I was having lunch with a friend the other day and the subject of my retirement came up (which it always does these days).
His response to my retirement was similar to others but he asked me a unique question:
“What things happened in your life that allowed you to become wealthy and retire early?”
At first I was tempted to list the basics of retiring early/becoming wealthy but I knew he meant more than that as those things are givens. What he was asking me was what were the key milestones in my life that allowed me to understand and then implement those steps.
I gave him a few thoughts that I could come up with on the spot but considered the question more since then. I thought I’d share my thoughts with you.
With that said, here are the money milestones that shaped my financial thinking and led to actions that helped me achieve financial independence (in chronological order):
- My youth — I think I’ve shared previously that I grew up relatively poor. Not destitute poor, but we didn’t have much for sure. My mom and dad were divorced when I was in third grade and my mom supported us on a minimum wage job and very little child support. We moved up a bit when she remarried, but it wasn’t until much later that my family entered the middle class (and by then I was out of the house). It’s this background that led me to want to earn a good living. I started off wanting to be a veterinarian (then learned I hated science), then a lawyer (which I learned I hated after I took a legal internship), and ultimately a business executive. This drive led me to another milestone…
- Got an MBA — Once I knew the law wasn’t for me, I was in a bind. I would have (in a year) an undergraduate degree that wouldn’t do much to get me a good job. So I had to look at options and an MBA was a good one. I got an MBA at a decent school that in turn got me an awesome starting job at a great company. This put me on the road to six figures within seven years. My MBA more than doubled the starting salary I would have earned out of undergraduate school and was probably the best investment I ever made.
- Married my wife — There are two sides to winning the wealth Super Bowl — the offensive and defensive sides. I had the offensive side (earning a good income) covered with the MBA, but it was/is my wife defensive skills (controlling costs) that really propelled us forward. We’ve discussed many times that saving is as important as earning (that’s why they both have a letter in the title of this blog!) After all, you can make a million dollars a year, but if you spend $1.01 million, you’re going backwards. My wife is frugal when she needs to be (more so than I am on average) and helped our family tremendously by controlling costs. If you look at the ten worst money moves anyone can make, she is personally responsible for keeping us from #1, 3, 5, and 7. She’s a defensive expert and as you football fans know, offense wins games but defense wins championships!
- Learned the basics of personal finance — Shortly after we were married, my wife and I took a class (similar to what Dave Ramsey teaches these days) at our church that taught us the basics of personal finance. We not only learned how to manage money (both of our parents weren’t great with money) but started to implement those principles in our lives. We then started to teach and counsel others (mostly in budgeting) which further reinforced the basics and encouraged us to keep taking the steps to grow our wealth.
- Educated myself — As we were teaching others, I started reading personal finance books to grow in my knowledge of personal finance. During this time I picked up The Millionaire Next Door (review here) and started implementing suggestions from it in our lives. A couple years later I ran into The Richest Man in Babylon (review here) and did the same thing.
- Blogging — Later on I began blogging, sharing what I was doing financially and my thoughts on money articles. I was the “expert” but I was learning TONS myself — both from reading so much about money but also from the comments readers would leave. I began to implement suggestions here and there as well as solidify my thinking/actions on money. My net worth began to take off. It was during these years that my net worth gained at least two-thirds of its total value. Yes, running that blog was worth a couple million or so for me — and not because it earned that much. 🙂
- Bought real estate — My journey into real estate is well documented. From what I wanted to achieve to how I became a landlord to my returns. It’s my rental real estate that provides the majority of my retirement income and without them I would not be able to retire at this point (or at least in the manner I want to retire).
So those are the money milestones in my life. There may be one or two I left out, but these are certainly the most impactful.
Now it’s your turn. What have been the money milestones that have formed your financial life?
photo credit: Kaarina Dillabough Stones via photopin (license)
The Green Swan says
Interesting post, ESI!
I’d have to list marrying young as a money milestone for me. My wife and I were on the same page regarding our personal finances and allowed us to tackle our goals together early and get a nice jumpstart.
The next I’d list is getting my MBA which, similar to you, really propelled my career.
And then lastly, I’d list my eagerness to learn more about personal finances. This started young for me, reading the personal finance section of Yahoo Finance, Money Magazine, the WSJ personal finance section and various books. That helped the slow process of learning new and different topics about personal finance that I could consider implementing in my own life.
Full Time Finance says
We started out first with a money milestone of parents that weren’t necessarily poor but were poor with money. I swore I’d never grow up to live pay check to paycheck. At a young age that meant thinking I would just increase my pay through the roof.
As I began to work though I started to realize that it was a slow progression. I got my MBA and did see some pay raises but I realized making big money would mean no life and potential unhappiness. So inflection point 2 was a decision to go towards cost savings while continuing to raise my pay.
The next milestone was marrying my wife, who holds similar money views to my own. Combined its like a snowball rolling down hill.
The final milestone was reaching the basic point of financial independence. I realized I can take more risks and building my career further is now less important. That has helped to lower my stress and allow me to enjoy life more.
Jack Catchem says
I had no strategy throughout, but in the roughly 15 years since I left high school I joined the Marine Corps Reserve and used the money earned there to support my bachelor degree.
In turn the combat experiences and training helped me land a job as a cop. I was then able to leverage the post 9/11 GI bill and Department funding to essentially pay me to get a master’s.
The master’s degree, military experience, and policing allowed me to successfully transition to a small, well compensated department that only takes people with superlative resumes (and me).
Each stone helped build a bridge to the middle class, now with a stable six figure job and having my life threatened significantly less, I can focus on the saving & investing side. As always, thanks for the insight, ESI.
Coopersmith says
A Chinese proverb “The journey of a thousand miles begins with the first step.” I would consider that the first step to a milestone is to just plain start. I find that most people have not saved for retirement because they failed to start. Hard to retire when you have not started doing something about it. Hard to get that college degree if you don’t start taking classes.
Dominic @ Gen Y Finance GUy says
I grew up in a very poor neighborhood where most people were on some sort of government assisted living and food stamps. I slept on the floor of my grandmothers 2 bedroom apartment with my 4 brothers. My grandma and mom shared one room, and my uncle had the other. My dad was in and out of prison for meth labs, and my mom had her own substance abuse issues, and could never hold down a job.
I think that was all the motivation I needed to set out on a path to become wealthy. I then met many mentors along the way, whom took an altruistic interest in my life. Through them I saw what was possible outside of my own bubble.
My grandfather was a big influence. I lived with him through high school and learned a lot about the man I wanted to become. He was a PWO and successful entreprenuer. I wish I would had gotten closer with him when I was younger. But I soaked everything up from him that I could while he was still alive.
Then I got my finance degree and started off on my path.
Starting my blog a couple years ago has been a big part of my wealth building path as well.
Cheers,
Dom
Indio says
So I have a slightly different view on the whole marriage thing. Getting a divorce actually helped me build wealth because my ex was very good at spending money. Marrying the right person is definitely key, but my wealth has tripled in the past 10 yrs since the divorce. Meanwhile, my ex is now living on social security. Worse part is that he is/was a financial advisor.
For me, getting a job in a hot industry, IT, had a major impact on my wealth. I’m watching and reading everything I can to spot future trends so I can encourage my kids to do the same with their career path. With so many enhancements in technology it’s difficult to identify where automation, artificial intelligence and robots are going to fit in.
Buying a small house in an affluent neighborhood with top rated schools has driven up pretty values nicely. Despite being in high cost of living area, property taxes are low and I have access to beach, golf course, tennis courts, ice skating rink all as perks for being a town resident. Kind of like joining a country club without having to pay monthly dues. Being active is an investment in my health, which is my top milestone to wealth followed closely by strong relationships with family and friends.
Brandy says
I started late in life. My parents were never good at managing money and the best they ever taught me was to keep my bank balance in the Black. I went through 2 failed marriages, one husband drank the money away, the second would buy toys(literally) and then try to pay bills. It was when I was on my own and spent a year struggling that I finally woke up. I was given a book, Prince Charming Isn’t Coming, for Christmas that year(ironically from my mother). That book struck a chord and I started doing everything I could right then. A little over a year later, I was laid off. In a panic, I scrambled to gather all of my money and found that I had saved up/earned $13K! Along with unemployment, I managed to make that money last about a year. I moved from VA to FL to be closer to my family. I picked up a job that would barely pay my bills and got tired of that real fast. A few months later, I landed an admin job at a telecom company. It was very low level but I learned exactly what the people I was working for were doing and proved that I could do it too. I asked for a promotion and got it! A little over a year later, I got yet another promotion! I currently make 6 figures and tuck a hefty amount away every month in various places.
On a side note, one year to the day that I moved to FL, I closed on my very first house all by myself! I got a great price and 6 years later owe less than $70K on it. 🙂 with a current resale value of approx $125K.
I have about 20 years until the government says I should retire. I figure I could feasibly do it in 10. Even with all of these accomplishments and being financially comfortable, I still strive for more. Recently, my boyfriend and I decided to start up a small weekend business selling succulents at a farmer’s market. There is no expectation to earn a living from it, but we do hope to make enough to afford vacations that take us out of the state for more than a 4 day weekend.
I am an avid reader of your blog and several others. Personally, I need the daily reminders to keep doing what I’m doing and stay on track. So thank you for all you do!
Cortland says
Your story is very inspiring. Congratulations and all you’ve accomplished and may your success continue.
Jeff B. says
I married well :). Our goal has been to retire early and we are pretty much there. Within 1-3 years, 3 years max, we will be done. I have to either accept that I will lose a pension if I quit early, or try and surive another 34 months at a job I am bored at. Two years will get us an extra $1M into the portfolio between growth and savings.
Chris says
34 months to get a pension, that would be hard to give up. Time flies.
Jeff B. says
Agreed, but I am bored off my ass. I won’t start getting it until 2025 and it will be about $38K a year. Not chump change, which keeps me from quitting and every day I get closer so it makes it harder. 🙂