My Financial Story
The more I continue this journey, the more it interests me on why I am the way I am. Why do I care about saving for retirement, or checking investments, or investing at all? Why budget? This is how I started saving, investing, and saving for retirement. This is my financial story.
The Beginning Of My Financial Story
Teaching kids about smart money habits is something that has to happen early. In many families, these conversations rarely happen. Money is seen as a taboo or shameful subject to be ignored as if financial literacy just happens. In my family, we never spoke much about money but when we did it was rarely. I knew we weren’t poor (we were middle class), but wasn’t sure. We didn’t travel much except to see family, there weren’t fancy new cars every couple of years but I never heard much about struggling.
My dad retired from the military and then followed up with a a second career in a regular office job afterwards. My parents ran a home business after that career ended. I didn’t hear about budgeting, but we rarely ate out and we had some hand-me-downs as well as kept our costs minimal. It’s always interesting where people fall in line with their childhood and others where they go opposite.
I started working when I was 12, just doing small jobs around baseball fields to earn money. It just seemed like the right thing to do. Never saving much of it but it was an early change for me to start working for money. I kept up with this until starting the normal teenage job. I was also recommended by my parents to open a money market account.
Finances in High School
Then I started working at a local grocery store during a hiring fair for a new store opening. Back in 2006 I started at a *drumroll please* very impressive $5.85 an hour. Naturally, I was rolling in money. Then I did something weird and started saving. I mean, I still spent most of it, but I also started saving money in a money market account. I didn’t know where to put it, but it seemed as good a place as any and back then it was earning low 4% interest rates. Don’t worry, this started creeping down as the financial crisis took hold and rates were cut. Looking into stocks also started (although I had no idea what to look for…well I still don’t but I’m luckier now). But importantly, I learned about saving. Saving money in the money market account was a great start and I first started to see how money makes more money and I also did what any teenager interested in cars does. Adding a loud exhaust and sound system just seemed to make sense. But that’s okay, no regrets for it because I actually spent an entire summer working extra shifts to be able to save up for it. I worked that job for a couple years until college and then had to quit. At the end of it I had a few thousand saved up and for the most part it sat there, earning 4%, then 3%, then 2%, until it barely made anything.
Finances in College
College can be incredibly difficult to pay for when you include the cost of tuition, books, room and board, and just surviving. In full disclosure my parents had saved a 529 plan for me, but I also earned a scholarship covering a majority of tuition (You can read more about 529 College Savings Plans here). So combined I could cover almost all room and board leaving food and gas really the only expenses. Safe to say, I didn’t save any money during these first couple years. I did learn a couple quick lessons.
Saving Money In College
- Paying full price for books is for fools. Learned this one quick. I started buying used books 1-2 weeks into the semester because they were cheaper. Then I learned I could flip the books around as soon as the semester was over, if I waited, I found that it was more likely for a new version to come out and the audience was bigger to buy the books. Overall I was paid back around 60-80% of the book price. This slashes book costs. Most schools also have free books set aside in the library which saves from buying books in the first place.
- Eating cheap. Like any normal college student, I survived on bagels, ramen, hot dogs, and whatever was at the dining facility.
- My housing costs originally for a dorm for the first year were roughly $3000 a semester. Most schools charge by semester and when you break it down by month it easily comes out to around $650 a month in my case. After the first year I moved out, moved in with three roommates and cut the cost of housing down to $350-500 a month for the rest of college.
- I lived close to campus and took free buses and shuttles on top of walking. This meant, no parking permit to pay for and cheap gas. Some places can easily charge hundreds of dollars a year for parking on campus.
Investing In College
I picked up a military scholarship after my second year. I started getting my tuition paid by that, this meant I was receiving nearly triple the tuition each semester, plus the military paying a stipend of $350 a month. At this point I had tuition, room, board, food, and all expenses covered. This was my first jump into investing. A buddy and me decided to try out stock picking because it sounded like a good idea. I still remember my picks.
The stocks were Intel, Ford, and Pacific Ethanol (It was 2010-2011 so bioethanol was a huge deal even though the companies had no profit). Intel I still hold on to this day, I sold a portion of it and have withdrew most of my initial investment but over 9 years it’s over doubled not including dividends. Ford has always had issues, I made a slight profit and sold out. Pacific Ethanol was a guess and rightfully showed me I was not investing, I was speculating. Somehow I made a couple hundred bucks then lost it trying to catch it as it fell in price later. I finished buying and selling Pacific Ethanol with a net profit of around 0 and decided this wasn’t the right time to be speculating.
Working In College
During my last year and a half in college I picked up a job working retail sales. This is where I was able to start actively saving and investing more with the disposable income I had. I absolutely spent more but bringing in an addition $800-1200 a month left room to save. While it was nice and worked for me, I do recommend looking at if this is needed and will work for you. Saving and not having loans is a great way to get a head start on life after college, but if you are sacrificing your degree or performance (Especially if you plan on or need to follow-on to another post-graduate degree) for the sake of working I highly recommend taking an in-depth to find the best choice for your specific situation. I left college with around $10k in savings and no debt with around $3,000 in investments. I should have started an IRA then, if I knew about them.
Starting A “Real” Job
Saving In The Military
I joined the military in 2012 and started now making what any early officer makes. This amount was a lot more than college me was used to. Luckily, I had someone tell me I should invest into a Roth IRA from the beginning. I was ignorant, but decided to open an account anyways. I hopped on Vanguard, picked the Target Retirement Fund that made sense and started investing. Over the last 7 years I have managed to max it out for the last 6 and my wife’s had her own Spousal IRA for the last 4. These are both kept in Vanguard’s Target Retirement Fund for 2050. The military also offers plenty of opportunities for some to earn extra money through work trips where you receive a stipend for meals.
You can save quite a bit of money with some ingenuity. I combine this with any amounts leftover after saving into a brokerage account. I keep a small amount in a TD Ameritrade account for individual stocks (this was only recent) and primarily for me to challenge myself for specific stocks. This is only about 5% of our portfolio. The majority is in various index funds or mutual funds through Vanguard.
Thrift Savings Plan (A Federal 401k of sorts..)
If there is one thing I regret not doing is jumping on the Thrift Savings Plan soon enough. I delayed for a couple years because the Roth IRA was better and the amount we would save in taxes was minimal. What I did lose out on was the ability to invest towards retirement. That’s the thing with retirement accounts. You can’t go back, sure you can “catch-up” and invest more over the age of 50 but you can’t double up next year if you miss this year. I wish I started investing in it sooner and investing the full amount earlier. I started investing in the TSP in 2014 just a small amount of 5% per paycheck and slowly grew it. Investing slowly, triggered a thought that I should bump up my investment amount by half of any pay raises (annual, years of service, or promotion). I would continue to increase my contributions without “missing” out on any pay.
Over 3 years it grew from 5% to 25% and I maxed it out for the first time in 2017. I then started using Mint and Personal Capital to better track my expenses and investments. You can find my review on it here. I largely invest in a 3-fund portfolio for the TSP now between the C Fund, S Fund, and I Fund. If you have no clue what these mean and would like to find out. Check out my post on the TSP.
Saving For What’s Important
(This will vary for each person)
A source of conflict for anyone saving is how much to save and how to find a life of balance. For some this means saving a large portion of their paycheck to work for as few years as possible. Others will save less and agree to work longer. The key is to find what works for you and to figure out the things you want now and what can wait for later. For the first couple years working we avoided taking vacations, only ever going home for trips or short day-trips.
Starting in 2016 we made a vow to start taking a trip once a year, it started off with the Caribbean and the past couple of years was to Europe. Is it costly? For sure. Worth it? Without a doubt. Embracing culture and people unlike ourselves is essential in our opinion to being well-rounded and grounded. I wish we started this earlier and made it a higher priority. With a young kid this year and the couple next may relax on the overseas part but will switch to road trips around the U.S. and maybe Canada.
The cost of these trips are covered through savings and tax refunds (I’m not someone that maximizes to receive the smallest refund possible). While I fully understand it can be seen as a “free loan” to not bring in as much as possible with each paycheck, the psychological benefits and where the money goes is much more effective for me to keep a conservative tax withholding. I do think you can be extremely effective if you do adjust your taxes to get as much back throughout the year.
Wrap-Up
This largely covered my story. My wife’s wasn’t in as much detail but she went back to school, we took a small subsidized student loans (yay military stipends lessening taxable income) to lower the cash burden. She worked for a few years saving 20-30% of her paychecks in her own 401(k) and putting another 10-15% in the company’s Employee Stock Program. This was before we had a child recently. We elected for her to shift out of working for a few years. Going forward we’ll max out the TSP and two IRA’s, anything over that will go to a brokerage account.
Does this mean life’s perfect? Absolutely not! No matter what the Instagram filter shows, there is no sit-back and passively coast through life. We continuously agree and disagree and agree again on how we use our incomes. Are we saving too much? Saving too little? Are we living with intent and happy with our choices? It’s constant communication and ensuring we are on the same page and if not to work on it to make it better.
Your Story
This brings me to this. I want to hear your story. Up top you will see a page link to where you can find details on emailing me (Or click here). I want to hear your story, you do not to be a blogger, instafamous, but just regular people. What’s your financial story? What got you to wanting to look here? Everyone has a story, some more picturesque than others but what we can all do is learn from one another.
Thanks for reading! I look forward to hearing about your story.
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