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Going on offense to grow investments from $5K to $100K (and a bus!) in less than 4 years (E17)
96 Plays9 months ago
If you feel like you're constantly on defense with your chaotic finances, this episode is for you.
Amber is an auditor who started her career with plenty of things going for her, but spending wisely wasn't one of them, and that led to her feeling like she was always playing defense, managing chaos, and trapped financially when the pandemic hit. In December 2020, Amber found the resolve to go on offense with her money, starting with a clear, deliberate budget and increased knowledge when it came to investing.
Listen to Amber's story to hear the steps she took to go on offense with her money and grow her investments from $5K to $100K in less than 4 years (oh, and buy a bus!).
If you have a story to share and are interested in being on this podcast, reach out to Jeff at wisemoneymentor@gmail.com.
For more information about Jeff and the coaching services he offers, check out his website at www.wisemoneymentor.com.
Create your podcast today! #madeonzencastr
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Transcript
Introduction to Wise Money Mentor
00:00:04
Speaker
Welcome to the Wise Money Mentor Podcast. I'm Jeff, a personal finance and budget coach, and the host of this podcast. My goal is to help you get the clarity you need to take control of your finances and feel truly confident that you are using your money to build the life you want. Through this podcast, we share stories and principles that help you do exactly that. I'm excited to dive into this episode, so let's go.
Amber's Financial Journey Begins
00:00:45
Speaker
Amber, welcome to the Wise Money Mentor podcast. How are you today? Good. Thanks for having me. How about you? Yeah, I'm good. Thank you. I'm excited to chat with you. This episode will be a little different than a lot of the other ones I've done because instead of just focusing on hardcore day-to-day budgeting or paying down debt or what have you, we're going to go on offense today with investing. And I'm really excited to chat with you about it.
00:01:11
Speaker
I came across your story in the YNAB fans Facebook group and another quick shout out for Brooke and Celia who run it. and And I loved your post. I'm going to read it to set the stage for our conversation today. You said in December of 2020, my investments passed $5,000 and I decided then to set a goal to hit $100,000 invested by the time I turned 30 years old and I prioritized it in my budget.
00:01:38
Speaker
It hurt to take money I usually put in my Starbucks category and redeploy those dollars to my investing categories. And sometimes it was not fun to live on a smaller grocery or travel budget. But today with a lot of help from the market, which is the whole point of investing, by the way. But anyway, today with a lot of help from the market, I hit my 100,000 goal four weeks before my 29th birthday.
00:02:02
Speaker
YNAB has truly enabled me to set and reach goals. I cannot imagine my life without it. And yes, I reconciled a million times today to mark my investment to market. That's awesome. That's really awesome. Yeah. um I'm excited to ask you a bunch of questions about it. Before I do though, do you want to introduce yourself, give a little background about yourself for anybody listening?
Background and Career Path
00:02:27
Speaker
Yeah, sure. So obviously you said my name. I'm Amber. um I grew up in a very small town in Wyoming. um We're talking 3,000 people, small town in Wyoming. um My parents were originally from Minnesota. They went to Wyoming, raised my brothers and myself there.
00:02:44
Speaker
I went to the University of Wyoming, got a bachelor's and master's degree in accounting. Fun fact, accountants are some of the worst with personal finance. So let's just dispel that right here. um I went on to get my CPA and then I moved to Sioux Falls, South Dakota, started my career in a CPA firm doing audits, not taxes.
00:03:04
Speaker
So no, I cannot do your taxes, barely do my own. and And from there, I spent a couple of years in Sioux Falls, then I ended up transferring to Fargo, North Dakota, which is where I still am, but I'm no longer in a CPA firm. I now work for a company that does ah construction equipment and and agriculture equipment sales.
00:03:24
Speaker
Outside of that, really, I'm just you know a normal, hang out with my cats, spend time with my family, recently bought a very old bus to renovate, you know just those types of things. But outside of that, that's really my story.
00:03:39
Speaker
Um, how often do you have to like hedge with people around you? Like, yes, I'm an accountant, but no, I'm not going to do your taxes. Is that 100% of the time, 100% of the time. That's why I always, I always start that conversation right there. Yeah. Well, um, I am one of those weird people who actually enjoys doing my taxes. And I like keep an eye out for all the forms from all the companies to come so that I can dig in.
00:04:04
Speaker
I think we need to get you a therapist. I know. Yeah. You're not the first to say that. um Well, thanks for the background. um I'm definitely going to ask you about the bus. So don't let me forget to come back to that. Could you just set the stage on, like you mentioned, you went to University of Wyoming. So maybe we start with like your college days, early professional life. How did you think about money? How did money work for you at that stage of your life?
00:04:29
Speaker
I'm gonna start with that I was really blessed in something that maybe a lot of people don't have anymore is my parents did talk about money when I was a kid. We didn't budget. They didn't give us an allowance. They've never given us money. They didn't help with college, but we always had the conversation of we can't do this because it's not in our budget. We don't do credit card debt because of this. So like I did have a little bit of financial education from my parents that maybe not everyone does.
00:04:57
Speaker
Can I ask you a question really quickly? Absolutely. Because I've been wondering this for myself. When your parents said, hey, it's not in the budget or maybe they said we can't afford it. Like when you were a kid, how do you receive that? Because what I'm what I'm nervous about for my family, for example, is to say, oh, it's not a budget. We can afford it to make like they might think, oh, we don't have money.
00:05:20
Speaker
When really it's a matter of we don't choose to spend our money on this thing because we choose to spend our money on other things or that family vacation or what have you. So like, did you ever have that feeling with your parents or how did that work? You know, I'm going to give my parents a lot of credit here.
00:05:37
Speaker
um I have now come to learn that my dad was making pretty good money most of our my very childhood, but I always felt like we had everything we needed, but we were never wasteful. And my parents had that conversation. You know, we would go into closed season for school and my parents would tell us what our budget was for that. They would say, Hey, you're getting $200 this year for new clothes. So that's what you're going to do. So you're going to prioritize that. It wasn't so much that we, they would tell me we didn't have more. It's just, this is how much we're spending on it. And I think what they,
00:06:09
Speaker
reiterated a lot was my parents worked very hard and they came from farming background so they their parents didn't have a ton of money and they pretty much said you know we don't we're not going to keep up with the Joneses we don't need the name brand everything like if you asked me to go to a volleyball camp did that a lot we spent a ton of money doing that Yeah, we'll probably pay for it just know it costs money, but they would kind of give that parameter of we're not just spending money on things that we don't value. I think that was kind of how they would phrase it. So we never got told no on, you know, sports activities or you need to know sports shoes or things like that. So I knew we had money. They just kept it kind of grounded in their values. And I think that was very helpful.
00:06:52
Speaker
Yeah, that's great. By the way, I, we didn't realize before hitting record that we both are volleyball people. So you played volleyball growing up. Um, I did until I broke my ankle rock climbing. Um, my brother lovingly let me fall. Um, so I had to give up volleyball and I turned to golf, but I did, um, up until about my sophomore year of high school. Got it. That's awesome. Yeah.
00:07:17
Speaker
And so you were clearly raised with great principles, a great foundation from your parents. Kudos to them. I know you said I'm actually going to give them credit. We don't need to tell them they get any credit, even though they do. But anyway, so you go to college and like, how did finances work for you in college? And then as you started your career.
00:07:37
Speaker
Sure.
Early Financial Management Challenges
00:07:39
Speaker
So one thing that was wonderful is the state of Wyoming gives a significant scholarship to um Wyoming graduates. So going to school in Wyoming is already one of the cheapest schools in the country. That was not optional. My parents pretty much said, you are on your own, but go to Wyoming. That's the only yet smart decision. um So most of my school was paid for, probably all of it. um And then You know, I had gone into pre-med, hated it, went into accounting. So both pretty pretty normal.
00:08:10
Speaker
um have an outlook of job careers. But with that being said, I did not go into credit card debt, but I did go into some student loan debt. And that was because I had terrible financial control habits. So I traveled all the time on money that I probably didn't have. So I could have gotten out of school without debt, but I was spending all that money to travel. I was eating out. I was buying things I shouldn't have. I was going to places I probably shouldn't have just because I wasn't in control.
00:08:39
Speaker
So I probably had more resources than most college kids, but I still didn't have discipline. So I was spending a lot of money. I get out of college with some student loan debt. um I had worked a little bit through college to help keep that low. So it was only, I think, 10 to 20,000.
00:08:57
Speaker
way lower than a lot of people who come out of college. Very blessed. I just want to be clear. I understand that. ah But when I went into my first couple years of of my job, that translated, right? I all of a sudden didn't have control over my money. I was dumping money all over. I can't honestly tell you one thing I specifically purchased in 2018 and 2019 when I started my career. I don't know. I was just spending money left or right.
00:09:24
Speaker
um And I also didn't have a plan. So I had actually purchased a house right out of college with a mortgage that was a little bit uncomfortable and I was dumping money into this fixer upper. And it was pretty hard because I didn't know where my money was going and I wasn't planning for it. So I always felt like I was defensively trying to figure out making sure I had enough money for the right things and and making decisions on the fly. And it's just very chaotic was kind of how I i managed my money. Chaotic is probably the right word.
00:09:52
Speaker
but What made you buy a home so quickly? A couple of things. Another lucky break for me is that the state of South Dakota had this program called Grants for Grads. And if you bought
COVID-19 and Financial Reassessment
00:10:05
Speaker
a house in the south state of South Dakota within five years of finishing college, they would gift to you 5% of your home value as a down payment.
00:10:14
Speaker
So I learned about that and I also was like, I don't like renting. I want to get the equity. Let's do this. I had no money. Like I think I had like $7,000 in my bank account. Should not have been buying a house, but I bought the house, but I had lucky break with this with this program. So they actually cut me like a $500 check when I closed. It was it was crazy.
00:10:34
Speaker
this episode is taking an interesting turn it's turning into uh shortcuts to have other people pay for things for you by amber and we started with hey everybody go to university of wyoming they'll pay for your school and then hey everybody after graduating go buy a home in south dakota they will pay for your down payment that's funny I think that's gone now and trust me, the house I purchased took me took way more money than you would imagine. um I was dumping money into this fixer upper that I knew nothing about um at ah at a rate that was insane. And you mentioned like it was uncomfortable, like the mortgage was uncomfortable, the renovations were uncomfortable. And this was, you mentioned this was 2018, 2019. What was your like starting salary just to set the stage for everybody on where things started?
00:11:24
Speaker
Yep, I believe I started with a yearly salary of $48,500, which would have been, and I would have started in June of that year. So I think I would have seen about $20,000 of that um in 2018. And then the raises happened mid-year. So I would say in 2019, it was probably around $50,000 I took home okay or I could take home. That was gross. Yeah. So you started about $48,500.
00:11:48
Speaker
got up to 50 the next year, maybe a slightly gradual increase for a couple of years. So and as you're uncomfortable, you have the student loan debt from all your extravagant travel during college and spending. You have the home that has a renovation and an uncomfortable mortgage. So what at what point in time did it like hit you that, I don't know what I'm doing here or I don't know if I'm on the right path financially.
00:12:17
Speaker
So I don't know if the finances came before the life event, if I'm honest with you, but in 2020, COVID hit. And all of a sudden, yeah i don't know I don't know if you've ever heard of this thing. But all of a sudden, I am now in a town that I don't know anybody.
00:12:35
Speaker
um you know I have friends, but we're all locked down. you know I'm not seeing my coworkers every day. I'm now in a job that was really, really hard um to do in COVID times. um you know We didn't have layoff risk necessarily, but everyone and their mother was relying, all our clients were relying on us, and things were getting backed up, and we were just working so, so much and so hard, and we weren't the firms weren't collecting money at that point, because all your clients are hoarding cash because they're concerned about going down and all of this. So you know you don't get a big raise. Your partners are saying they're taking a pay cut and you're working more and more and more and more hours because of this COVID thing. And I was just getting miserable. I'm going through COVID with everybody else, but also I'm in a place that I don't know anybody. And my first thought was, I don't know if I can do this. I might need to move home. And this is of obviously March, 2020, April, 2020.
00:13:32
Speaker
And then my second thought was, oh my gosh, I'm not underwater on this house, but I have no equity. I have no cash. Can I move home? what Would I even be physically possible for me to move home with the finances that I have right now? And so I i had gotten YNAB on a disk from my brother when I was a sophomore in college, maybe a freshman. Never used it. That's old school.
00:13:58
Speaker
That's old school. Never used it. I think I used it for a month and I was like, this is stupid. No. But because of that, I still had YNAB. And so I kind of got re plugged back in and I said, I just need to figure out where my money's at, what I'm going to do. And it was kind of then when I said one, ain't no way I'm moving home with these finances. There's just it's just not there. And so the second thought was, OK, we need to get control of this situation. We need to figure out what we're going to do.
00:14:28
Speaker
How can we get home in six months? If this stays, like what are we going to do? And that was kind of the turning point. I don't think it was really finances that led it. It was, I have no flexibility now because of what I've done. Wow. So did it's interesting that you were feeling all those feelings due to COVID and working harder. You were feeling what you were feeling because you realized I can't get out of this house. Like I'm not underwater, but I don't have any cash. Like if there's nothing I can do.
00:14:58
Speaker
Um, that your reaction to that was not one of like feeling even more destitute, you know, but one of, okay, we got to take control of the situation. What do you credit that to? Like deciding to have that resolve instead of the like further panic.
00:15:15
Speaker
um I think I was always raised with the idea of, if you get yourself in a situation, you're going to have to learn to get yourself out of it. One of the phrases that I heard quite often was, you choose your action, you choose your consequence. And so that was kind of always a thing. My parents never, ever bailed us out. You know you do something dumb. We're not going to let you you know die on the streets, but you're going to figure it out.
00:15:39
Speaker
And so I think that was always kind of just a tenacity that we were required to have. My parents didn't call it a loss. And then I think the other portion of it was. I was in a situation where I couldn't do what I wanted, but I also was not in a situation where I was rapidly sinking and I didn't have a lifeboat because I hadt i had stability in the sense that I had income, I was not negative in bank accounts. And so I couldn't do what I wanted, but I also could see that I wasn't
00:16:13
Speaker
completely out of the like out of reach of this thing of wanting to maybe have a little bit of ability to go home in a year or whatever. So it was just a short term, like, why don't we just see if we can kind of figure this out if this
Investing and Budget Overhaul
00:16:25
Speaker
keeps going? Because we were only four weeks into the pandemic at that point. And I don't know if you remember, it was two weeks to flatten the curve. So, you know, it was six weeks. So like we didn't know. And so I was like, well, let's just figure it out as we go. um And then in that process, I figured out my 401k that I was kind of sort of investing in wasn't being invested anywhere. Yeah, let me chime in here because this happens to a lot of people and it is really frustrating. And frankly, it shouldn't be this way, but it is this way. So when you contribute to a 401k or an IRA or a brokerage account, you put the money in the the account type, just like you're putting money in checking your savings.
00:17:10
Speaker
It's then not automatically invested into an equity of some kind, an index fund, a mutual fund, ETF, whatever, a bond. It's not automatically invested. So it's not as though putting the money in the 401k or IRA equals, oh, um it's going to grow with the with the market. No, you have to actually then choose the assets that you invest in with those dollars. The account type is just the vehicle. So it sounds like,
00:17:39
Speaker
You didn't know that until this point in time. And then you realized it that, ah oh, your money was probably just sitting in a money market fund or something like that, right? Correct. Absolutely correct. And how much? um I think at that time, I i i didn't have windup at that time, so I wasn't tracking the market. But I think that I only had like $2,000, $1,500 in there with employer match. and Part of the reason why I had looked was I knew that I wasn't invested yet. And so it's like, how much did I lose if I left this job? Which is really what made me even open that account. um But I think it was somewhere between like two, 3000 when I looked early that year.
00:18:18
Speaker
Okay. So when you, you realize you're like, Hey, I got to take control of this situation holistically. Um, and you in the process discovered the money in the 401k wasn't actually invested in the market. So what'd you do first? Like, what did you decide when you say I'm going to take control of this, I'm going to figure this out because that's what your parents taught you to do. Figure it out. What did you do first to figure it out?
00:18:42
Speaker
First and foremost, I invested that in, ah at that point, i I didn't have a lot of education. So I just went with a target retirement date, threw it in there and was like, hey, this looks like a good date to retire. Let's just do that. um So that was, for that piece was easy because I didn't, I just did it. I was not too worried. ah But for my actual finances, step one was I set up a budget and I got very clear on the budget. like i prioritized and I kind of took probably four months to be really honest with you to figure out where I was spending money. it It took a little bit of time to even just figure out all of the money that I was spending. And then once we got to about July of that year,
00:19:21
Speaker
I think my first step was I started actively looking at a budget and saying, here's what I want to do with the money. So once I finally got a little bit of the spending under control, I said, if I want to move home, how much is that going to take? That was really where it got to. um And so I started saving for that. And that gave me a little bit of room, cushion room.
00:19:43
Speaker
At that point around, I think probably September or October of that year, things started to get a little bit better at work, and I was a little less on the panic. Oh my gosh, we're moving. And so I kind of got a little bit off of that. That was my driving force. And from there, I said, well, let's just start being better with money overall, build an emergency savings. So if I ever need to do this again, we can look at this money and pull that trigger, no question asked.
00:20:10
Speaker
And then um from there, I started thinking maybe I should care more about investing because I had learned that I really wasn't at that point. And all of my money was going to DoorDash or whatever Amazon thing I purchased or Starbucks or whatever the case may have been. So I just i think I just started being more disciplined little by little with the priority of emergency funds. That was really what blood was. I'm curious, like as you started to build up the emergency fund,
00:20:39
Speaker
and as you um were budgeting more diligently. What sort of highs did you experience that made you stick with it? Because it's really easy just like working out at the beginning of the calendar year, right? It's really easy to do it for a bit and then let it fade and you revert back to your old habits. So what was the difference for you in ah establishing a budget, saving for emergencies, investing in the market, and what made it stick?
00:21:10
Speaker
Great question. There's a couple of things and you actually just hit fun fact. I'm on a health journey. We're now in month three of that. It's been great but using the same concepts. We're actually talking about here on that approach this time. um But first of all, learning discipline.
00:21:26
Speaker
is part of this because motivation will get you started. Discipline is going to keep you there. And I think the fallacy about discipline is that that happens all at once. You just say you're going to do it and you're going to go. It's a muscle. It's it's a muscle. And so every little decision you make to build that muscle is going to make it easier to keep going, right? So the first time you say no to Starbucks, it's really hard because it's, you know, but that tiny little thing isn't going to be a money a wealth builder, right? right But it's going to build the tiny decision-making tools so that when you have a huge pay increase down the road, all of a sudden it's not crazy to just put all that money in the market. you know You're building those tiny little disciplines. And through that, it's wins. right The wins kind of help you with that discipline. One of the things was I had happened by accident in learning that my 401k was not invested anywhere, um perfectly timed the low of the market.
00:22:24
Speaker
just happened into that, because if you remember, there was a massive COVID sell-off, and everyone else was, you know, probably pulling money out, to be honest with you. But I didn't even really care. I hadn't been investing. I hadn't been tracking it through it in. So then, all of a sudden, I went for a pretty big gain by December of 2020. And I was like,
00:22:45
Speaker
This is kind of fun. yes good I think the most of this in, and so I had a quick dopamine hit with, with the investments that maybe not everyone gets. And so I think that really helped frame the mindset of, well, if I could do this forever, this would be easy, you know? yeah that's really That's really fortunate that ah you had 2,500 bucks in your 401k, but it wasn't invested in anything. And when you chose to invest in something, the market was low because of COVID. And then you invested it and it grew relatively so much so quickly. You're like this free money in just a few months, like that feels really good. I want i want that feeling to keep going, right?
00:23:27
Speaker
Right. And then I had, you know, I had ah another small win in that my dryer went out. Like I think, I think it was early 2021 and all of a sudden I could cover that with cashflow. I could buy a new one. And so it was just kind of these small little, Hey, this works. And and then as I got more disciplined and and that muscle grew a little bit more and more as I went through it, it just got easier, you know, I stuck with it just a little bit more.
00:23:55
Speaker
It seems like everybody in their YNAB journey, if they stick with it, they have that moment of the dryer for you. Where it's like, wait, I have hundreds of dollars set aside for this particular thing. I don't have to use the credit card. I don't have to like figure out when I'm going to pay this back.
00:24:13
Speaker
that feels amazing like everybody tends to have that moment and that's when it like clicks in and they see the value of it and for those who aren't yet there they struggle i think they underestimate how it will feel to be in that situation of hang on so christmas came around and i had all of the money set aside to buy all the gifts and do all the activities what like that feeling is intoxicating if you can get to it And i I think it's even, one of the things that I always say is people are like, I don't like to budget because it's so restrictive. The truth is is I spend more and more money almost every day anymore because I'm so comfortable with my my plan. It's there. I saved for it. I have no guilt. And and before it was so chaos, I was always
00:25:00
Speaker
oh my gosh, I need to find the $20 to buy this or oh my gosh, can I do this? I was checking everything and now I just go, yeah. I mean, I i know it's there because i I've covered everything. you know its it's not a It's not a concern. And so I spend more money than probably most people who don't budget because of that.
00:25:18
Speaker
I totally agree, and granted the two of us are on a budgeting, personal finance focus podcast, so there's some bias here, but yeah um I totally agree that, yeah, I understand why others feel like budgeting can be restrictive, but it can also be really liberating if you do it a certain way. And I think you described it perfectly, that if you do it a certain way, meaning in alignment with ah the YNAB method, if you will,
00:25:47
Speaker
What it unlocks is guilt free spending, like taking the trip, going out to eat, buying the thing at the store, buying the thing on Amazon. Suddenly it's not, there's no like, ah, can I do it? Where am I going to find the money? You look at your checking account. Do I have enough wiggle room in my checking account to buy this thing? Like you don't have to do that. Cause you know, no, I set aside money for this particular thing. So that's, I'm going to use it for it. And yeah, I agree. That's a great feeling. And and I think there's value in,
00:26:18
Speaker
in the friction of it too. like if you if you We call it why not broke in the community, but if you have to make the decision of, I want my money to do this, you have so much control over it, even if it's a finite resource, right? And so sometimes that's actually valuable because there's a win in the fact that you finally save for the thing.
00:26:41
Speaker
Or there's a win that I was able to stop myself from door dashing two times to buy the laptop or or whatever the case may be. So you know that was something that even as I invested more and more and more money, you know it was nice because I was making conscious decisions of I was OK with giving this up for this. And it was a little bit painful, and I couldn't have both, but I knew. I knew what I was doing. It wasn't that I was guessing. So you're saying, OK, that makes sense. So you're saying that two things were happening. One was obviously the budgeting and deciding which jobs your money would go to. But you're saying, secondly, in the wake of ah that dopamine hit of seeing the market go up, that what that led you to do was invest even more aggressively
00:27:31
Speaker
moving forward, meaning you decided, hey, these dollars, which up until now have been doing certain jobs for me, I'm actually going to have them do this job of investing in the market so that they can grow for decades, and which then reduced the amount of money you were getting into your budget effectively. And thus fewer dollars to go to fewer jobs. Talk me through ah both of those, like what you observed or what you learned about yourself as you started investing more, but also felt the crunch that had on your budget.
00:28:01
Speaker
first, that first dopamine hit, hit very hard. And I had made a spreadsheet in the accountant. It's a thing we do. And I said, you know, in December, 2020, I coughed it out. And I was like, if I could put in like $20,000 a year, which is a huge number, it's a huge number. Like it wasn't even a totally possible number at that point. And let's let's pause for a second because this was 2021.
00:28:24
Speaker
That would have been December of 2020, so January of 2021. So you're you're still like around $50,000, $53,000 or so in salary. Gross, yeah. And you're like, oh, if I save $20,000 on average for the next five years. That you could hit what? $100,000 by 30. That's a meaningful portion of your salary.
00:28:49
Speaker
Yeah, it's about 50% or 40 to 50%. And I knew it wasn't totally possible. and And I want to be clear on that. I knew that you know in 2020, there was no no hope to save $20,000. But my thought was, if I could shoot for that and and just get better, then maybe over the next five years, I could average it as I figure my things out a little bit more and more.
00:29:16
Speaker
So I did the dumb thing. I didn't math it out. And I said, we're going to up our 401k percentage starting January 1 by a lot. Um, a lot wasn't actually that much, but it was still felt like a lot. So all of a sudden I'm taking home, like, I don't remember four or $500 less a month, which doesn't seem as you say it like a lot, but when you are spending all of your money without really like.
00:29:42
Speaker
any regard for saving, it became kind of uncomfortable for those first little bit of years. And ah so that was kind of like the first time that I had to really scrape by and make those super hard decisions in a way. And then I obviously, I also started investing in a Roth IRA at the same time, just because I was starting to get into finance content and educating myself and and figuring things out. But what I really learned was when you're dealing with very finite resources, your your options are limited. I mean, they just are. I couldn't stop paying my mortgage. I couldn't stop paying my electric bill. So I'm now saying, can I go one week a month just eating off the pantry?
00:30:29
Speaker
Can I turn down my air conditioning a few degrees in the summer? These things aren't going to fix your wealth problem, but they are going to contribute just a little bit and it's building that discipline. And so I did that and then it became fun because all of a sudden I am having a plan.
00:30:49
Speaker
I have a goal. That goal is getting clearer and clearer and clearer for the reasons why. I'm learning more. I'm educating myself that what investing can do for me. I'm understanding compound interests. Didn't really get that before. And I'm now making extremely explicit goals. Like I am saying, if I do this 100K by year, now I can take a trip in my 30s and not have to invest as much. Now I can retire earlier. And even though those things were ambiguous and they weren't really motivating, they were the starting of understanding that when it
Discipline and Financial Satisfaction
00:31:22
Speaker
got hard and I didn't want to do it anymore for motivation, because that goes away around six months later, yeah um I now have clear and clear goals that have names like this Starbucks because of compound interest could become
00:31:38
Speaker
you know, a meal in Italy down the road because of compound interest. And so I started framing things like that. So I learned to give up things that I didn't value highly, you know, the mindless Starbucks gave those up. But if I was going to Starbucks with a friend that was planned, that was fine. Yeah, you know, I gave up DoorDash because I have a car, I can drive there, save the extra money.
00:32:02
Speaker
And it got easier and easier and the more wins I had and the more discipline I got in doing that, the more fun it was because I was no longer deprived. I was actively working toward a concise goal and that goal had names and that goal had an image and that goal was tangible to me for the first time ever.
00:32:21
Speaker
Man, there's a lot in there. So I want a lot of goodness. So I want to like identify a few takeaways for me from your experience. One is let's talk about compound interest as everybody rolls their eyes because they hear about compound interest. It's a thing.
00:32:36
Speaker
It's as a wonderful thing. It's a wonderful thing. And what you chose to do is I'm going to take the brunt of living on less money now so that i can it can grow over the next few decades and live and fund a certain life.
00:32:52
Speaker
ah That I want to live when I retire or to your point I'm gonna save a lot more now so that when I'm in my 30s and There's the risk of me still feeling like oh I shouldn't spend and go on this trip or take this time off from work or whatever and Cause I need to invest like I'm in my prime from an investing perspective. Like this money's going to grow the most. Like doing it on the front end then gives you the freedom to be like, no, I'm going to travel because I'm ahead of schedule based on the goals I want. So that's one like take away that I loved with competent interests. The second one was the specificity of the goal. Like you could say, Oh, I want to travel or I want to retire early.
00:33:37
Speaker
But that's pretty, as you said, like that motivation will fade pretty quickly. It won't it won't sustain you through the, hey, it's the 28th of the month. I have no more money in eating out in my budget. Am I gonna door dash or not? Like it helps. I'm not to say you can't, like you can choose to do that and move money. But anyway, um it's the specificity of the goal. Every single client I have worked with,
00:34:06
Speaker
In my coaching business, the first thing we tackle is like, what are your goals? What is your vision for your life? And none of them have specificity from day one. And so we have to work through that.
00:34:21
Speaker
And as I say to them, it has to be a goal that you find motivating because rubber is going to meet the road here in a little bit when we talk about your budget and if you can sustain living off of X dollars either because you got to pay off that debt or because you need to save more aggressively for retirement. So I totally agree and wholeheartedly endorse the idea of like the ah specific goal. And then the third I wanted to highlight was um when you're living on a budget even if it's like restricted it's not as though you're not enjoying life right so people perceive the like financial independence retire early movement they perceive it as you're just like eating Cheerios for decades to save so much money of your from your paycheck so you can retire early and that that'd be a miserable existence i doubt you would say that's what you're doing right you're living life
00:35:15
Speaker
Oh, absolutely. And I think that's always kind of a misconception too, is you can have more than more than one goal and work extremely hard towards both of them. um In the last five years that I've really been doing this or four years or you know close to.
00:35:32
Speaker
I have gone to Mexico, I've traveled all over the US, I've purchased a bus. i have you know I've done a lot of these things, but they were conscious decisions that didn't already interfere with my other plan that I deemed more important. So it is possible to rearrange to your values and so still have multiple values. And I think that's that's really important. So like I go out to eat with friends and if a friend invites me, I never, ever say no. I will never, ever eat out myself.
00:36:00
Speaker
I just don't, I don't find it a valuable thing because it's just, I don't get enough joy out of it to warrant the cost of me doing that by myself. Whereas I could save that money and do it with a friend. It's just those, those casual decisions that I don't think we always think about in that term. And I think the other thing is, is knowledge, right? So, um, I can maybe tell you this is that I sort of am kind of planning to take a year off of my job in my thirties.
00:36:31
Speaker
And I am now saving for that. And it's so funny because I have a budget category that says you're off in my 30s. And I can never ever get myself to take from it. I will take from almost any other category. But my thought is this could be a city I can't visit. And it's so specific. Whereas if I took from it would be a problem. No, $20 isn't going to make the difference. It's just there's a value system I've ingrained into where I'm prioritizing my money.
00:36:59
Speaker
Yeah, it's easier to not steal from that category 100% of the time than it is to not steal from that category 95% of the time. Correct. Because then once you open the door, you open the door. I love that. I agree that and for a lot of people, there's leakage, if you will, in their monthly spending where it's not a deliberate decision. It's rather first come, first serve.
00:37:25
Speaker
so you're in the moment, you want to buy that thing online. ah And so you buy it just because it's the thing that popped up. And then maybe a week later, it's like not that big a deal. You forgot it was even coming. Like, okay. Like what you're saying is, no, no, you you didn't like restrict your life. You just became a lot more deliberate in what deserved money and what didn't. And that's how you're living.
00:37:52
Speaker
That's a hundred percent. And I, you know, and I would never say I'm perfect and that those things happen. Absolutely. And I, you know, and especially when you're earlier on in figuring out your budget, but I think the other maybe take away from this is if you can automate and never see it too, it's just less enticing. You know, most of my investments automatically come out. I don't even know they're there. Um, I got a fairly large pig pay raise this last year from switching jobs.
00:38:22
Speaker
And I didn't see any of it. I immediately made so much more go to my 401k that I actually took a pay cut because I knew it is so much harder if you have to make the action of doing something than making the decision and making it automated. And so the more you can Find your plan, get comfortable with your plan, stick to your plan and automate your plan. It's going to just be easier because as long as you have that plan and you're comfortable with it, it's kind of like the backbone that you can go back to. You might have a bad night of sleeping and you're a little bit wonky, but all of a sudden your your spine still holds you up, right? Like that's, that's kind of the mentality there.
00:39:04
Speaker
Well, I applaud you for like getting a new job where you took a pretty big pay increase and then before you could feel the increase in that pay, you set your automated investing, meaning your automated contributions to your 401k, maybe your automated direct deposits into an IRA or brokerage, whatever.
00:39:26
Speaker
Um, you set those up so that you actually, while you increased your salary by a meaningful amount, you effectively took a pay cut in terms of what lands in your checking account and that you put into your budget. 100%. Yep. And as a result, you, uh, hit a hundred thousand, not only before 30, but before 29. Yep.
00:39:49
Speaker
And as I mentioned in the intro, like with a lot of help from the market and I made a joke about it. Yeah, that's the whole point of this thing of investing is to benefit from the upswings in the market. And so good on you for doing that. That's awesome.
00:40:04
Speaker
Thanks. Yeah. And i I mean, I deviated from the plan a little bit because I saw that I could do it by maxing out the Roth IRA early. So I'm still a little bit on edge on should I have done that because I believe a dollar cost averaging, but I wanted to hit it. So we just did it. um But i I will say.
00:40:22
Speaker
One thing you just mentioned that I think was extremely key for me is I needed to educate myself on the market. Investing is scary. I think people, and I was included in this, it's this big thing you hear about. Sometimes people call it gambling. Sometimes people say you have to do it. like There is so much narrative out there, and I'm lucky that I have kind of a lot of experience researching. So that was, that was kind of something I did a lot. And one thing that really helped was keep it simple and keep it consistent. You know, early on I dabbled in all sorts of things. Like at one point in time, I think I had like $700 crypto and I was like, what am I doing? I don't know what I'm doing. You know, it doesn't have to be complicated. The majority of people can just dump it into a high quality index fund that tracks the market, don't beat the market and never sell. Don't even look at it.
00:41:13
Speaker
You know, it took a lot of time to get comfortable with that of, oh my gosh, as those numbers grew, it's riskier and riskier and riskier. But also research says, don't beat the market, beat the market, lean into just simple well established concepts and just be consistent. and And that helped because I think I was really nervous early on with not really a lot of personal finance background to manage investing. That was very scary.
00:41:44
Speaker
Yeah, man. That's awesome. Congratulations on hitting a hundred K even earlier. So I'm curious now that you hit that goal, like you mentioned, you want to take a year
Future Financial Goals
00:41:54
Speaker
off in your thirties. That's awesome. Um, you bought a bus, so I want to hear about the bus. Like what's what's the point of that? What's your vision for it? And then what's on the horizon? Like what are you now that you hit the a hundred thousand threshold, what's your next goal?
00:42:08
Speaker
Sure, so I'll start with the next financial goal, which is once again on paper, not exactly possible, but I like to set like stretch goals. um I would like to hit net worth of a million by the time I hit 40, so 39 and 360.
00:42:24
Speaker
four days, um that would be the idea that's including equity. I don't think I, or like equity in my house. I don't think I could do it just straight stocks. So we're going to give ourselves a little grace on that one. um But like you said, I'm hoping to take a year off in my thirties to spend six months living in the bus and potentially six months traveling Europe. um I've really gotten good about the goals. So I have a little map um and I've already designed the bus and So that's kind of the overarching goal. Let's not tell my employers that this is something that I'm considering. But those are the kind of the two big ones um that are currently being saved for. Wow. So you're like doing all the work to like update the bus, like the interior of the bus and everything? So that was the point that was the whole point. In 2020, the other thing I got real into was van life content. Yeah.
00:43:19
Speaker
I mean, I think everybody and their mother did. It was van life content, sourdough bread, plants, which, guilty, I'm a big fan. Yeah, I see that here. Yeah, you see my plants. Yeah. Yeah, there are a few staples of the COVID era.
00:43:34
Speaker
ah Yep. Yeah. So I really only got into van life content from that staple of of the COVID era. um And it never went away. I just kept watching them and I kept watching them and my parents were getting annoyed. They're like, just do it. You talk about this every single time we talk to you, just like do it. Do you know how expensive an actual van is? like No, I haven't looked into it.
00:43:57
Speaker
Even an old, high-top van, easily $15,000 without any renovations. The renovated ones, $100,000, $120. Ridiculous. and So logically, the answer is forget the van. I'm buying a bus.
00:44:11
Speaker
Yes, because ironically buses are cheap, like pretty dang cheap. And so I'm lucky my dad is very, very handy and I'm pretty handy. I did my house renovation in Sioux Falls and all the things. And so I was never looking at a bus. My dad sent me this stinking Facebook marketplace post and it was this 2002 Ford E450, you know, the thing ran, it was kind of up near them. It was like, it's four grand.
00:44:40
Speaker
And so I sent him to go look and all of a sudden I owned a bus.
00:44:47
Speaker
Where does it sit? So my parents retired and they moved back to the family farm. And so the bus is at my parents' house and in one of the shops. um So we will start that project in the spring. My dad has told me that his the thing he's looking forward to most is my struggle trying to do this. So that should tell you where we're at on the bus. But yeah but my interesting. My hunch is that ah that joke from your dad will turn into him wanting to do it with you.
00:45:18
Speaker
Oh, he has to do it with me. The first part of it is welding the floor and he's already volunteered for that. And he's kind of excited because he thinks it's a little bit of a ridiculous project and they've been building houses up there on the property. So it's all square stuff. And he's like, this is going to be different. Someone who's handy and retired and could use a project, but would deem it irrational to do it on his own. So if it's like your project, great. And I bet as you guys do it together, like it'll become an experience that you both look on fondly in terms of your relationship. That's awesome. And he adores spending my money, like to a level that you cannot even believe. So it'll it'll be fun. Amber, congratulations on
00:46:07
Speaker
um Making so many wise and strategic decisions so early in your career, when you face adversity, ah instead of letting it just tear you down or shoving it out of your mind and not even worrying about it, you like tackled it head on.
00:46:27
Speaker
And then as you learn different principles, you then applied them like really consistently to the point where before you hit 30, you had a hundred grand in the market. That's amazing. Congratulations on that. And I am excited to stay in touch and see the bus when you're done and to see, uh, where you go for that six month European trip. And to hear when you hit the million dollars net worth before 40.
00:46:54
Speaker
I bet you're going to get there. We don't know how the market's going to go, but um I'm optimistic you'll get there. That's awesome. Well, thank you. Thank you so much. And thanks for having me on. This was great.
00:47:12
Speaker
Thank you for listening to this episode. If you enjoyed it, be sure to subscribe to this podcast so you don't miss future episodes and please leave a rating and review. If you have a story to tell about your own financial journey and you're interested in doing so on this podcast, please email me at wisemoneymentor at gmail dot.com. For more information about me and the coaching services I offer, check out my website, www.wisemoneymentor.com. Thank you.