A Financial Freedom Retrospective

Like donut day or waffle day I would like to participate in Financial Freedom Day on July First. Halfway through the year is a great time to reflect on what you have done in finance and maybe be open to changing some habits. Financial freedom to me is linked very closely to doing whatever you want whenever you want. Now obviously this is within reason because if I worked a normal wage job odds are that I’d never have enough to buy a mansion, a sports franchise, or something crazy expensive. 

That doesn’t mean that I can’t have MY version of financial freedom where no matter what the small things are I don’t have to worry. I have the freedom to have options in the workforce if I don’t like my current situation. The ability to live in a decent house, to retire comfortably provide for my wife and kids, and to be able to give them experiences that I wasn’t able to have. To have the opportunity to get a personal trainer to train me like the movie stars get trained. To retire my parents. To help out a friend. To have more exotic vacations. These are all just luxuries that having autonomy over your finances can do. A bad financial burden can impact you the same as bad sleep, bad eating habits, and other terrible habits. The stress that finances can cause is truly scary. It can affect relationships either family, romantic, or friends. Divorces over finances are not uncommon. If we can make steps toward financial freedom, we will have the options to live life on terms we never thought were possible. 

I am now halfway through my 20s and I am trying to put a heavy emphasis on good money habits, and I would like to say I am making good progress. Here is my progress:

Let’s start this story out just growing up. 

The only money advice my parents gave me was to get a credit card to build credit, to buy a car, and to go to school for a better-paying job. I didn’t get much advice out of that so, when I graduated high school in 2016, I just got right to college. Luckily lived at home and luckily was able to make my credit card payments and car payments. As those were my main expenses. I had scholarships for my college, so I was on an easy path to success. I didn’t take advantage.

By 2018 I was debt free. I was stupid, I had no idea what I had done. I just got tired of paying $25 a month on my credit card and $150 on my vehicle so I paid them both off. A vehicle with insurance money and my $300 credit card debt with my next 30-hour paycheck. With scholarships and living at home, I was lucky enough to not have very much debt, but I didn’t learn anything else for a while. Just enjoyed life cheaply. 

By 2020, I had gotten pretty tired of school, and I took my first of many gap years. I had no direction in my schooling, so I just needed some time off. Throwing money into a fire, and ruining my scholarship years on three years of four different majors wasn’t smart. 

I got a good-paying job when I first entered full-time workforce and my goodness did I get torn up working about 75-80 hours a week with no benefits for the United States Postal Service. Now with my time there, I kept noticing mail from a brand called Vanguard. It kept popping up and I delivered to a very wealthy neighborhood, so I did some research. In the next coming months, I started listening to money podcasts and YouTube videos in my mail truck on a Bluetooth speaker. All my money was in a savings account at that point. Within a week of looking up Vanguard I had a Roth IRA I opened in my name and used my college fund that my parents gave me to start it. Didn’t max it out yet but it was a step in the right direction. 

Still in 2020, I created a brokerage account, this is where I put in most of the serious money I was making for a 21-year-old living at home with no car payments. I was making about $60,000 a year after taxes, and I just pocketed a majority of it. I enjoyed stacking the cash up and the problem with a Roth IRA is that I couldn’t have access to MY money until 59 and a half. Not good enough so I opened a brokerage and built up a balance of around $20,000 in it. All in single stocks… what the heck was an index fund. I ended up transferring money back into my account from that and there was only $2000 left before I just was sick to look at it. It was a horrific return and I now wonder why index funds are the best way to invest. 

2021 

Moving out

I had a nice nest egg even with losing almost $20,000 and I used the leftover cash to get the courage to move out of my parents’ house. 22 years old and finally off my parents’ balance sheet…. Mostly, I hope my momma never stops paying my phone bill. However, groceries, rent, utilities. Turns out they are expensive and not much fun. My enjoyment budget turned into just a survival budget. It all hit pretty hard especially when I didn’t like my job so in the first three days I left and it took 3 months for me to find a new one. I was picky because I had savings to float me. No problem. And the job I took was part-time too. I usually hovered around 30 hours a week and just used my extra savings to supplement my income. I was stupid. I could’ve gotten a full-time job earlier, but I was stupid and had a nest egg. Three months with no job before a part-time job happens really hurts, who would’ve thought?

2022

I was finally able to contribute to my 401(k) that they offered. I was leaving early a lot at work and my savings went down to about $5000. From $20,000 liquid money down to $5000 what a magic trick. Not even counting the $20,000 to $2000 I did a year before. I was stupid. Burning through money without a care in the world and I don’t even think I was spending much. I just was not paying attention. I started to stabilize about halfway throughout the year and stopped burning through savings and just lived check to check. Eventually, I had enough to contribute to my 401(k) and start to build my assets up. Even though I put 2% it was something. My freefall was over. Now I needed to build. 

2023

Rebuilding slowly. It is quite funny to see how fast I could tear down $30,000 in cash and investments but it is much more difficult to build it back up. That safety net allowed me to slack off but one day you just hit rock bottom. Now that I have much more sense I was able to save my first $1000 in a month which was a record! I wouldn’t budget so it wasn’t consistent, but this is when I started learning even more about finance righting my ship. Also, late in the year I got a new job with a raise which was nice. My savings rate increased to about 10%. 

2024

Which brings me to today. With my slightly higher income with some decent money habits, I have been able to really let the rubber hit the road. I have no car payments and no debt payments so that has been a HUGE HELP. 

My savings rate hit 25% of gross income in several months this year and at my income level is a pretty good accomplishment for how low it is. I have been able to run fat on cash in my emergency fund. The only month I have missed with 25% savings rate was last month I had to pay for a cruise and have my brakes replaced. Luckily, I didn’t even need to dig up my emergency fund, I just paid the bill with no problem. I am no longer check to check. I have entered a new stage in life where I am stable for myself. 

Many Investments have come along. This is the first year since 2020 and 2021 where I am putting a significant chunk into investment vehicles. 25% of my gross income for this year. I have been able to accept my employer match. I am on track to max out my Roth IRA and in November open an HSA and make even more tax-free growth. Speaking of tax-free growth I have started to contribute to a 529 savings plan for my unborn child. It feels like I have really hit a speed boost and gotten on a wonderful track. 

Next steps

As of today, I am pretty maxed out with cash flowing college and all expenses I am probably only saving $100 a month over the year after these saved expenses get taken out of the bank account. A 3-paycheck month could hopefully clear up the prepaid expenses. I have about $2600 of prepaid expenses that will lower the savings rate. But using the bucket strategy I could have enough money for those expenses to move on to other goals. 

Add to that brokerage

My tax-free dollars will be maxed which means I need to focus on taxed accounts. My 401(k) and brokerage have similar amounts which aren’t nearly enough to make a difference as of yet. I need to get them to a bigger mass so it can start working harder than me. Right now they are so small that they aren’t going to do much heavy lifting. 

Focusing on a bigger shovel

I like this analogy a lot. I am not in a very big hole which has let me be able to move towards my goals while living on a smaller wage. 

How do I do that?

Invest in education. This is the easier and much more walked path, which seems harder to me for me but it is tried and true. Getting past the entry-level roles would be huge in my financial goals. 

Invest in business

I have always been drawn to this. Always felt a great joy talking to people about money and using my competitive advantage I want to help people save money at Disney World and hope it grows into a money-making venture. Unfortunately, when school comes back around this endeavor has to take a back seat because I am two years away from taking enough college courses to fill two presidential terms.

Here are some strategies to help you reach financial freedom like myself. 

Have rich parents. This wasn’t my journey but thought it was funny. 

Forced scarcity

There’s a reason why the United States takes taxes out of your paycheck first. They don’t trust you and you shouldn’t trust yourself either. Pay yourself first and make it easy for the habit to stick. I have my investments into my index funds automatically from my bank account each week. This forced scarcity makes me only spend the money I have and I pay myself first. 

Have goals

One thing that really gives me the drive to make things happen is having goals. It makes everything so easy because I know what I am saving for and how much I need to save each week to get there. Find the goals and then reverse engineer into a weekly bank account deduction into another bank account. One bank account that doesn’t have a debit card attached. Make the bad habits difficult and make the good habits easy. 

Budget

I know these are simple without the sexiness of a get-rich-quick scheme but I have done both and I choose the safe route now. I started tracking all my expenses, all my income and it was very exciting to me that I was able to save more than I ever have before. Just putting the numbers all out there can really show where you are bleeding money. Finding spending amounts and spend recklessly within a budget. I used to get my haircut from a guy who said he would go to a bar and easily spend $100 each night he went out. He had to have three jobs to keep up with his lifestyle. Bought a brand-new car and bragged about how much money he made.

Shop away from the store and cook at home

This goes along with budgeting. The food category can balloon up into a monster that steals money from you. I have friends who go into the store to shop and leave with $300 bills because they don’t know how to shop. A $15 pack of chicken goes a long way in a budget. Shop at home. Not hungry and not entranced by food marketing. Live nothing your means. 

Debts need to be destroyed immediately and you need to be scared of debt. 

This can put a strain on your money when you have to pay your lenders first, Uncle Sam and then you finally get paid. It can really slow down your future goals. If I had a $450 car payment and a $250 credit card payment all of my savings’ goals would be wiped out and have me check to check again. I have gotten out of debt as fast as I could.

Avoiding debt and living below your means is the best way to achieve financial freedom. If you have goals to reach this coveted area I want to hear all about it. Shoot me an email or message me on any of the social media. I also have a Facebook group I created for financial and vacationing.