- In January 2021, my net worth was – $ 15,000. Today, it’s $ 15,000 in health thanks to three steps.
- I stopped paying my student loans while the payments were suspended and instead invested this money.
- I set myself a savings goal each month, then did everything in my power to reach it, including some side work.
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Last month, for the first time in my adult life, I achieved positive net worth. As a first generation college graduate with a master’s degree who has spent most of my working life underemployed, this struck me as incredible.
First of all, let me note my privileges: I am a suburban white man who was fortunate enough to attend an elite university with very significant financial aid. Being underemployed has always been a choice, and most Americans in this situation are not. I chose to pursue opportunities like a Fulbright scholarship and an AmeriCorps position instead of a stable and relatively well-paid job for the experiences. These are privileges that not everyone has.
These privileges aside, however, I did not receive any windfall or inheritance. I’ve never even earned more than $ 40,000 in a single year (although that will change by the end of this year!). Despite this, my net worth has increased from -15,000 $ to 15,000 $ since January 2021. Here are some of the ways in which I did it.
1. I changed my mind and adjusted my schedule
For so long, the student debt associated with my master’s degree weighed heavily on me and it was difficult for me to think of anything else. I was sitting on over $ 50,000 in debt after school and barely made a dent over the years. It quickly became my sole focus: every little extra money I received went towards this debt because I couldn’t imagine feeling happy and free until he was gone. Several years later – and still $ 37,000 in debt – I realized I didn’t have to continue down this path; I can look at it differently.
After realizing this, I made the decision to suspend my federal loan payments in February of this year. I had already canceled the four smaller loans (they ranged from $ 1,000 to $ 3,000) using the debt snowball approach and could see that I was starting to make progress. At the same time, I realized that paying all my extra money for loans that didn’t earn interest (during the pandemic) was not the best way to build wealth.
Instead, I started to invest more (both through a robo-advisor with Betterment and Roth IRA transactions that I chose on my own) and eventually started to see some growth. Since February – when I made the choice to focus on building wealth over paying off the student loan – I first maximized my Roth IRA and replenished my emergency fund (which was depleted. by the chaos of 2020). Together these represented a $ 12,000 increase in my net worth.
2. I set myself achievable monthly goals
This step – although it seems simple – probably had the biggest effect on my overall increase. In addition to the regular monthly transfers that I set up on my accounts, I have set myself a separate and realistic financial goal each month. When my personal investment account was around $ 3,800, for example, my goal for the next month was $ 5,000 in that account.
I set myself a goal each month – each for a different account – and put everything in addition to that goal (like my stimulus checks). After I deposited this money into my investment accounts, the magic of compound interest took over and my investments started to grow exponentially. In total, I am about $ 6,000 richer since January due to meeting these goals and reinvesting all interest and dividends.
When I was close but didn’t think I was going to make it, I looked for opportunities to earn extra money or worked hard to cut my budget in other areas. It was like a video game that I played with myself, except the point total was real money and the prize was a better financial base.
3. I spent time each week looking for additional sources of income
I know that side activities and self-employment are not for everyone, but there is usually a way for everyone to make a little extra money. For me, that meant devoting a specific time each week to researching additional sources of income.
As someone who lives in the Alaskan bush, my opportunities are more limited than most – there are no Craigslist “gigs” or service jobs available, period. Instead, I set aside a specific time each week that I spent researching any possibility of increasing my income. I used this time to build my freelance portfolio and find opportunities that my full-time job offered that I wasn’t already taking advantage of. In the end, these different sources amounted to over an additional $ 5,000 that I invested over the past six months, which allowed me to exceed my initial net worth goal for that period.
Many financial success stories are flashy, but mine is proof that they don’t need to be. Making consistent financial choices really matters, even if it doesn’t seem like it at the time. Three years ago I made the first deposit into my Roth IRA and today that account is a substantial part of my net worth. I’m not a perfect example – I still have $ 37,000 in student loans – but maybe next time I’ll write about how I’m debt free now.