I'm 28, and With My $81,000 Debt Paid Off, I'm Retired

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Courtesy: Austin Netzley Austin Netzley's new book tells how he has "retired" at age 28.
By Gerri Detweiler

As a kid, Austin Netzley remembered being enthralled with the concept of money and promising himself that one day he'd be wealthy. And now, at 28, by most people's measure, he is. He's been an athlete, student, engineer and entrepreneur. And now, with his book "Make Money, Live Weathy," he's also an author and speaker. And at this point in his life, he considers himself "retired."

Not bad for someone who, in 2008, had a brand-new bachelor's degree, $72,000 in student loans, and used Honda with a $9,000 auto loan. He had attended a good but expensive college in Ohio where he had played football. His degree was in mechanical engineering, so he had a leg up on finding a job that paid well, which certainly helps when you're trying to dig out of a financial hole.

He went to work for an oil company in Houston, bringing in six figures the first year but carefully tracking his spending. As an engineer, Netzley tends to think in terms of numbers. He knew housing and transportation take up about half of a typical household budget, so he worked to keep those low. You will save much more by finding inexpensive housing than by clipping coupons, he notes. His used Honda and low housing costs -- he bought a foreclosure with a friend -- kept those costs far below that. He lived frugally but not abstemiously, meeting friends for drinks rather than dinner but also continuing to travel and to attend sports events and concerts. He kept his expenses as low as $32,000 a year, which made it easier to repay the debt.

Building Wealth, Destroying Debt

But debt payoff wasn't his sole goal. He was also looking to create wealth, and he understood time was on his side, meaning the sooner he could invest, the more time the money would have to grow. He signed up immediately for a 401(k) at work, first putting away 12 percent of his salary, then 16 percent. He didn't exactly attack his debt methodically. Sometimes he would pay the minimums, preferring to invest. But then he "just got tired of having the debt" and focused on getting it paid off. So, two years and 10 months after he graduated from college, he paid off the $81,000.

And now he is a retiree, if you can really call it that. Netzley says there are four ways to retire:
  • to have enough money in savings to stop working;
  • to have financial freedom by having more passive income than you spend;
  • to be able to do what you love when you want to do it;
  • a combination of the above.
Crucial to his way of thinking is that you see money as a tool rather than a goal. Because a rich life isn't a direct result of money. People who have a high net worth tend to measure wealth in terms of experiences, relationships, family and health, he says. So for Netzley, being retired means money has bought him the freedom to do what he wants. And now, his next couple of priorities are to "retire my parents" and to donate $1 million to charity.

He believes any of us can repay massive debt, and in his book he profiles people who have. But he looks toward making more than you spend rather than spending less than you make. They sound like pretty much the same thing, but Netzley said he has never operated out of fear of being poor but rather in pursuit of wealth. And you get ahead by shedding debt -- which he describes as "a burden holding you back" -- and investing.

He said the very first step in getting rid of debts is to make a commitment to doing it and get serious about attacking it. Because he has a bent toward numbers, that came easily to him. His advice to the rest of us: Get clear on debts -- get a credit report (you can get a free credit report from each of the three major credit reporting agencies annually; you can also get your credit scores for free every month from Credit.com) -- and define who every debt is is with, the interest rate and the balance. He chose to pay his off by paying off the highest-interest debt first, explaining that "I'm an engineer and I like to listen to the numbers."

But he said that method isn't for everyone. Find the one that works for you and make a commitment to getting rid of debt. (Asked about so-called good debt, like a mortgage or student loan, he said there's not a lot of debt he considers good. If you think you can earn double the rate you're paying on a mortgage by investing the money instead of paying the house off quickly, you have his blessing.) But the way to financial freedom, he says, is making more than you spend and investing the difference wisely.

Ironically, he says the way to financial wealth isn't so much focusing on every dollar but identifying your priorities. What you are doing is moving toward your ideal life -- figuring out what you were put on Earth to accomplish and moving toward it, not hitting a certain target. Your most valuable currency is time, and in many cases, money can buy you time. Because life is a journey, not a destination. And a lack of funds can make the journey more stressful. But so can loneliness, little fun or poor health. Richness, he says, lies in finding a balance.

6 Steps to Start a Debt Payoff Plan
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I'm 28, and With My $81,000 Debt Paid Off, I'm Retired
The first thing you should do is stop charging. Put your card aside, and switch to cash or debit now.
Get your debts in order. Make a detailed list of all the cards you're carrying debt on. Be sure to include each card's balance, its annual percentage rate and its payment due date.
Now that you know what you owe, it's time to make a budget. This will help you keep your finances in order and plan to pay off a big chunk of debt every month. It's also an opportunity to look for ways to trim expenses so that you can devote more money to cutting your debt.
Before deciding which card to pay off first, you should consider consolidating your debt onto a 0 percent balance transfer card. This can save you big bucks in interest, but it's also tricky. There are a lot of factors to consider, including balance transfer fees.
As an alternative to consolidating, you should make it a goal to pay off the card with the highest APR first. Devote all your extra funds to squelching this balance while still making minimum payments on your other cards. Doing so will save you the most money in interest in the long run.
Once you've paid off your highest APR card, attack the card with the second-highest APR next. Then tackle the others using APR as your guide to prioritizing. Keep it rolling until all your cards are paid off.
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