A Money Wake-Up Call: Hitting the Big 3-0 with a Big $0 Saved
In my recent post about my high school and college years, I told you how I didn't make much money back then, and blew what I had. Maybe some of you can relate. This trend held true pretty much for all my saving in my 20s. But around the time I turned 30, I woke up to the reality of my financial situation. Here's what I had managed to accumulate:
- A new sports car, for which I would still be making payments if I hadn't gotten it out of my life.
- An enviable home entertainment system with a big, expensive HDTV. The TV is almost totally obsolete now, the technology having improved a lot in the past few years. At the time, I thought I could see atoms at this resolution. Today I'd be lucky to get $200 for it.
- Plus or minus $1,000 in savings, depending on what I was wasting money on at the moment. I also had slightly more than this in a poorly chosen mutual fund, generating minimal profits.
New Decade, New Me
First I got rid of the car. I had paid down the loan enough that I actually got a little bit back. It was still a stupid move to have the thing in the first place. It had cost me a lot by the time I sold it, and being out from under those payments was a huge relief. Moreover, I found I didn't even need a car. Between my bike and public transportation, I could get everywhere I needed to for next to nothing. Why hadn't I been doing this all along?!
Next, I fundamentally changed my lifestyle. I quit eating out (I learned to cook and tried to live on $60 of groceries a week), cut out live concerts and sporting events from my schedule and canceled my cable. Was I a hermit? Maybe sorta. But I started a business. I learned about finance. I learned a lot of things that I'd always had on my "I'll do that someday" list.
It all added up to a major difference in my savings. After I sold my car, I redirected that $564 a month straight into my portfolio. Awesome! I was honestly really excited to start seeing this pile up in my new cheaper, higher-yielding mutual fund. (I would learn more about investing in the years that followed, but at that point, it was a solid home for this money.) I was also saving about $225 a month by not eating out, which also went straight into the savings pot. Add to that another $200 a month or so for concerts, games and drinks, and I found that I was able to save $1,000 or more, without even trying that hard.
Once you have a little money (and this was the first time in my life I had any at all), you begin to realize how many things you can do with it. I'll tell you more in the next installment about how I spent and invested some of my money in what I think are really good ways.
I'm here to tell you that you can make big changes in your life too, to start preparing for the future. I learn more every day, and every day, I get more excited about what is to come.