A Money Wake-Up Call: Hitting the Big 3-0 with a Big $0 Saved

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Every one of us has had "aha! moments." Epiphanies. Days when we reach a crossroads and realize that we have to make some changes. For the next two months, we're sharing moments like those in our Life Stage Lessons series: Real stories straight from the financial lives of our DailyFinance contributors about times when they realized they were due for a serious course correction. So read on, learn from our mistakes, and get inspired to improve your relationship with your money.

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.
Of course, I had other things too, but this picture probably feels very familiar to some of you. Lots of young guys live this way. And it feels fine while you're doing it. But I realized that if I kept living this way, I could never retire. I say "I realized." It was more like "I panicked." So I got serious.

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.

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