FIRE on an Imperfect Timeline

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Despite an interest from a young age in finance and relatively strong financial literacy, I struggled to make progress in my financial journey to financial independence until the latter half of my twenties. Models or plans assume constant savings, but our own lives don’t always mirror these models. We might temporarily lose income by going back to finish a degree or find ourselves unemployed. Life is unpredictable. However, even if you’ve failed to prioritize financial independence in the past, it isn’t too late to begin. Life is a marathon, not a sprint.

A Slow Start

I was originally on track to graduate college in 2013 at the age of 22. With a full scholarship and anticipated job as an Army officer after graduation I was well on the way to financial stability. Instead of staying the course, I withdrew from classes at the beginning of 2012 and enlisted in the army. Between minimum wage jobs while waiting for training orders, Army training itself, and enlistment, I didn’t return to college until the summer of 2015 when I enrolled at George Mason University. Ultimately, I graduated in the spring of 2017 four years later than I originally intended at the age of 26.

2012 Net Worth: ~$3k

Income was the main limiting factor

It’s common knowledge that the lowest enlisted ranks, like privates, get paid very little. As a Private First Class the annual salary amounted to just under $23k. While I was frugal and saved about half of my income each year, half of $23k isn’t going to cut it if you want to achieve financial independence. I quickly decided that I’d go back to college to complete my degree as education was the surest bet to rapidly increase my earning potential.

A promotion in mid-2013 gave a modest pay increase of about $2,000 annually but that was a drop in the bucket compared to the raises someone can get annually in the private sector. The event that really launched my savings was actually a deployment to Afghanistan in early 2014. Tax-free overseas income, hazard pay, and nowhere to spend the accumulated cash helped me save a huge percentage of my income that year. I did spend about a thousand on a new computer and another couple thousand on a multi-week Euro trip but otherwise saved the rest.

2015 Net Worth: ~$30k

College Round 2: A more focused approach

As a result of my service, I returned to school with the help of the Post 9/11 GI Bill. This program pays for both tuition as well as housing expenses and combined with a partial athletic scholarship allowed me to finish my degree without accruing debt or dipping into savings. This saved a huge amount in potential student loans and made the years of low income feel worth it. While I didn’t save much, and I didn’t invest my IRA in mutual funds (doh!) I still managed to earn some interest and saved a few thousand dollars.

2017 Net Worth: ~35k

Nailing the First Job Out of Undergrad

Getting a good job directly out of school is one of the most critical steps towards accelerating your journey towards financial independence. I was lucky enough to get an such an opportunity Not only did it provide a steady stream of income, but it also provided access to a 401k, excellent benefits, and the career stability to qualify for a mortgage. The high salary for the area along with the career growth prospects made it worthwhile to move from hot job market in Washington DC out to the town of Madison in Wisconsin.

Living it up a little

I didn’t always maximize saving and investing during this time. I spent money on a nice trip to a Colorado ski resort to propose to my now wife (money well spent), a wedding, honeymoon to Whistler, and several other trips. I’d estimate our savings rate was still at least 30% but likely fell short of the 50%+ that some in the FIRE community reach.

In hindsight our timing was great. My partner and I were able to take advantage of a time in our lives when we had few obligations and no worldwide pandemic. Of course, there was a lot of luck as there is no way we could have anticipated a global pandemic to hit just as we were expecting our first child.

The Power of Real Estate

We were also lucky to have bought our first house at the end of 2018 when prices in the housing market temporarily slowed down and mortgage rates inched upwards. The purchase allowed us to dip our toes in the real estate market with a 2B/1BA starter home and start building equity. The move proved to be especially timely as the COVID pandemic unfolded in 2020 and house prices skyrocketed. While I would normally recommend staying in a house for at least 5 years, in this particular case we were able to sell for a huge gain to pursue graduate school in California. Selling our house for $341,000 after purchasing it less than three years earlier for $227,000 provided us with the majority of our funds in our taxable accounts.

A Little Luck and a Little Foresight

A third lucky break was an investment I made in the stock market on 25 March 2020. On that date I moved $10,000 from our emergency fund into the Vanguard Total Stock Market Fund, Real Estate Index, and Value Index. My thinking was that the S&P 500 was already down 30% on the year. Since there are only a few years in the last century with a worse annual return to the index, the odds were in my favor that the market would end the year higher. Since I was getting in at 30% down, I’d still come out with positive returns if the index finished the year down 25%.

Where do I stand today?

I made some short-sighted decisions and some very prudent decisions over the last 9 years. As much as I might like to think that my financial windfalls in the last four years were due to hard work and skill, that simply isn’t the case. Luck also played a large role.

2021 Net Worth: ~350k Age: 31

Sam at Financial Samurai has already done a lot of the hard work of defining what an above average net worth looks like. It’s a good article and reference point so I’m borrowing it here. My net worth skews a bit higher since I’m including joint assets in my marriage and just excluding my wife’s retirement accounts. Even so, I’m falling right around the average net worth for the above average 30-year-old. That’s a win in my book!

What’s Next?

Over the next year and a half, I’ll be working towards my MBA full time. Thanks to the generous federal government and a tirelessly working spouse I expect our family net worth will continue to increase over the next two years albeit at a slower rate.

At 31, a millionaire by 30 is out of the question without time travel. However, I could still reach financial independence relatively young compared to most Americans. With the increased cost of living in moving from a small Midwestern metro to an expensive coastal city a realistic target might be FIRE by 50.

An Imperfect Path

My path isn’t linear or typical. I made a minimum wage level income for four years in the middle of my undergraduate studies, failed to invest my assets in a diversified portfolio for several years, spent money for a 100-person wedding, and we had our first child early in life. Despite all this, I’ve been able to get my net worth back on track. It took luck as well, but it is possible and worth striving for. Eventually you might like to retire and the best day to get serious about your finances was 10 years ago, the next best time is today.

Big Takeaway? Education is Key

The most important thing you can invest in is your education. The more you learn, the more you can increase your future earnings and chance of meaningful work. Education has opened career doors for me that wouldn’t otherwise be possible; Don’t underestimate the value.

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