Saturday, April 17, 2021

$-40k to $100k NW 3.5 years not in tech or healthcare, 25 years old

I thought this might be of interest as I don’t work for a tech company or as a doctor making 6 figures, I’ve made a pretty modest income but have had a very high savings rate.

Background:

25 years old, single, pilot. I graduated college about 3.5 years ago with $40k in student debt. I didn’t have a real “big boy” job until about 6 months after I graduated.

I’ve always been financially literate, thanks to my father. He kept me out of the super expensive brand name schools (embry riddle), taught me how to save and invest money, and most importantly instilled a non-stop work ethic. Combined with reading financial subreddits almost daily, I think I have a good amount of financial knowledge.

Timeline, all at the end of the stated year.

2017: NW: -$35000. Salary $55000. Started my first real job after college in late 2017. The first few months of making that much money I went a bit overboard, after tax I was making something like $2800/mo and spending all of it. A few months of wondering where all of my money was going, I realized I needed to cut back on my expenses.

2018: NW: -12K ish. Same job. Increased salary to $68k. Aggressively paying off my student loans, with something like $20k left.

2019: NW: $17000. Started a new job at the end of 2019. Now hourly, but make between $60-80/year depending on how much I work.

2020: NW: $67000. Same job. Ended up grossing $61k. Moved in with my parents during covid as my job security decreased. My expenses became nearly 0. I saved massive amounts of money as I was fearful for an extended furlough. I was lucky and was never furloughed.

April 2021: NW: $101000. Stock market gains and low expenses have fueled my savings over Q1. My most recent paycheck finally pushed me to six figures. I have worked as much as humanly possible this year and have grossed $35k YTD. I don’t think I can multiply that by four to make $120k+ this year though.

Lessons Learned:

While I absolutely love money, seeing my accounts grow day by day, and working as much as possible to see my paycheck be what it has been, I do realize I have neglected a lot of social aspects of life. I haven’t dated anyone in years. The only people I hang out with are coworkers on layovers. I have a friend group from college, but we are spread all over the US. I am most definitely lonely at times and I feel helpless. I can make excuses all day for why this is, but in general it’s a combination of self confidence issues and frugality.

I really do love my job. I often get home from work and sit around waiting to go back out. Why would I sit here and play video games when I could be getting paid to fly?

DAY TRADING WILL FUCK YOU. I learned about Wallstreetbets back in like 2018. This was after the crazy bitcoin runup and drop. I decided to get more involved with investing. I learn best by doing, and that involved me losing lots of money on options and stocks. It was addicting. I learned a lot, but I lost a lot of money. Eventually I figured out day trading was a total waste of time. I see peers doing it now and I get a chuckle when I see them think they are JP Morgan himself, since I was there once. Ultimately, using emotion of any kind to make trades is a poor idea.

Don’t touch your 401k. In 2018, at the height of me trying to be the wolf of wall street, I switched my 401k to all bonds just before the market dropped hard in October. I thought that this was the next recession and bonds would be a good profitable placeholder until the bottom hit. I did well with the bonds, but ultimately I held them too long and missed out on gains.

My brokerage account grew massively in 2020 for various reasons related to job security. My industry (the airlines) has been in the worst shape it has ever been in. Luckily, the government gave out grants to the airlines specifically to keep everyone on payroll during covid times. I made as much as possible and saved it all. I didn’t want to get stuck with a 1-2 year furlough with all of my money in a 401k. So my savings account grew. And grew. And grew. My “emergency fund” could now last me nearly 3 years on my current expense rate, and probably even longer if I really went barebones. I realized it was fucking stupid to have like $30k as an emergency fund when my expenses were $500/mo. I decided to invest the majority of that in index funds. I finally realized I was putting 2-3k/mo into my brokerage and needed to up my 401k contribution. Currently I sit at a 50% contribution to my roth 401k. This allows me to contribute that same 2-3k/mo to investments, with enough take home to cover my expenses.

Dogecoin. Wow. I mined dogecoin on my computer back when it was created in 2013/14. Had 150k doge. Converted it to Bitcoin in 2017 when it was getting close to $.01. Look at it now lol

The future:

I don’t have a desire to have the standard American lifestyle of get married, have 2.5 kids, live in the suburbs, etc. I would much rather spend most of my time traveling, seeing new things, meeting new people.

Student loans are deferred until September. Ideally once they become active again I’ll pay them off in full, unless the government decides to erase some of them. Its only $6k at 3.5%.

Ideally this summer I will reduce how much I work and take time off to enjoy the good weather, my travel benefits, and easing covid restrictions.

I am actively looking for a new job as I would like to relocate to another area of the US.

I realize this is Financial independence, where people generally want to retire early. I’m not sure I want to do that. I really like what I do. I get to go on vacation all the time, whether that’s during work or when I have days off. Its pretty easy work for the most part. And when you’re old it pays really well as you have seniority.

My long term goals are pretty simple. Have a smaller house somewhere west of the Rockies or in Hawaii. Be 100% electric, solar panels, battery backups, electric car. Have a big garden with all sorts of fruit trees and vegetable plants. I’m kind of a hippie at heart. Own a small airplane where I fly around the US on my days off.

Overall, I’m proud of my accomplishment. It’s nice knowing I now have a nice nest egg to always fall back on in the event I get laid off or something. I think I need to reduce my savings rate/work less and have more fun. If you made it this far, thanks for reading. Would like to hear your thoughts :)


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