This is a chronicle of how an ordinary-but-privileged American achieved financial independence. It’s a long read, so grab your coffee and settle in.
I stared at the white boxes of the Google sheet I used to calculate my finances. It didn’t feel real.
If I didn’t work for the next 10 years, I would be okay.
By 30, I managed to save over half a million dollars. Now, a few years later, that has compounded even more. I realized that I had achieved some version of “FIRE,” shorthand or the financial independence, retire early trend. This amount of money – while not extravagant – could sustain the rest of my modest life. How did a regular guy like me pull this off?
Context: I didn’t have rich parents or went to an elite college. I grew up in a single mother household that qualified for school lunch vouchers. I studied Economics at UC San Diego – a decent school but not elite. My first job at 22 paid $60k/year as a business analyst. Switching careers into UX design was more lucrative, but I never made a ton of money by Los Angeles standards.
Those are the broad strokes of my middle class background to illustrate that what I’m about to tell you is achievable. Maybe not for everyone, but I know there are millions of others like me. I reached my goals by doing 4 things.
- Defining financial freedom
- Setting financial goals
- Designing my lifestyle
- Saving and investing aggressively
^ Those are anchor links you can click on to jump to those sections, but I encourage you to read top down.
When I really think about it, becoming financially free involved more mindset and habits than any fancy hacks—and I have some unique perspectives to share here.
There will future writeups with detailed tactics and what I invested in. Get on my newsletter to be the first to read. But let’s dive in.
✍🏼 Step 1: First, define financial freedom
Focus on where you want to go, not on what you fear.
Tony Robbins
The typical image of financial freedom might look like sipping on piña coladas on the beach and going to yacht parties. That wasn’t it for me (though send me an invite if you own a yacht).
Before you define where to go, figure out why you want to go there.
Just as I started my working life, I picked up the now-infamous 4 Hour Workweek. Tim Ferriss gave me a model that was so dramatically different from the linear model of working til I’m 65. I saw the possibility of designing my life. I knew that I wanted to enjoy my youth while also creating wealth, and not wait for some fuzzy future to finally have fun.
Fired up, I started defining my ideal lifestyle. I got really specific, from when I was waking up to what my morning routine would be, and even who I would be spending time with.
From there, it was easy to figure out what I wanted financial freedom for :
- Time for the people and experiences I love (I’m still sour about not going to Hawaii with my family years ago because I started a new job)
- Freedom to pursue hobbies like this blog, taking dance lessons or traveling wherever I want.
- Flexibility to stay, change or quit jobs
- Never worry about food expenses like groceries or going out to eat with friends. Yes, get the $10 kombucha!
It’s just as important to note what I left out in that list. I didn’t need to drive a Maserati, wear a Rolex, or own a Hollywood Hills home.
There are a lot more exercises you can do to define financial freedom for yourself, so I’ll just say this: there’s immense power in seeing the possibility of designing your life.
Do whatever you can to expand the surface area of your knowledge and see possibilities. Maybe it is reading a book, getting into the FIRE movement or talking to someone who’s living a life you like. (Psst… if just want to chat, sign up for my newsletter and email me directly.
After I defined what financial freedom meant to me, it was easier to set a specific goal.
🎯 Step 2: Set a financial goal
If you aim for nothing, you’ll hit it every time.
Unknown poet
A lot of people think of financial freedom as having some vague big bucket of money, often in the millions of dollars.
I’ve written before that generalizations hide and specifics reveal. All it takes to get more specific is to do some basic, personal math. Here were my rough numbers:
- How much do I spend on average a month? About $3000. I padded this up to $5000 just to be safe.
- What does that look like annually? $5000 x 12 = $60,000.
- 10 years x $60K = $600,000
$600K was my initial financial freedom number, and I was surprised to have crossed it by 30 – not including the value of my home.
Every time I saved $5000, I considered it buying my future self a month of freedom. This takes the concept of an emergency fund and expands it into a freedom fund. Read about the future self savings method here.
I wanted to have enough to be free for 10 years. The beauty of that timeline is that 10 years is a long time to do nothing. Knowing myself, I’ll probably still work or pursue some income-generating activities in the meantime, meaning that I don’t have to live off completely off my savings. That also means more time for investments to compound and grow.
Depending on who’s reading this, my numbers will feel laughably small (hello Bay area engineers) or impossibly big (remember I live in LA). The difference between those two is lifestyle, which I’ll get into in the next section.
🎨 Step 3: Designing my lifestyle
Wealth is what you don’t see.
Wealth is financial assets that haven’t yet been converted into the stuff you see.
Morgan Housel
Earlier, I said that my numbers for financial freedom could sound big or small depending on who you are. Here were the big lifestyle choices I made so I can have more money left over:
🏠 Rent + where I live:
Living in Los Angeles means dealing with some of the highest costs around, including housing. The way around that for me was to 1) live with people and 2) pick an inexpensive neighborhood.
Even when I could afford it, it was never quite the priority for me to live alone. So I always had roommates to split the cost of rent with. The most I’ve ever paid in rent living in Los Angeles was $1000/month. Rents have definitely gone up since 2015. That’s when I bought a home and started paying a mortgage instead.
👟 Not keeping up with the Joneses
This one was kinda automatic for me: I’ve never been into luxury goods. Save for the Apple products that I use to make a living off of, luxury cars, watches, or clothes were appealed to me. I was also OK buying used and drove my Infiniti G20 for twelve years.
Chasing status is expensive. I decided to look where I’m going instead of looking good. High price tags never made sense to me when I knew I could invest that money instead. I figured that the best way to look good was to stay fit and take care of my health.
Not keeping up with the Joneses is the best way to keep lifestyle inflation down.
Here what I realized: I didn’t have to impress anyone, especially at a young age. Who does a 25 year old need to impress anyway? And if the car I drove or wearing non-brand clothes makes someone want to dissociate with me, then they’re not my tribe anyway.
🍳 Leverage cooking as a financial skill
Cooking saves a ton of money. Since I was 22, I’ve cooked every meal except for eating out a couple times a week (gotta be social).
Assuming at least $15 per meal eating out, that’d come out to $15/meal x 2 meals/day x 7 days: $210/week…and I’m someone who doesn’t eat breakfast. 3 meals could easily be $315.
- Groceries: $60/week + $30 eating out = $90/week
- Weekly savings over eating out every day: $210 – $90 = $120/week or…$480/month
Eating is a variable cost that rapidly scales up if uncontrolled. Cooking is a way to make eating more of a stable cost. Not only that, it’s generally cheaper and healthier for you when you control the inputs that go into your body.
A lot of these habits were built over time and now feel like second nature. So I never felt like I was deprived. Other that investing, I usually spent my money on things that mattered more to me, like travel or taking classes.
Housing, eating, transport…those are some of unavoidable expenses of life. But they’re all negotiable, and there’s a wide range of costs to play in there. Controlling these costs as a lifestyle decision is a core pillar of my financial freedom.
💰 Step 4: Save and invest aggressively
Everything leading up to this step was about developing the right mindset and habits around money. If I didn’t have a financial goal, I would’ve lacked the motivation or clarity to even attempt investing. If I didn’t control my costs or lifestyle inflation, then I wouldn’t have the money to invest.
Investing is where the rubber hit the road for me. There’s a way to become an automatic millionaire. Consistent, set-it-and-forget-it investing.
I had the advantage of a working mom and friends who taught me about 401ks and setting up retirement accounts. I did that as soon as I could at age 22 when I started working. Any place I worked, I would max out the 401k. I’d also maximize the annual Roth contributions every year.
Yes, I contributed the maximum $16,500 to my 401k when I was making only $60,000. My total take home was about ~$2500/month after contributions. Lifestyle decisions – like paying $650/month to rent a room in Orange County when I could have easily paid double – really supported my investing.
Just to illustrate what’s possible for someone today. $19500 (401k limit) + $6000 (Roth IRA) = $25,500/year. If you contribute that over 10 years using average annual stock market return of 8%, you’ll get $424,460. Check out this calculator to see for yourself.
That doesn’t include any employer match or the performance of the stock market, which has been amazing over the last 10 years. Consistent investing alone – even just through work retirement accounts – can make the vast majority of people millionaires in their lifetimes. And I believe most people can achieve this well before 65.
The biggest privilege I had was starting early.
Warren Buffett says that compound interest is the 8th wonder of the world. The earlier you start – and don’t interfere with compounding – the faster you can reach financial independence.
If I did a good enough job in sharing my story, then you’d be left with more questions like:
- What exactly did you invest in? (Index funds)
- Did you invest in things outside of the stock market? (Yes, primarily crypto and alternative investments)
- How does buying a home play into the financial picture? (I didn’t count my home in this equation)
- What happens after reaching financial independence? (Not too much changes)
I’ll be writing follow on guides to answer all those questions and more. To read more about financial freedom, join my newsletter and let’s talk money.