Any long time reader of this blog will know that I came to the Church of Financial Literacy late in life. I was 37 when I finally decided that being a financial idiot was just, well, idiotic. I was a little less than two months shy of my 38th birthday when I made the discovery that financial independence and early retirement were things mere mortals born without silver spoons could aspire to.
Even though this will be about as much fun as getting my teeth pulled by an enthusiastic monkey wielding a pair of pliers, for your amusement let us review some of my doltish financial moves:
- I lost track of my investments in India and declared them all wrong on my U.S. tax returns. I ended up having to appeal to the IRS for amnesty under the Streamlined Domestic Offshore Procedures (SDOP) program and the whole infernal mess cost me over $12,000.
- When I moved to this country at age 30 my Net Worth was just shy of $60,000. I had been working as a software developer for nine years at the time.
- Outside of my 401k, I invested nothing from age 30 to age 37. What I did not spend piled up in a Bank of America savings account, losing value while the stock market experienced a massive bull run.
- I spent altogether too much time and money on Amazon. Between 2008 and 2016 I ordered 1,427 items from Amazon, and before you ask, no, the vast majority of those were not consumables like toilet paper and coffee.
- I invested in my company’s ESPP plan, but never bothered to sell when the shares were purchased. The result? Instead of locking in a sweet 15% gain every six months, I frequently lost money when my company stock took a nosedive.
I could go on, but I won’t, because flogging a dead horse is only fun if you are a zoosadist, and while I may have my flaws, that ain’t one of them.
Cut to now. I am a few months shy of my 39th birthday and I am on track to be in a place where I could retire by the time I turn 42. How is such a rapid turnaround of fortunes possible? I’ll tell you how. Though I did make more than my fair share of financial blunders in my misspent youth, there were also some key things I got right. Some of these things were intentional; most I just lucked into. Without further ado here is the list of moves that can save your financial ass even if you are as big of a dolt as I was.
I acquired no consumer debt
I was stupid, but I was never quite that stupid. I always paid off my credit card in full. I have the societal norms of my country at the time (India) to thank for this I suppose. Credit card debt was simply unheard of. I knew nobody who carried a credit card balance. I knew nobody who knew anybody who carried any credit card debt. I knew nobody who knew anybody who knew anybody…..well, you get my gist.
Credit card debt was just societally unacceptable, and I am ever so glad that I never ended up throwing money down the black hole of credit card interest and fines.
I didn’t rush to own a home
While I toed society’s line as far as credit cards went, I staunchly resisted the rising chorus of voices that told me that I had to acquire property. By the time I was around 27 years old, I was one of two people in my social and professional circle who did not own any property. The pressure was enormous, but I held firm. I’d like to claim that my resistance was based on number crunching. It was not. It was based on a feeling of acute claustrophobia when I imagined the millstone of property tied to my neck. Whatever the reasons, in hindsight, this was the smart move. I worked in 3 different cities in India before I moved to the U.S. The fact that I owned no property made it easier for me to pursue career opportunities, and eventually, easy to pack up and move across the ocean.
Not only did I not own a home, I refused to purchase furniture because that meant that I couldn’t pack up my worldly possessions into a couple of boxes and set forth whenever I pleased. Until I moved to the U.S. I slept on what was a comforter that my mother had used when she was in college. I had some cushions to sit on in the living room. No dining table, no chairs, no couch, no entertainment unit, no T.V.
Together with Mr. BITA, I finally bought a house when I was 34 years old. And yes, we do have a couch now. And a bed.
I chose a degree that resulted in high paying jobs
Chose is a strong word. Stumbled into is more like it. I’ve written before about how I ended up studying computer science. The short version is: I grew up in an environment where the only two acceptable career choices were to be a doctor or an engineer. The year I graduated high school admissions to medical colleges in my state were delayed due to some workers striking, and just like that I found myself enrolled in an engineering college.
I cannot emphasize enough the beneficial effects of making a higher than median salary. If I had to choose one reason why I will be able to be financially independent in my early forties despite being as financially savvy as a gnat for most of my life, this would be it. A solid living can compensate for a myriad of sins.
I focussed on my career
One good thing about not knowing in my twenties that there was a chance that I could retire early is that I did not view my career as something to escape from. It saw it as something that I would need to do till I was old and grey, and so I intended to be as good at it as I could possibly be. This meant that in those early years while I partied hard, I worked about as hard as well. I worked nights and I worked weekends. I was fortunate enough to have some very bright coworkers and I was constantly inspired to up my game. Guess what the side effect is of getting to be pretty damn good at your job? Yep. You make more money. In my case it also led to me being given the option to move to the U.S. office – an option that was on the table only for the top performers of the company.
Once I moved to the U.S. I had no choice but to focus on my career. The terms of my visa were such that I was not allowed to make money doing anything other than the job that was covered by my visa – so side hustles were out of the question.
I never spent big
While I knew nothing of investing, and spent way more than I should have, I was lucky in that I never had truly expensive tastes.
I bought a lot of shoes (and I do mean a lot. At my peak I would estimate that I owned around 60 pairs), but from cheap local stores in India, where $5 was the average cost, $20 was the absolute high end and only one pair of mine cost that much. I bought a lot of clothes, but for over a decade none were recognizable brand names. I first bought a dress that cost close to $100 when I was around 32 years old. It felt like a shocking amount to spend, and I have spent in that range on a single piece of clothing maybe three times in my life.
I ate out a tonne, but never set foot in a Michelin starred restaurant. I traveled extensively, but never sprung for anything other than coach and never stayed in expensive hotels. I did not buy a car until I was 30 years old, and I’ve only ever owned Hondas or heavily subsided electric vehicles. I’ve never hankered after an expensive watch. I own a grand total of one diamond – the one in my engagement ring. You can guess the size of that diamond when I tell you that the ring cost less than $2,000.
I was stupid, but luckily my extremely consumerist urges were satisfied by relatively inexpensive things, and this saved my ass. I made a good living, but I certainly did not make enough sustain an appetite for Gucci, Jimmy Choo, D&G and the like.
I chose a compatible partner
Mr. BITA was as financially unsavvy as I when first we met. Yet I assert that I chose my partner well. I chose well because despite all of our superficial differences, at the core we are very similar people. We hold the same things dear. We think about problems and solutions in much the same way.
This means that when I finally gained financial enlightenment, I didn’t have to struggle to get Mr. BITA to buy in. Once I explained the why and the how and the what to him, he hopped right on board. Easy-peasy (squeeze assorted citrus fruits as desired). He isn’t interested in finances the way I am – he leaves the actual investing to me. The important thing though is that he trusts me to make the right money decisions for us, and because he is subscribed to our common dream of being financially free, he does what it takes to keep our ship on course.
As I asserted when I wrote the Five Commandments of Personal Finance, getting your partner to play the same game as you is critical. If you are an ant but your partner is determined to be a grasshopper, your likelihood of success is about the same as Rush Limbaugh declaring that President Obama is the best thing since sliced bread.
Financial Flaws Don’t Have to Spell Failure
If you are young and at the start of your journey, I hope you’ve learned that it is okay if you still haven’t quite tamed your finances yet. With some effort and some luck a few good moves can outweigh a glut of fuck-ups. If you’re older and have a couple of skeletons in your financial closet, I hope I’ve reassured you that you are far from alone.
Onward and upward. I’ll see you all at the finish line.