My Path, Part I: The Early Years

Compound Interest

I started pursuing financial independence in the mid-00s, before it was cool¹ and before I knew it was a thing.

I started working after college at the tender age of 22. Suddenly, I had excess money for the first time in my life. I happened to read The Little Book of Common Sense Investing by Jack Bogle and learned about compound interest and index funds. Between investing and a nice bed, I knew investing was the obvious choice. It wasn't necessarily the compound growth that grabbed me, but the automatic compound growth. My money would work for me and make even more money. Heck, I might even become a millionaire!

Not knowing who I could talk to about my money ambitions, I searched online. I found Get Rich Slowly and I Will Teach You To Be Rich. I enjoyed the anecdotes, but I quickly absorbed any lessons I could glean and stopped visiting soon after. I listened to Dave Ramsey's podcast every day, not for his advice, but for the troubled callers' stories and drama. Those cautionary tales fueled my resolve to accumulate wealth.

Fresh out of college, I was earning $40,000 ($60,923 in 2024) and saving ~$20,000 ($30,461 in 2024) per year in a MCOL city. I cut every unnecessary expense possible: travel, fancy food, car, etc. I'm kidding, I never spent money on those things to begin with! I knew that $1 saved today would be $3, $4, or even $5 in 20 years, I could go anywhere and eat anything! That's Financial Independence ✊

🎬 Montage of me resisting desserts, biking in scorching heat and torrential storms, cooking every meal, never leaving the country.

Hitting the 100k milestone

It took me six years of saving and investing until I finally broke the 100k barrier. At the end of my sixth year, I had $120,000 ($163,805 in 2024). A short aside on the "100k milestone": This milestone is generally recognized because Charlie Munger said you should do anything you can to save 100k and then it gets easier. Well, Charlie lives in Omaha and he said this back in 2002. In 2023, the equivalent inflation adjusted amount would be 166k. And if you adjust for cost of living, that would be the equivalent of saving 268k in San Francisco. Sooo, my 100k milestone is less than half of what Charlie threw out there as the most important milestone, but whatever, it's mostly psychological anyway.

At this point you might be wondering why I only had 6 times my original savings rate of $20,000 ($30,461 in 2024) per year, wasn't I investing it? Yes, I was. In fact, I was investing much more than $20,000 ($30,461 in 2024) per year, my salary had steadily grown and I was making about $120,000 ($163,805 in 2024). So why didn't I have more?

Shortly after I started working, we entered the Great Recession. In that period, my portfolio lost half of its' value. After six years, I had less money than I had put in to the market.

Compound interest, my ass.

Although the results were disappointing, I never stopped shoveling money into the the furnace of the compound interest engine. Mr Bogle said this might happen and not to panic, so I didn't.

Moving to the land of sourdough and fog

In my late-20s, I decided to move to San Francisco for more opportunities and fun. My pay didn't increase, but my expenses immediately jump. I started spending about $40,000 ($52,722 in 2024) per year, mostly due to housing. My rent went from $700 ($923 in 2024) for a room in a spacious two story modern townhome to $1,500 ($1,977 in 2024) per month for a 300sqft 1930s era studio. I was still able to invest about $45,000 ($59,313 in 2024) per year.

Maybe it's the city and the sense of possibility in the air, but I started spending more on wants. I went out more, traveled comfortably, bought some clothes. Instead of always thinking about life in the future, I started focusing on the present. Life in the present got better with new experiences and memories. Life in the future is life in the present, if you think about it. Don't think about it too much.

The decade-long bull market run was just getting started and I had over $200,000 ($263,612 in 2024) invested. I also got lucky with some private startup equity liquidity. The extra $150,000 ($197,709 in 2024)² almost doubled my net worth, totaling $350,000 ($461,321 in 2024). My take-home pay during this period never exceeded $80,000 ($103,638 in 2024) and I did not have access to a 401k, but I was content with my progress. I was definitely on my way, confident that I could retire in my 30s.

To be continued in Part 2.