8 Years Ago

Eight years ago I had just graduated from college. I felt lucky because I actually had a full time job waiting for me when I graduated. I had always wanted to be in the army and ROTC (Reserve Officer Training Corps) was my route in. I was awarded a two year scholarship which not only paid for my tuition and gave me a monthly pay check as a college student. The scholarship also guaranteed me active duty. Believe it or not but back in 1995 when I was freshman, active duty assignments in the army were extremely competitive to get. By 1999, when I graduated, active duty was not as competitive. How times have changed.

Three days after graduation my car was packed and I was headed to my Officer Basic Course for training. For the first 5 ½ months of active duty I was being paid my salary as a 2nd LT and also a monthly stipend equal to about an additional pay check to compensate for my in transit for training status. I felt rich..Honestly…I had gone from a college student to collecting what felt like a huge pay check three times a month. My living expenses were also extremely low. The army covered just about all of my living expenses including housing. For me this was a small two bedroom apartment just outside post. They also offered cheap alternatives for eating etc. At the time I had about $8K to my name made up of a checking account and a fidelity brokerage account. I started to quickly pay down my car loan which was in my parent’s name. My parents agreed to pay my student loan for the first two years of my in state tuition. My parents were nervous about me being in the army but were thrilled that the army had paid for the last two years.

With the army paying for my housing, giving me a salary of about $900 dollars take home pay twice a month and an additional stipend of $900 more dollars I felt in great shape. $2,700 dollars a month in take home pay and next to no living expenses. Within two months of being on active duty I had signed up for a Roth IRA and set up automatic payments to max it out. I also set up automatic payments of $150 dollars to contribute to my brokerage account. Within the next few weeks I remember realizing that I had a lot more room within my budget (remember I was totally new to the real world…well the army). I gradually increased my automatic savings or would manually transfer money over to my mutual funds. My brokerage account began to grow. While other young officers were buying new clothes or fancy cars I was watching my savings grow. I was hooked.

If I had it all to do over again, I think I would have focused more on building up a large cash savings for an emergency fund. However, during 1999 it was hard to ignore the gains of the stock market.
Overall, I would say looking back 8 years ago; I had a huge advantage of having an immediate job after college and one that paid relatively well. I also had supporting parents who helped cover college costs and an Army scholarship that chipped in a huge amount. What I remember most was the excitement I had over seeing my brokerage account increase on a monthly basis. It was during this time that I wrote down that I wanted a 6 figure net worth by the time I was 30 years old. At the time I was quickly crossing from $8K to $10K. The hardships of the army helped me save more money. I was deployed or in the field training for over 50% of the time I was on active duty. While deployed I had the advantage of not paying federal taxes and receiving hazardess duty pay. During one 7 month deployment I only spent $2,000 the entire time I was away…and that included my plane ticket home to see my family. The rest went into my saving account or mutual funds.

Why I'm Saving

Why I’m Saving
A few years back when I was in the military one of my Sergeants compared being in the army to being in prison…He had a very good point. First of all we were standing on a hill top in a third world country under very difficult conditions. He quickly ran down the list of, we don’t eat what we want, sleep when we want, wear the clothes we want, or basically do anything we want…He wasn’t complaining, in fact he was one of the most pro Army soldiers I ever worked with. It was just how he looked at it. It was hard to argue. I think I said something like, “yah, but we have guns.” We had a good laugh.
Bottom line was that he felt like he was in prison because he had no choices. This really stuck with me. During my time in the military I learned so much from the people who were on my team.
Although I would never truly compare my life to someone serving hard time in prison I still think about what he said to me that day. By all accounts I have a great job. I have a boss who loves me, pushes for promotions and gives me large raises when he can. But I still don’t have the freedom of choice on any given day. I have to go to work to get a paycheck. I don’t get to wear what I want or keep the schedule that I want. I often have to jump on a plane at a moments notice to attend meetings putting my entire life on hold until I get back. Again, I have a great job but I don’t have the choices that I want. That is why I am saving. I don’t want money... I just would like to have more choices in my future. Maybe take a job that truly inspires me instead of a job that pays me the most amount of money...The list of choices seems endless. It would be nice to have a few more in my life one day...

My Financial Strategy

A few things about me…In my daily life, I typically don’t enjoy details. I tend to gloss over pretty quick. I like broader strokes and concepts. This is where I excel. I run my financial life much in the same way. Also, from the time I was very small I was a saver. I always asked my parents for singles because some how I thought it looked like more money. I’ve had a fidelity account since I was about 16 years old (thanks dad). I must admit I did have a Legg Mason account for 2 years but have since moved back to Fidelity. I enjoy listening and reading about single stocks but rarely act on any of this info. I dream of one day being a day trader of such but have enough of an understanding to know this takes a lot more time than some late night infomercials admit to. A key moment in my life was first reading about compounding interest. If I remember correctly I was in middle school. From a very young age I understood this concept of compounding interest and it has made all the difference.

So here is my strategy (1) starting early is one of my strategies. I’m saving as much as I can now so it will have the biggest impact on my life (and brokerage account) later. Also, (2) making up for my lack of Warren Buffet stock picking skills by sheer volume of money saved. I want to make up for my projected smaller rate of return by saving more money. I can control how much I save way more than I can control if a small cap stock will triple in the next 6 months. (3)Being disciplined. I am the king of delayed gratification. Discipline is on my side I must admit.

For most of the past 8 years I have decided how much I wanted to save first and then lived the rest of my life with what was left over. Most people do it the other way. I am merely going to try and use my strengths to my advantage in order to meet my goal.

Over the last two years, my wife and I have seen a huge increase in our net worth by using these three basic strategies. I hope you enjoy my posts and following me on my journey.