I hadn’t even graduated college yet (CSU Fullerton) when I landed a position as an engineer for a company in Aliso Viejo, California. The pay was decent, and I decided to transition from a full-time to part-time student. With a semester’s worth of classes to take, in the pursuit of a Bachelors degree in Mathematics - Probability and Statistics - I realized that funds were running out fast!
I purchased three suits to wear for the new position and had $5,500 when I started the job in May 2015. After working full-time, and attending college part-time, for 7 months, I had under $3,500 in my checking and savings accounts - December 2015. The next month, January 2016, I actually had about $2,800 total in both accounts. I really needed to make this new position work; there was a lot of financial pressure to succeed, and I needed to start saving fast! I started the job just over four years ago; it took me a year of attending school part-time to complete the Bachelors degree while working full-time. In the end, It took me over 5.5 years to complete my B.A. It was very tough, but I finished the program at CSU Fullerton and graduated with honors.
Here’s where the “real money” gets interesting. All numbers discussed are rounded in my story. During the first year, I was able to sock away $8,000 into my employer sponsored 401K - that’s including the employer 3% match. I also saved some cash to add to my emergency fund which then made it close to $10,000. The year after, I put around $14,000 into the 401K - also including the employer 3% match. I saved even more cash and regret it; I should have been investing more. Two years in, I had right around $36,000 saved.
At that point, I had no idea what an IRA was. I had received a few raises along the way, but was still making well under $100,000. The next year, I wanted to save more. I contributed the maximum amount ($18,000 in 2017) and discovered Traditional and Roth IRAs. I took $3,000 from my emergency fund and contributed it to the preceding year’s Traditional IRA. By doing so, I noticed that I was getting more back from Uncle Sam on my tax return. I immediately took the money that I got back from the return, and some additional emergency savings, and put it into both IRAs for the current year - $2,900 in the Traditional and $2,600 in the Roth.
So, at the end of year three, I had saved somewhere near $60,000 split between a 401K, Traditional and Roth IRAs, and a High Yield Savings account (my emergency fund).
Year four I became even more aggressive. I contributed $18,500 plus the 3% employer match and put my entire tax return, along with some additional bonus cash, right back into my Traditional IRA. In a little over four years, I had saved around $93,000 (including the original $3,500) between all of my accounts. I made a few mistakes along the way and believe that if prevented, the amount would be well over $100,000. I will continue to perfect my technique and will share all of my life-hacks and optimizations in this blog so that others may benefit and grow with me towards one day becoming financially independent.
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