My Steps to Getting My Money Working Harder For Me

It takes money to make money, no real secret.  If you double your money from $1000 up to $2000, you are still having to work harder for your money than it works for you.  Having say $800,000 and getting a 20% return brings you up to $960,000. At this point your money is probably working harder for you and doing all of the heavy lifting.

The following are the 5 stages I went through to get my money working harder for me, than I have to work for it.

Stage 1- Beginning Your Journey

During the first step, you are probably finishing college, landing your first job, paying college loans, and adulting.  This is a crucial stage for anyone wanting to hit Financial Independence or Retire Early.  You have to set the habits that will form your FIRE life.  For me this first stage started while I was still in college.  In 1999, I decided I wanted to become a millionaire as soon as I can, pay off debt, and set up a comfortable lifestyle for later in life, so I could do whatever I want.  From ’99 to 2001, I would finish my undergrad in 2000, work part time while getting my masters and complete that in the summer of 2002.  The accumulation wasn’t much dollar wise, but seeing the YOY increases were highly encouraging.  I was age 20 starting out in this stage and 23 at the end.  Towards the end of this step, I had already decided I wanted to accumulate more income producing assets versus assets that depreciate.  Income producing assets make me money.  Assets like cars, shit laying around the house lose value over time (and cost money to maintain).

Stage 2- Beginning to See Some Results

At this stage, I was a couple of years into my first real full time job after finishing school.  I made the conscious decision to not live a fancy lifestyle, wanted to max out my 401(k), and Roth IRA, and sacrificed living in a cool apartment or buying a fancy home, in lieu of buying a modest $45,000 condo that reminded me of home (New Orleans).  It wasn’t the worst part of Dallas, but it wasn’t located in the best part.  It checked off all my requirements, close to work and all the best parts of a major city, quick drive to work, was highly affordable (I didn’t want to lock up my money in a home), and allowed me to max out my retirement account, Roth IRA, and sock away money in a brokerage account too.  It was a starter place to live and I wouldn’t be there forever.  During this stage from 2003-2007, I was age 24 and finished out at age 28.  I saw healthy growth on my net worth during this stage and peaked in 2007 at $195,985.41.  I had yet to see a year of a decrease in my net worth and was on track to retire at age 35.

One thing I would have done differently during these years, go out to eat less.  I spent a shit ton of money going out drinking with friends just about every night.  It was fun, but expensive.

Stage 3- Recession- Fight or Flight

We all know what happened in 2008.  Unless you were short MBSs, you took a beating.  This was the first year I had a drop in my net worth of almost 25% (-$47,456.83) and had moments of doubt in myself being able to retire at 35.  I made adjustments, decided I should be able to do it by February 1, 2016.  Instead of giving up, I charged ahead and continued to by into the market dips.  It was a gut wrenching time, as I continually put money into investments, saw big drops, and continued to plow most of my paychecks into the market.  I developed a “fuck it” attitude with my money, that I still have till this day.  I would continue to throw money at the markets until the problem was fixed.  The drops didn’t seem logical to me.  I could have given in, cut my losses and parked my funds in money markets like many did, but I was determined this would be my make or break time.  Stage 3 was in 2008, I would turn 29 that year, and closed the year with a drop in net worth down to $148,528.58.  The $47,000 loss felt huge to me at the time.  This stage would technically be from August 2008-March 2009.

Stage 4- Money is working with Me

During 2009-2012, all the years of investing were finally starting to look bright.  I was still working hard for my money, but the money was working hard with we.  It was like an equal partnership forming with me and all the little George Washington’s.  I was between the ages of 30 and 33 during these days and in 2012, I finally had my first year of all the little George Washington’s working harder than me.

During this stage, I started tracking my spending.  Not sure why, but I should have started earlier in life.

Stage 5- The Payoff.  Money Works Harder for Me

From 2013-Now (January 31, 2018) my money has been working harder for me than I do for it.  Sure 2016 was a flat year, but I also only worked until January 13th and wouldn’t work the rest of that year.  In 2013, I had my absolute biggest dollar increase of $219,886.89.  In reality, I probably could have comfortably retired at age 35 back in 2015 and been alright, but “just a little more” syndrome kept me from doing that.  Looking back at 2008, that drop in my portfolio wasn’t actually bad at all.

If losing $47,000 in 2008 seemed big at the time, I have to say that I’ve adjusted to the fluctuations in my balance.  September of 2015 I had a single day drop of $40,000.  As recently as February 5, 2018 I have actually had a new 1 day biggest drop of $45,000.  If anything, my comfort level with seeing fluctuations has become extremely comfortable.  This month has been extremely volatile.  What have I done in reaction to the volatility.  I actually had $30k cash, so I threw that money into the drop. That “fuck it” attitude with money again.  To make money, you can’t be afraid to take a chance.

I’m a couple of years into feeling extremely comfortable with life.  When I left work in 2016, I ran into a past manager and told him I was leaving and moving.  He knew about my plans and asked if this was me pulling the trigger.  It was time.  I know during my lifetime, I’ll stand to lose a lot of money in the markets, but I also know I’ll make way more than I lose.

At this stage, a 10% return generates $100k for me.  Compare that to 1999, a 10% return would have only generated $1000.  Not to mention the cash flows from dividends coming in monthly.

Your money will work harder for you over time.  You have to start as early as you can and stick with the plan.  Before you know it, your money will generate not only enough to live of, but more than going to your daily job.  Work becomes optional.

Ironically, I’m coming close to making a decision in the coming months on what I will do with work, again.  Should I stay or should I go.  I’m sorting that out on a day to day basis.  We’ll see what happens.

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Readers Comments (1)

  1. These are great levels. I wonder what the next levels will do in your life and comfort.

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