By Mr and Mrs MoneyPlant
I hope you enjoy reading My First 100k.
Typically, this isn’t how most ‘I’ve saved lots of money’ articles on the internet start off, for starters
- I wasn’t counting and saving money since I was 5
- I didn’t own my first share after I learnt to read, and
- I didn’t start my first job until I was 18 and had already finished school
Instead, I enjoyed spending time with my friends, playing sport, exploring the beachside and riding my Kmart bike around town. I had NO idea about any of that money stuff, and that’s perfectly ok. In fact, If you started working before you graduated high school, then congratulations, you’re already closer to your first $100k then I was at your age!
$-6000 | JANUARY 2009
It all started when I finished high school. I managed to get a job nearly straight out of school on a IT Traineeship ($12 per hour). I was relying on mum dropping me off to work for the first few weeks, which lets face is, was not ideal! I needed a car…
We looked around and ended up buying a second hand 2001 Toyota Corolla. To pay for it, Mum and I ended up getting a $10,000 joint personal loan. The car was $6,000, and mum kept $4,000 for herself. I had no idea what I was doing, but this ended up to be a really important lesson in debt, and poor financial habits.
The first 6 months of working, I saved hardcore to pay off my car loan, which ended up being more than $6,000 (Turns out the interest rate was super high. I’m not sure how much I ended up paying, but it was probably $6,500.
We went into the bank and I paid it all off in one fell swoop…well that was the plan, however turns out Mum spent her $4,000 on stuff, so the loan still had $4,000 outstanding. I paid all the interest until that point as the bank wasn’t able to work out my portion, so that sucked, but they promptly removed me from the loan after I deposited more than my fair share, and the loan was switched over solely into Mums name. Phew, glad that was over. This was an important lesson.
- Interest rates matter, I wasn’t expecting to pay off another $500 more than what I borrowed.
- Debt sucks (See point #1)
- Having poor financial discipline can really hurt (Mum eventually paid it off… but I don’t want to know how much that initial $4,000 spending spree costs her in the end)
$0 | JUNE 2009
STARTING FROM ZERO
6 months after finishing school, June 2009, I had paid off my car and was now at $0 wealth. Having my own car meant I could start driving around independently and as it turns out, cars are pretty expensive! (That’s a story for another time…)
I remember saving hardcore and paying my way. As soon as I paid off the loan mum wanted board money, that seemed fair as I was living at home, I was working for $12 p/h still and most of money went straight into savings. My only expenses at this age were:
📱 Mobile Phone (Pre-Paid)
🚗 Car (+Runnign costs)
🏠 Board to Mum
It was definitely tough in the early stages, most of my friends had jobs and were buying all the gadgets they weren’t able to get when they were younger, but I was pretty curious and interested to see what this whole ‘saving money’ thing was about. I didn’t have any peer pressure to buy the latest phone (this was before Instagram, so the culture was weirdly different from today)
I was working hard, saving and learning all about how to overcome my crippling shyness (Did I mention I was so shy that I couldn’t order my own fast food? How embarrassing, but we all start somewhere I guess…)
$700 | JULY 2009
MY FIRST INTEREST PAYMENT
The first of July 2009 came along, and I eagerly logged into my account to check how much the bank paid me in interest.
After saving up for an ENTIRE month, forgoing all the luxuries and fancy new gadgets……$1.21!?! Wait, what?
Honestly, I was pretty disheartened. I was hoping for some serious cash. I guess I thought I would get paid more for such willpower and sacrifice…I had to readjust my expectations! Still… I was curious at this point, $1.21 was better than $0, I wonder much next I could get paid next month if I kept at it for another month…
I had a choice to make. End it now and enjoy the $700 spending spree that I currently had in my account, or keep sacrificing, saving, and seeing what I could do.
I chose the latter. A choice that I can’t thank my past self enough for making. Turns out, this choice was the best financial decision of my entire life.
$28,200 | DECEMBER 2010
It took nearly two years and was the slowest, most gruelling part of the entire journey. I setup automatic bank transfers from my everyday account to my savings account that occurred a day after payday as a fixed amount, and I lived on the rest. Out of sight, out of mind!
It’s worth noting another important lesson I discovered, it’s always in your best interest (Hehe) to shop around for the highest interest rate on your savings account, as the more interest you earn, the faster your capital grows!
I recorded how much interest the bank paid me every month. Remember the first payment of $1.21? Well…. after accumulating $25,000, I was earning almost $100 PER MONTH, Winning!!!!
The first graph shows my total wealth that I updated at the start of every month, there are 23 points, each representing a month.
The second graph shows how much interest I was paid every month. Total return over the entire 24 months was $630, not too shabby.
Up next was the big $50,000… Halfway there!
$51,200 | OCTOBER 2011
THE HALFWAY MARK
I just turned 21 at this point and was moving back to Brisbane after living in Toowoomba for nearly a year or so.
$50,000 in the bank and moving in with my best mate, things were looking pretty good.
How long did it take to hit $50k?
The first $25,000 took 23 months, and the second $25,000 only 10 months, so 33 months to get to $50k, about 3 years! This progress was really encouraging, and it gave me a jolt of inspiration to keep going towards the big 100k goalpost, which honestly still seemed like a pipedream.
I was continuously earning interest every month, and that was going along steadily, but as my savings account was getting larger, I wanted to start looking at how to invest as opposed to having my cash sitting in a savings account, so I began researching the share market.
$66,029 | JUNE 2012
Becoming a shareholder
I had put off buying shares for a long time, more then a year or so because the idea of investing frightened me to death! All I ever heard was how much of a gamble the share market was, and I felt it was this mystery box full of risk. So I did what any young guy would do, I did a risky thing and brought a share! haha
I registered with Commsec, and brought my very first share on the 18th June 2012… for a grand total sum of $1,658.95.
Wow what a nerve wrecking experience that was.
Tip: Once you buy a share, stop refreshing the screen every 5 minutes for the next several days, turns out it:
- Doesn’t matter in the slightest, and
- Doesn’t help you get a good night’s sleep (Seriously, what was I even doing spamming the refresh button?)
We all have to start somewhere though, and after the 1st, I brought a 2nd, and a 3rd. By the end of the month I had dropped around $11,790 into shares across 6 companies, which was a decent chunk of my cash, Crazy, right?
By the way, I had NO idea what I was doing. I actually just looked at the bundle deals that Commsec offered and picked companies I had heard of, not a lot of strategy (well..none to be honest) but hey.. I was just getting started, so that’s ok…eac
MY OLD STOMPING GROUNDS
At this time, I was nearing closer to $100,000. Around October 2012 I hit the $77,000 mark, so the end was in sight! This period was quite valuable for me, not financially, but as personal growth. I was still living with my best mate and my girlfriend at the time had just moved in. I was working in Education/IT at a job I really enjoyed making $39,000 a year, when out of the blue… I recieved a phone call from an old employer asking me to move back to my old hometown to run the IT department of their small design practice for $49,000 per year (That’s a 25% payrise).
My family were still living back in my hometown so the transition would be super simple, and I would be earning way more, win! Being so close to $100k I was pretty financially driven and decided to take the money and move away from my friends/girlfriend, so far so good!
$100,000 | MAY 2013
I FINALLY HIT THE BIG $100,000! GRAND TOTAL 51 MONTHS
At the start of May 2013 I sat down to update my spreadsheet as I had since 2009, over 4 years earlier. I logged into my bank account and updated the figures like I had every month since I started and then boom, it happened… the big $100,00
What about the total amount of interest and dividends? $7,695 (Not a bad outcome considering my first interest was $1.21) You may be thinking… Yeah that’s easy for someone who probably had a good wage, right?
Well fortunately for you, I’m a bit of a data nerd and I went back and had a look at how much I actually earned over that period.
HOW MUCH DID I EARN?
Over this time, I earned $146,000. For those thinking about tracking your net wealth, I highly recommend keeping track of as much as you can early on, it took… a very long time to go back through several years of income statements to work out my monthly income!
Out of the $146,000, I paid a bit of tax (Not much as my yearly income averaged was less than $35,000 so my tax bracket was pretty small. I saved/invested ~$90,000, made ~$7,600 in returns, and over 5 years, lived on the rest $60,000 total.
How did I live so frugally? Well… This is where it gets controversial. I was a major scourge. I paid everything with coupons or discount deals; I learnt to cook so I could eat on the cheap, If I went out with friends, it was at their place or BYO at ours. I kept healthy by cycling ($250 road bike) and running; I had no memberships to anything and my phones and gadgets were always 2nd hand from Gumtree (Before FB Marketplace was a thing)
There were definitely some benefits to cost cutting, especially when I was younger, but I wouldn’t recommend the approach for the rest of your life as my quality of life has significantly improved by spending more on travel, experiences, and comfort.
Also, it’s worth noting here that I hadn’t learnt a valuable lesson. There is a difference between being frugal, and being a cheapstake. Frugal is about being efficient and minimal with your spending. Being a cheapstake is avoid paying a fair share of costs or expenses. Unfortunatley, I was more a cheapstake. No-one likes a cheapstake. So if I could give me 20-something year old self some advice, it would be to pay your fair share and don’t be a financial drain on anyone, be it friends or family.
- My First car (I actually had 3 cars over this period because of non-fault accidents, I was insured so minor lose).
- Moved out of home to Toowoomba.
- First car accident… Cylced to work everyday for months saving for a new one
- Moved to Brisbane to move in with my best mate.
- Enjoyed a week’s holiday to Queenstown NZ (Snowboarding for a week, until I fractured my ankle, but definitely got my money worth).
- Moved back to Bundaberg (hometown) for a 25% payrise.
It was a really proud moment, and yet it felt strange …… when you have $100,000 in cash and shares, it’s not really something you announce to the world to celebrate with your friends, so I kept it quiet, smiled to myself, and wondered how soon I could hit $200,000……
There are two types of people who read this.
- Those who say “That’s really encouraging, I’m going to kick start my finances” and…
- Those who say “Sigh… I’ll never be able to do that”
If you’re in the first group, DO IT!
If you’re in the second group, don’t compare your current situation to others, compare it to your past self, and be happy and proud of ANY progress, however small, as progress means you’re facing the right direction, and that’s all that matters 🙂
Building Wealth is a marathon, not a sprint