I May Have Been Financially Lucky

I somehow avoided getting into financial debt traps when I was young and didn't know any better. I guess, I must be lucky.

When starting out my adult life, I could have easily made decisions that could have put my financial future at risk, or at minimum prevented me from achieving financial independence and early retirement. Therefore, I consider myself financially lucky that somehow I avoided early life financial mistakes.

Here are some of my early financial decisions or experiences that could have easily gone the wrong way, but they didn't:

No Credit Cards prior to getting a Real Job
I didn't get a credit card till my last semester in college, and even then it had a $500 limit. Prior to that, no bank would give me a credit card as I had no real job or credit history. 

In hindsight, banks did me a favor by not giving me a credit card at such a young age. I would have surely used it to buy things that I didn't need, and could have easily raked up a big balance without having the ability to pay back. That would have ruined my credit history and could have even prevented me from getting a good job as most employers do credit check.

Picked a Well Paying Career
I picked an engineering major in college and pursued my career in Computer Engineering. It was the top paying engineering career at the time and remained so till today. 

Though, it is likely not by luck that I picked engineering as a major in college. I was interested in computers since middle school when I first got my Sinclair Spectrum 48K and later Commodore 64 computer.

Home computers were not that common back in the 80s. I guess I was fortunate that my parents bought me those computers which stimulated curiosity and interest in my learning of electronics and software in college.

I may have not lasted through a tough engineering major in college and a 20 year long career if it wasn't for the passion I had for technology and computers in general. So, I guess I am lucky that I got an early start on computers.

Married to a Frugal and Goal Oriented Person
I met my wife in college when I was a freshman. We have been married happily for over 15 years, but have known each other for 25 years. Over the years we have become more and more frugal and financially savvy together. We make our plans for future together and then work together to achieve our goals. I wouldn't have retired early if it wasn't for the support and encouragement I received from my wife. 

Like me, she doesn't believe in material things and would rather have great experiences in life than a house full of things. 

I got really lucky that I found her early in my life and probably the reason why I avoided some of the common early life financial mistakes.

Bought an Inexpensive First Car
Cars are usually the weak point for guys, especially when they are young. Getting out of school with a nice job offer, I was ready to go and buy me a nice new car. Many of my friends were already buying expensive cars, so I also wanted to have a nice car to show my success and celebrate entry into an adult life.

Lucky for me, I didn't have much money or credit to buy an expensive car or any new car for that matter. All I could do was lease a car based on the offer letter I had from a big tech company. 

A local car dealer agreed to lease me a car solely based on the job offer letter I had. I literally had to show the offer letter to get approved for a car lease.

I ended up getting myself a brand new Toyota Corolla. The car lease was for three years and it cost me $259/mo. It was an expensive lease for a Corolla. I didn't bother to read the lease contract or tried to negotiate with the dealer for a lower price. I just wanted a new car at any cost.

Nevertheless, I ended up leasing the car for three years. During those three years, I absolutely hated having to make those monthly payments to the bank. I learned that even with a decent starting engineer salary, after paying taxes, rent, utilities, and food, there was hardly money left to pay a car lease of $259/mo.

I moved to a cheaper apartment and started to save money. The desire to get out of the car lease motivated me to save money. In three years, I saved enough money to buy the car from the bank with cash at $1500 less than what the car was worth at the time. Bank was happy to sell me the car at a lower price than the lease residual value because that saved the bank the cost of having to resell the car.

I feel lucky that I leased a car and didn't get into a long-term car loan debt. Leasing a car taught me how to save for a goal and also not to buy something that I couldn't buy with cash; no matter how badly I want it.

I never ever again leased or financed a car in my life. The experience taught me value of saving and knowing what one can afford.

Bought a Small First House
When the time came to buy our first house, my wife was still in grad school and I was the only one working. Even though, I had good income and could have bought a bigger house, we decided to go for a small 1300 Sq Ft older house. 

Because of the small house, we had enough saved to pay for a good down payment and keep the monthly mortgage payments low which gave us enough cushion to save for the future.

We didn't have to buy any new furniture either because there wasn't much space to have too much stuff in the house, or our old furniture from our apartment was enough for the two of us.

Thankfully and luckily, we didn't stretch ourselves when buying our first house as many first time buyers don't realize there are many additional hidden costs of owning a house that are not obvious at first. 

Moved to Inexpensive State
Living in California was super expensive. From our house and car insurances to just about everything including taxes were pretty high. After living in California for seven years, both of us wanted to head back to Pacific NW where we first met.

Luckily for me, I worked for a very big high tech company that has a major presence in Oregon and was able to transfer me to an equivalent job at no cost to me. I was also high enough on the grade level that I got a very nice relocation package from the company that basically took care of all our moving expenses including selling of the house and providing temporary house at the new location.

Coming to Oregon was like getting a big raise. Same salary, but we were spending way less than in California for almost everything from buying a house to getting insurance and utility bills etc.

I feel lucky that we made the smart decision to move to Oregon and didn't stay in California for too long.

We now own a nice house in Portland Oregon and because of the recent influx of people to Portland; our house has greatly increased in value. We have been in our house for over 10 years now and love it living in Oregon.

Didn't Catch any Expensive Habits or Hobbies
During most of my engineering career, I was too busy with work and had no time for expensive hobbies. Though, being a computer engineer, I liked to build computers for myself using latest greatest hardware. It was somewhat expensive, but luckily I didn't do it for too long.

As for habits, I have never smoked in my life. Also for some reason, I didn't really develop a taste for beer or wine. I can drink in social settings, but not something I enjoy doing on my own. My wife is the same way. Therefore, even if we go out to eat we hardly ever buy drinks. It saves us quite a bit of money. 

No smoking, no drinking, no crazy stuff, I guess you can call us a boring couple...

Stayed Healthy

We are fortunate that over the years neither of us had any serious medical condition or sickness. However, my working in a high stress environment for nearly 20 years was starting to show signs of health problems in the form of migraine and few other stress related conditions.

I was lucky enough to see the signs and make drastic change in my life by leaving my job and stress behind.

Now, I exercise everyday and live a low stress life. My migraine and stress are gone for good.

I guess I am lucky that things worked-out well for me during all these years, and I did not get into any major financial issues, or didn't make any big financial mistakes when I was starting out young and naive.

Comments

  1. Great post, as Dave Ramsey says, personal finance is 80% behavioral and 20% knowledge. Just practicing great habits like you mentioned above can get someone over the line to FIRE. I'm shocked at how many people just say they want to get rich but never take action to get rich!

    ReplyDelete
  2. Thanks, yes one has to take action to change their financial situation. However, they also need their spouse and family to be on-board to stay on track.

    ReplyDelete
  3. Congratulations on retiring early, although I think you should've tried to figure out a way to get some sort of voluntarily separation package after so many years of service to the company.

    I started as an engineer and spent 6 years before transferring to a program management role and am happier for it. I still enjoy my work, but my advice to young kids thinking of choosing an engineering career is that if their goal is to make lots of money, then choose finance in wall street unless they love engineering and think they can become great at it. You'll be stressed for 10 years at least and work like a slave in Wall St, but can walk away easily with several million if you decide to retire early or change careers.

    ReplyDelete
  4. Thank you :)

    In one of the open forums, somebody asked the question to management if they can get VSP when they are not impacted by the layoffs. They were told "No, we are not going to pay people to leave on their own."

    VSP or no VSP, there is great satisfaction in being able to walk away at your own terms.

    Great advice to young kids, engineering careers are not what they used to be unless you really love it and start your own company and sell it to the big guys for hundreds of millions of dollars.

    I am finding finance and accounting to be more useful and applicable in life than engineering.

    ReplyDelete
  5. Wow, that's corporate America for you. Doesn't surprise me at all. I read your marriage and high tech career analogy post, so the analogy I would use for severance is that no matter who's at fault or the reason for separation, I'd fight like hell to get some sort of alimony/settlement if I've put at least a decade into the marriage/company whereas for 2 to 3 years, "hey, no hard feelings it's not a good fit & have a nice life" attitude.

    ReplyDelete
  6. I like your marriage alimony/settlement analogy. I didn't think that way when I was leaving, I just wanted out and start my new life as soon as possible.

    ReplyDelete

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