How I saved $130k in 3 years….. and you can too!

Before we get to the super juicy stuff, Julie from Millennial Boss has graciously featured my guest post Working is Expensive. I encourage you to go check it out!

The news is full of articles about the Obstacles to Millennials Saving for Retirement. Millennials aren’t saving enough for retirement. Half of Millennial women aren’t saving for retirement. It’s a pretty gloomy picture.

But I’m here to tell you that not only is saving for retirement not only possible, but actually incredibly simple. I’m 26 and I’ve already saved $130,000 towards my retirement.

The Numbers

I started saving at the age of 23 as a new college graduate with $10k to my name.

It took me approximately 1,000 days to save $120,000. That works out to just over $100 a day. It took me:

  • 4 months to save $15k
  • 10 months to go from $25k to $50k
  • 9 months to get to $75k
  • 8 months to get to $100k
  • 6 months to get to $125k

Looking back at my statements showed me most of my net worth is from direct contributions I’ve made. Only a little fraction is from market gains. Even with minimal help from the market, the compounding interest is starting to add up as seen in the shrinking gap between $25k milestones.

How I Did It

I saved up so much so quickly due to 5 factors: no debt, tracking my spending, shared housing, not upgrading my car, and automating the saving process.

I graduated from an average state school with no debt thanks to a full-ride scholarship, a stint in the Air National Guard, and other part-time jobs.

Now, I realize many of you reading this have already graduated with some student loan debt. Don’t despair! All hope is not lost. Your first priority will be to focus all your efforts on paying down the debt you have. Start a side hustle. Get an extra job. Minimize as many expenses as you possibly can. Throw every single dollar at your loans. There are so many things you can do without a cloud of debt hanging over your head.

Quite possibly the thing that helped me the most was tracking my spending. I use so it’s automatic. I check in a couple of times a month to see how I’m doing according to my budget.

Before I started to really crack down on my spending, it was far too easy to just pull out my card and spend whatever I wanted. Then I started track everything and realized I was wasting money on stuff I didn’t even care about or didn’t need. Only after you start to track your spending will you find out where your problem areas are and work on whittling them down. I had a huge problem with overspending at Target, so now I just don’t go.

My first rental

It seems like such a small thing to get worked up over, but it’s the small changes that really start to add up over time.

The thing that was most surprising to me was seeing how quickly housing added up. My first rental cost me $900 a month. Not too bad…. Until I realized that was over $10k a year. A full 16% of my spending went towards housing! I could’ve used that money for fully maxing out my HSA!

Having a roommate can sometimes be troublesome, but the positive impact on my wallet outweighed the bad. I got a roommate and cut my housing expense to $450 a month. That one small change immediately added an extra $5k back into my pocket for the year. That’s huge.

I also furnished my house through a combination of hand me downs from family and friends, Craigslist deals, and estate sales. I got perfectly great stuff for cheap and saved it from going to the landfill. That was a win for both my wallet and the environment!

Another small change was actually what I didn’t do. I did not go out and buy a new car right after starting my new big girl job. I had to buy a car in college when I hit a deer, so my car wasn’t that ‘old’ to me, even though it’s from the 2005 model year. There was, and still isn’t, anything wrong with the car. Sure, it has 155,000 miles on it. It’s not the newest car in the parking lot at work, and it doesn’t have fancy bells and whistles like heated seats or a bluetooth connection.

My trusty vehicle covered in ice

However, it is entirely paid off. Not having a car payment has saved me at least $12,000 since that’s the level of car I would’ve bought. In addition, since it’s older, my costs are lower when it comes to registration and insurance.

All those little things add up to $20,000 more in my pocket. Since I mostly invested that money, it’s now working for me and earning me even more money.

Speaking of investing, the key to my success was automating the entire process. I made saving a priority and based my budget off that. I have automatic contributions set up for my 401(k), so I don’t even see that money hit my bank account. I can’t spend it if I don’t see it come in. I also have direct contributions taken from my paycheck for my HSA. I am lucky to be young and in good health, so my health costs are relatively low. Finally, I have an automatic withdrawal set up for my Roth IRA from my bank account.

Since I am so young and have plenty of time to recover from a down market, I invest solely in index funds like VTSAX and an S&P 500 index fund with super low fees. Low fees means I get to keep more of my gains, which just like at the gym, I’ve worked hard for and would like to keep as much as possible.

With just a few simple changes, I've set myself up for a very cushy traditional retirement and made early retirement a possibility. The smarter you are with your money early in life, the easier it is to get ahead of the pack later.

What was your smartest money move?


This article first appeared on Fiery Millennials. 

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46 thoughts on “How I saved $130k in 3 years….. and you can too!

    • Maybe 4, maybe 5? Who knows? Largely dependent on the stock market so I don’t place too much stock in the time it takes to hit milestones before I actually do so. It could all go down in a minute!

      I’m so, so, SO glad you started your blog. We need more young people (especially women) sharing our stories so we can all band together and make lives easier on everyone!

  1. Great post, Gwen! I just wrote about how I became a 401(k) Millionnaire, and you’ve taken many of the same steps I took at your age! Keep it up, and you’ll be blown away by the compounding impact in a few years. I suspect you’ll see a year in your late 30’s when the return from your investments exceeds your annual earnings from work. Now THAT’S a great feeling, and you’re well on your way!

    Love your 5 factors, and will reiterate them here: no debt, tracking my spending, shared housing, not upgrading my car, and automating the saving process.

    Great Advice, and proof from your experience that those tips really do work!

    • Thanks Fritz! I’d love to become a 401(k) millionaire too someday! Nice to hear from those who have gone before me that I’m getting started on the right foot 🙂

  2. Congrats on the retirement savings. $130K in 3 years is awesome! I have $120K in my 401K and I have been contributing for 4 years (‘m 26). The key message to young people is to start maxing out retirement early. First day on the job. And if you have a college part time job try to put some money in your ROTH IRA. My brother is 19 and I helped him open up is ROTH IRA last year. He put in $1K. Waiting to see how much he earned in 2016, to make him divert some of his funds during tax time. He has no idea how lucky he is by having me as an older sister! By the time he graduates college he should have a little bit of money put away to help him kickstart retirement.
    SavvyFinancialLatina recently posted…No FI NumberMy Profile

    • You sound exactly like me! Although I wish I had had an older sibling help me out with all this stuff. My stepdad was more the harp on me until I did things just to shut him up style of encouragement. At least it worked – I got an 18 month loan for my first car instead of a longer loan!

      • I didn’t have an older sibling because I’m the oldest but I got lucky. My high school boss mentored me and taught me the basics of personal finance. He helped me open an investment fund in college. I honestly don’t know how much I made, probably not much since I put it in 2008 and pulled it in 2011. But I didn’t lose money and it helped my buy my first new to me car, so I didn’t have to get a car loan. I don’t think my brother realizes what an IRA is (I actually I know he doesn’t) or retirement. Pretty sure he doesn’t even remember he has a small IRA with Vanguard. But in a few years, it will click. Plus, I need him to be financially secure because he and I will be taking care of our parents in their old age.
        Keep hustling Gwen!
        SavvyFinancialLatina recently posted…Goals Recap 2016My Profile

  3. That’s a fantastic foundation and it’s amazing at how easy it can be to scale your net worth as you advance in your career. Avoiding lifestyle inflation / creep while such a simple concept, seems to be amiss to so many in our society. Great job in tracking your spending, this (to me) seems like the clearest way to provide insights and shed light on whether your actions are in-line with your priorities. So much joy in optimization and finding ways to actually reduce expenses year over year… but maybe that is just the nerd in me! Keep up the good work!

    • Thanks Jason 🙂 It’s so hard to say no to, but so easy to say yes to! Especially when everyone expects you to get a fancy car and nice apartment just because you have a good job.

      I think you’re one of very few who enjoys the whole optimization process….. especially since you probably use a spreadsheet to do so hah! Such a nerd. (I say that very lovingly as I do the same thing!).

  4. Wow great job! 130k in 3 years is so impressive! Here I am sitting on a measly 30k haha.

    You’re so well on your way to reaching your goals, and I’m sure soon you’ll have a great rental property that will help you reach that goal even faster!

    • Thanks Vanessa. Just remember everyone’s story is written differently. $30k is still a fantastic number to have. You’re doing a great job!

  5. I’m totally jelly that you started out of the gate with zero debt. That’s CRUCIAL. I, of course, didn’t do that, so our current focus is paying off debt so we can build net worth.

    We’ve already eliminated a $10,000 car loan, $14,000 of credit card debt, financed a renovation in cash, and are now paying off $65,000 of student loans in 18 months.

    But! If we had avoided debt in the first place we’d be able to accelerate our FIRE by several years. 🙂

    Oh well, live and learn, right? I’m 24 so I still have a good chunk of time on my side, thankfully.
    Mrs. Picky Pincher recently posted…A Review of Living On One DollarMy Profile

    • Just imagine what everyone else is thinking when they discover this stuff at 30 and wasted all that time! You might have debt, but you figured it out early and will crush it in no time. Plus, sometimes I’d wish I’d had debt just to lend my story a bit more weight when talking about it. Sometimes people read my story and scoff, “She doesn’t know what it’s like, she’s never had debt!”. I could always go back to school hahahah!

  6. As always, a very well written article.

    I agree with Fritz about the 5 factors of the path to FI. It is great seeing them broken down in simplicity like that, of an otherwise, sometimes, seemingly over complicated process.

    I have never owned a vehicle without a car payment, however starting this month, I have begun paying double payments each month and hope to have it paid off by the end of 2017. This article reiterates great confidence that I am performing the correct steps to FI!

    • This is what I love about this community. Everyone else in the world is telling us it’s impossible, but here we are showing that it can be done.

  7. Hey! Great post. Me (24) and my boyfriend (29) are on track to max out our HSAs, 401Ks and IRAs for the first time this year. We kicked things into high gear part way through last year. We each make between 45k-50k, so maxing those accounts is fairly significant. We’re waiting to see if we can save more on top of this. If we do have more savings, do you have any suggestions for where that money should go (taxable account?), and if not, then where should our annual raises go?

    One thing I get hung-up on is the fact that these buckets are “old people money”. I want to retire by 40 (at the latest :). Where do you save the money to bridge that gap? Is there any concern for saving “too much” in those traditional retirement funds?

    • Taxable accounts are the next best thing if you’ve maxed out all your retirement accounts. There are multiple ways you can save for ER: 1) max out your pre-tax accounts for a few years and then shove everything you can into a taxable to live off of, or 2) max everything out for as long as possible, put stuff in taxable, and then do Roth IRA Conversion Ladder to get some money out early. Or, 3) just take the 10% hit from your 401(k) if your income is low enough to avoid the double hit in taxes. The Mad Fientist, Go Curry Cracker and Root of Good all have excellent articles on the different strategies.

      • Ok awesome-thanks for your input! I’ll have to do some more research on Mad Fientist/GoCC & Root. We also have a 457 option at work, so I’ll most likely throw that into the mix too. Retiring early is still a pretty conceptual idea at this point, but it’s nice to have someone confirm the strategy. Thanks again!

  8. This is awesome! It’s really amazing to see that snow ball start rolling. it can be a bit disheartening for those of us who started our working careers later and with student loan debt. I didn’t get my first job until 26 and when I started my journey, I was already $87,000 in the whole. My fiance won’t have her first real job until she’s 32! But like you said, don’t give up!
    Financial Panther recently posted…Net Worth Report – Q4 (2016)My Profile

  9. That’s awesome, Gwen. I love so much your approach to finances. No whining, no lamenting – you just punched debt in the face and kept looking for ways to improve.

  10. Congrats! Wish I knew better when I was your age, but better late than never, right?
    I recently celebrated the 120k milestone, even though I literally just moved to the US 3 years and 3 months ago 🙂
    MMM is right – it really is much better to live in the First World – wealth really is abundant here!

    • Your story is super amazing! I can’t even imagine moving to an entirely different culture and being so successful so quickly!

  11. Love it. Awesome graph, Gwen! This post is chock full of great advice and inspiration! Now is when you’ll really start to see more and more of that magical compound interest. And I like how you dealt with your Target spending – just don’t go is a great solution.

    • Thanks Dylan! I’m glad you’re getting use out of my numbers sharing. Sometimes it feels almost like I’m walking out naked in the crowd by doing so!

  12. Wow awesome that you’ve saved so much at such a young age. When I was your age (man I feel old now), I thought I was a rockstar because I got my 401k match and opened an IRA while my colleagues did neither. I really wished that I saved EVEN more than I did. The compounding really does start working down the road. Like you, I’m glad I kept my car from college even though some friends teased me for STILL driving it when I pushing 30! Oh and the blue tooth connection, I bought a Bluetooth car kit for like $20. Not much of a difference!

    • I’m keeping my car as long as I can! The aftermarket radio I put in it is starting to crap out on me, so I will for sure be putting in one with bluetooth! If I can avoid spending $12k on a car by spending $50, I’m going to do it!

    • Thanks Mrs. BITA. Seems like you had a fabulous time in your 20s though so you’re enriched – just in a different way than me 🙂

  13. One thing Millennial’s should take away from this is how you understood in college the type of career that would enable you to save a significant amount so quickly.

    I wanted to be a Math teacher ( and I plan to as part of my retirement.) However, I realized that going into engineering would provide a much better income.

    I think high schools need to do a better job educating kids of their options after high school. We need to teach them the cost to get certain jobs and what the ROI is for jobs.

    • Agreed. I originally was going into Law Enforcement but after I went through Basic Training, I figured out that would be a bad fit for me. So I looked at a list of the most in demand careers, figured out which paid the best, and then changed my schooling to go into that. Following your passion is great and all, but I like to have more than just my bills paid.

  14. This is good work; you should be proud of what you have accomplished so far. Getting serious about your finances early in your career is particularly commendable.

  15. For me just getting a account a few years ago changed my spending habits completely. I identified so many “little” things that were taking me away from my money goals. One of my favorite quotes: “What gets measured gets managed”.

    Keep up the good work, Gwen! Im enjoying your posts!

  16. Awesome story, you’ll be thanking yourself for the rest of your life setting yourself up like that! The first $100k hump is one of the hardest to get over for a lot of people so now you can reap the compounding for a long time! Super smart, great job!

    • Thanks Ryan! Most of that $100k is direct contributions as well. There’s hardly any market growth, so I’m excited to see the compounding really take off!

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