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 fiancé 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

    • Still though, the fact that you “woke up” and saw the light is more than the Aver­age Amer­i­can can say!

  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. Well done! I real­ly enjoyed read­ing the method­i­cal process you took to reach your goal. Isn’t it fun­ny how we think some­thing per month (like rent) isn’t too bad and then we baulk when we see the year­ly cost!

  12. 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.

  13. Nice. You’re build­ing up pret­ty rapid­ly. I appre­ci­ate you shar­ing actu­al num­bers, and I look for­ward to fol­low­ing your progress.

    • 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!

  14. 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 🙂

  15. 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.

  16. 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.

  17. 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!

  18. 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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