** Money Diary is about learning from stories. If children can learn for tales and fables why can’t adults. **
Clare is a 21 year old new college grad. She graduated with a major in chemistry from an expensive private school. She lived at home throughout the 4 years and took out student loans for her tuition. The day she graduated, she had a whopping $60,000 balance and a monthly payment of $864.
Thankfully she got a job at a lab paying $50,000.
Clare moved out of her parents place and started living with roommates to save money. She also started driving Uber 10 hours per week for some extra cash: with this side hustle she was able to make $800-$1000 per month. This extra cash allowed her to save $500 per month in her Roth IRA.
After 10 year of diligent payments Clare paid off all of her student loans. Her income grew to $70,000 and she had saved enough to pay for a down payment on an apartment. Claire considered her monthly payment and made sure it was only 35% of her monthly income.
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She stopped working Uber on her 31st birthday. Uber helped her build her Roth IRA. She reached her goal and did not want to hustle anymore. Additionally her ROTH IRA balance grew to $75k. Her investment in a broad market index fund payed off. If she did not add a dime to this account when she turns 67 her balance would be $1.2 million. She would be a millionaire.
At 31 Claire can use her full income however she wishes. She can travel more, pay off her house or save & invest more.
What would you do if you were her ? If you had no debt weighing you down and your income was all yours.
Lessons from Clare’s Debt Payoff story
- Overcome large debt: create a strategy and follow through.
2. Be smart with your money: Control your expenses and boost your income.
3. Invest in index or target date funds. set, automate and forget.
4. There is no time like the present to take control of your financial future.
5. You don’t need to rely on employer matches or 401k’s. You can open a Vanguard IRA today.
If you like this story read A single mom exceling in her personal Finance
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