The evolution of my relationship with money

Last year after talking to a friend about FIRE, she said something that struck me "I didn't grow up in a household with aspirations". Dazed and confused, I realized that I didn't either. So I wanted to see "how did I bumble along through life and eventually stumble into my current financial independence trajectory?". Let's look back together with both a money lense, and a motivations/values lense.

I think it's good to start with my earlier blog post to learn the origin story of this blog and you will get a small primer on the "versions of myself" that I have inventoried. I've taken the graphic from that blog and replicated it here so we can start bucketing sections of the timeline.

V1: 1985 to 2003 (birth to 18 years old)

In V1, we have childhood and adolescence. It's not in the graph above as it was simply a time in my life that I was developing into a human and coming into my own personality.

• I grew up very poor. Neither of parents had any strong financial literacy. When I was 5 years old our house burned down in a California wildfire. That event permanently changed my trajectory as I learned that possessions meant nothing. It also opened my eyes to the strangle hold that possessions have on people like my mother who is a borderline hoarder. When you are very poor, the scarcity mindset can do incredible damage to your well being. I have watched it as my parents left poverty and came into money, only to spend all of their money on frivolous belongings. Who needs 5 vacuum cleaners and 25 pairs of scissors?. You never know when you could lose the income again so scarcity mindset causes my mother to spend it while she has it and enjoy life. And then if you do become poor again then you at least have the stuff you need to survive.
• When I was around 8 years old my father was building and taking apart computers in our living room. He helped me install an accounting software on one of them and I loved sitting on the living room floor balancing my checkbook for the savings account my grandparents opened for me with $100.
• I had one pair of jeans in middle school (around 11 years old). Kids made fun of me a lot. 
• Around 13/14 years old I started earning money by babysitting the neighbor kids. I suddenly had disposable income and could buy myself clothes and music. Around 15 years old I started working in the basement of my neighbor's at-home business for cash. I spent everything I earned. I would buy things for my friends without thinking, because it felt good to be the one with money. It also felt good to feel independent and say "I pay my own bills!" (even if I didn't pay rent or utilities).
• I was a math genius as a kid. Various male math teachers would tell me "you should make a career in math!" so I naturally asked "like what?". To which they would respond "you can be a math teacher!". Of course the world needs math teachers but I found it hard to believe that the only reason to learn math was to teach it to other people. So I asked what else could I do. They would suggest being an accountant or an actuary. Not very ambitious thinking for a young (female) math genius. I could be sending people to mars but... spoiler alert: I'm not.
• Around 16 years old I could legally be employed in a legitimate business. I first worked as a cashier in a hardware store and then making sandwiches and pizzas at a convenience store (gas station). I bought a car in my own name, getting a loan from the bank and making the monthly payments myself. 
• At the age of 17 I graduated high school a semester early (December rather than May). I got my first accounting related job from my high school accounting teacher who recommended me to a local CPA that needed tax help during busy season. I worked 16+ hours a day between my tax/accounting job and as a cashier at the gas station. I was saving money for university that would start in 9 months.

V2: 2003 to 2008 (18-23 years old)

In V2, I remember hearing from people "oh just wait until you get to the REAL world!!". As if I was in some doll-drums that wasn't reality. It created this perception of delay. That choices we make today aren't a big deal because none of it is "real". I modeled as a hobby and traveled the country having fun in between studying. But I also took on scary debts (that luckily didn't ruin me). 

• Very proud of myself, I had saved $4,000 over 9 months of earning somewhere between $5-$6 per hour for 16 hours most days of the week. My tuition and books at my university were around $3,000-$3,500 per semester. So my college savings was all gone in one semester of school. Luckily my second semester was paid for with a few scholarships. My parents had certainly not saved anything for my university but growing up poor I had never even thought that was their responsibility to do so.
• I had no mentors as a child nor was I surrounded by aspirations. I was told by teachers I should go into accounting because I was a math genius. Because I took an accounting class in high school and I was good at it, I decided that I would pick this as my university major. My logical brain loved that debits always equal credits.
  • News flash nobody told me: accountants don't do math. 
• To pay for my university after the first year, I won some $500 scholarships here and there. I also had my wages that netted me about $700 a month. I decided around 19/20 years old to move out of my parents house to "become an adult" so my monthly expenses were: $263 for rent, $150 car loan repayment, $100 for my teeth braces, $50 for my phone, and a $50 credit card minimum payment. Which meant that I needed to find money to pay for a) tuition and books of $3,000-$3,500 and b) fund all my remaining living expenses like gas, insurance, food, and traveling. I was eligible for federal subsidized student loans but I maxed those out each semester at $2,500 per semester. My options were: 1) a private bank loan at 14% interest, 2) a 7-8% loan co-signed by my parents which they would have to repay in case I died, or 3) put everything on credit cards which at the time had lots of 0% introduction periods and then changed over to 5% interest rates. I chose credit cards. The credit card companies would give me $5,000 limits so I opened a bunch of cards and slowly maxed each one out (over 4-5 years). 
• So in my early 20s at university I was earning about $14,000 gross income per year while studying. I had no real time for extra curricular activities during the week because I had to study and then go straight to work. On free weekends and in the summer, I would travel to other cities for modeling gigs.
• In December 2008 I graduated with $25,000 in federal subsidized student loans with a 6% interest rate and $15,000 of credit card debt with a 5% interest rate (though some jumped to 10% a few months later even on existing balances). I graduated in the peak of the financial crisis but luckily still had a job lined up. My halloween costume in October 2008 was literally "The Economy" and I won a costume contest as one of the scariest costumes.

V3: 2009 to 2016 (23-31 years old)

In V3, almost all of my life choices were driven by being on the "life escalator". You just do stuff because "that's what adults do" and you don't question it or know how to find alternatives (or to calculate opportunity costs). 

• Midway through university I was offered an internship. I accepted. During the internship I was offered a job post-graduation. I accepted. I never considered any other options nor did internships with any other companies. I had no aspirations I just took whatever was set in front of me.
• I started my full time job in January 2009 and from there I was doing a minimum 5-8% 401K contribution through work but had no idea what I was putting it in. My employer match went into a cash interest pension earning about 3% per year (which I didn't realized at the time)! I was paying down debt fast and furious. Any time I got a raise or a bonus it went straight towards debts. I paid off my car and had no plans to buy a new one, with that monthly payment redirecting to credit cards and student loans.
• By 2011 all of my credit card debt was paid off (since they had variable interest rates that were climbing). But then I sold my car, sold everything I owned, and moved to Australia for one year for a work assignment. I really credit that year of my life with helping me open up and discover the big wonderful world out there waiting for me. I had zero stamps in my passport before that move. I did not contribute to retirement during that year but saved loads of money anyway due to a low effective tax rate.
• In 2012 when I returned to the US, I used the savings from Australia to make a downpayment on a brand new $30,000 car. But I also kept about $10,000 in my savings account back in Australia because it earned 6% interest! Then I started thinking “should I buy a house?” solely because that’s what adults do. I never questioned it or knew how to do the math on buying vs renting.
• Returning from life abroad also made me set my eyes on living abroad again. I realized I needed to get in the drivers seat of my career and stop making choices based simply on the options that other people set in front of me. I went on another work assignment in 2012 but this time it was for 4 months to India. Because work was paying for our rent, food, and bills I had some coworkers dropping 100% of their paychecks into their 401Ks. But I still had to pay my rent and insurance back in the US so I didn't do that. I didn't really save that much during those 4 months.
• In 2013 after returning from India I quit my job to figure out what was next for me. I applied for a job I wasn't qualified for and I got it. Reminder to the ladies out there: apply for that job even if you don't tick all of the boxes. Reminder to recruiters out there: see the potential in candidates even when they don't tick all of the boxes and actively seek out those candidates.
• In 2014 I started thinking "I wonder how much money a person needs to buy a house?". I got in touch with a realtor friend and asked her the question. This set in motion a house search and a few weeks later I was transferring my $10,000 of savings sitting in Australia over to the US for a downpayment. I only wanted a 1-2 bedroom house but my realtor convinced me to buy a 4 bedroom because of the resale potential. I got lucky winning the bid on my property because the listing went up on a Thursday, I saw it that evening in the dark and made an offer on Friday with a deadline to accept before weekend viewings. The owners wanted a buyer that was flexible on move-in date which was my one power I brought to the table. They accepted my offer for their listing price.
• In 2015 my monthly housing payment was $1,400 including mortage principal, interest, property taxes, and homeowners insurance. I rented out my basement to a lovely couple for $900 a month. After 5 months of dating, I convinced my boyfriend to leave his $1,000 apartment and move in with me. My then-boyfriend moved in and paid me $400 while we lived on the top floor together. So I paid $100 for my housing and we all split the utilities 4 ways.
• The year was 2015, and at almost 30 years old it was also the first year I was put in touch with a financial planner. I was in the work force for 6 years at this point and I'm pretty sure my 401K was just invested in a Target Date Fund or "Conservative Investor" profile because I knew nothing about investing so that seemed like a safe idea. My financial planner set goals for me like saving up 6 months of living expenses (which I now know is completely unnecessary) and helping me open a brokerage account to buy my first $1,000 of mutual funds from my work because I wasn’t using my no-fee benefit (I worked for a mutual fund company). Just simply having a plan really helped me see my vision and I quickly paid off last of my car loan (the one I took out in 2012) and made the last payment on my student loans. I asked good questions of the financial planner like how would he make money off of me. I knew he got a commission on insurance. And I let him sell me a Permanent/Whole Life Insurance policy as an investment tool. I'm an accountant, and I still didn't get it. It was so complicated that it HAD to make sense. Though I can now look back with gratitude that I'm not following ANY of his financial advice today, I also have gratitude that he finally got me moving on setting goals and taking action. It was what I needed at the time. It's scary looking back and realizing that I was an accountant, and a math genius, who was not saving and investing properly for so many years. 
• In 2016, with my eyes set on living abroad one day, I convinced my boyfriend to move to San Francisco California with me so I could start working for a global firm that had offices around the world. I hoped I could get them to transfer me one day to a foreign office.

V4: 2017 to 2021 (31-36 years old)

In V4, I realized I was on both a life escalator and a relationship escalator. In V3 I had simply been following the path that society writes for all of us because I didn't know there were any other options. I realized that a long-term monogamous relationship was not serving me in the way I had been told it would. I discovered relationship anarchy and set my eyes on getting out of the US to rediscover myself. There was a somewhat terrifying realization for me in V4: I had been convinced my whole life that the purpose of life (one worth living) was finding your one-true-love that served all purposes for all of time, getting married to them, and then dying. And when V4 of me realized this was no longer my purpose, this empty void sat staring back at me asking "then what is the point of it all?". My search for purpose commenced.

• Living in San Francisco was expensive but I was paid a very high salary. My employer matches to my 401K and my bonuses really supercharged my net wealth. Owning a car was expensive so rather than paying $300 a month for parking in the city, I found someone on Craigslist that would rent out a spot in their driveway to me further in the suburbs and then after dropping my car off I would take the metro home. I only needed the car on the weekends anyway. So in anticipation of leaving the US, I sold my car in early 2017 and just rented a car when I needed one.
• Then in the end of 2017 I got my opportunity: I moved to Ireland and took a 50% pay cut. But moving into 2018 I realized I was surviving but not thriving. I couldn't afford to live alone (something I could afford in San Francisco). And I hated my flatmate. Financial and mental health disaster were at my front door.
• By the end of 2018 I was trying to find my way out of Ireland. Moving to Ireland was always the right move because it got my foot in the door to Europe. Then in April 2019 I got the call asking me to move to the Netherlands for a job. Not only would I get a 30% salary bump (Ireland wages are garbage) but I would also receive the highly skilled migrant tax ruling which gives you a 30% discount on your taxable wages. 
• 2019 also gave me a few other wins. I got a letter from the company I worked for right out of university, the one that was putting my employer matches in the pension earning 3% each year (for the last 10 years). When I left that company I wasn't allowed to take that pension with me. I would have to wait until retirement. But now they were giving me the option to take a distribution and roll it into an IRA. I submitted the paperwork immediately while I frantically opened a brokerage account and IRA at Schwab to roll it into. The other win in 2019 was that I discovered my perfect financial advisor. He has a reasonable one time setup fee and then I pay $8 a month for his no non-sense financial planning. He really got me set on the right path of simplification and helped me discover that I needed to get out of the Permanent/Whole Life Insurance Policy I had been paying into for 6+ years.
• Though 2020 hit us hard with COVID-19, I'm so grateful of my timing luck. I decided to exit that Permanent/Whole Life Insurance Policy in February 2020. I had paid about $25,000 of premiums over the 5-6 years and my cash out value was $15,000. A loss of $10,000 that I could not deduct for taxes. But luckily, I got the check from Northwestern Mutual in March 2020 and dumped it into the stock market on one of the lowest days of the market tanking. Today as I write this, that $15,000 I put into VOO in March 2020 is now worth $23,000. I got lucky with my timing. But it was not luck when I asked my financial advisor "should I just stick with the investment since I'm so far in, until I at least get it back to $0 since I can't deduct the loss for taxes?" to which he responded "a bad investment continues to be a bad investment, exit once you've realized it's bad so you can get your money working for you in a good investment". 
  • If I had stayed in the insurance policy, today I would have a basis (what I paid in) of $36,615 and the cash value would be $34,350 (what I could withdraw in cash from the policy if I wanted to cancel it). Instead, considering that I've diverted my $655 monthly payments to investing in the stock market instead of paying those premiums, I now have $45,523 thanks to VOO.
  • If I had never bought that insurance policy and had instead been investing my insurance premiums in VOO the last 7 years, today I would have $68,000.

​V5: 2021 to now (36-38 years old)

In V5, I made a shift away from searching for purpose and moved into discovering my values. Purpose tends to be outward facing and "how can I serve others" where our values are inward facing and "how can I serve myself". So I quit my job since I discovered I didn't need to prove anything to anyone and that I should make decisions that give me the life I want to lead. I started freelancing and discovered the FIRE movement through the ChooseFI podcast. A movement that I previously thought was about eating ramen noodles and sacrificing. 

• In 2021 after quitting my corporate job and setting up my freelance business, I also took a shot at entrepreneurship. I had an idea for a solo travel app, started a business, and entered an incubator to find out if my idea was viable. I'm grateful I spent $700 on the incubator to discover I didn't want that path in life, rather than having spent $30,000 to blindly build an app.
• In 2021 I also worked for a start-up for 8 months and got my first investment into a private company (not publicly traded on a stock market).
• After discovering Choose FI and Mister Money Moustache, I realized I could "retire" in 5 years by making changes in my thinking and strategy (which mostly involved simplification). I started tracking my earning, spending, saving, and investing. I also went back through time to chart where I came from and how I arrived where I am today (see below).
• Because COVID-19 caused us to rethink how we work, I can now do my work from anywhere in the world. And I am earning double what I was making at my wage-based corporate job which allows me to make decisions based on spending money to save time. In 2022 I saved almost 30% of my income and in 2023 it will be an almost 50% savings rate.
• In 2022 I moved to Italy to get back to my favorite hobby: hiking. The related but secondary benefit is that I am cutting my effective tax rate from 40% to around 15%. In 2022 I sold my rental property in Denver because I was too highly concentrated in that single asset. I haven't sold my house in the Netherlands yet but I've decided I won't buy property again (for now) as I much prefer the freedom of renting. Real estate is too risky and overly complicated for me. 

I am excited to see what V5 has in store for me and setting up future versions of myself for success. Part of my work in V5 is learning to spend more money to save time. As someone who grew up poor, it can be difficult convincing myself to spend money on a house cleaner (as example) because my whole life I considered that a "rich people luxury". I struggle with this today as I try to find tasks I can give to a virtual personal assistant. 

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