Since graduating in May and starting work in July, I set a goal that I would pay down my debt within two years. When I graduated, I had $25,500 in student, car, and credit card loans. Today, only 5 1/2 months from my original goal, I have only $11,500 in total debt. On top of paying down my debt, I accumulated an additional $7,000 over this short period that I am now using to invest. How did I get nearly a year ahead of schedule in my financial goal?
How I Got Ahead of My Financial Goals in 2013
- Rent – I am fortunate my parents allowed me to live with them following graduation. This has saved me nearly $1,200 a month in rent costs living in Washington, DC. Of course, I could move out and gain more independence, but I have bigger goals ahead – owning my own place and never having to pay rent again in my life. At first, I was a little nervous moving in with my parents because of its negative stigma. But now, after saving so much, I really don’t care about what others think. I will likely be the first of my friends to own my own place and I’m proud of that.
- Investing – Since I was living with my parents, I had more residual income. Instead of paying down my debt above my monthly payments, I decided to invest my earnings. Fortunately, my investment paid off through options trading and I made a quick $12,000. I used my gains to pay down my debt. Check out how I did it here.
Saving on rent and investing my residual income are really the only two reasons why I am ahead of schedule. I definitely could have saved more in 2013 though.
My Financial Goals for 2014
- Spend less – I eat out way too much. I spend nearly $12-15 a day on food on weekdays and $20 a day on weekends. I also spend a lot of money on going out with friends almost every weekend – usually bar hopping. I also made major upgrades like buying a new smart TV, new work clothes, and a new Trek bike that I plan to ride to work in 2014 which will save me money on metro/transportation costs. Further, I upgraded to the Verizon Edge plan, which means I will be paying nearly $80 a month for my iPhone 5S. Needless to say, I splurged and spent an extra $2,000 I probably could have saved. Still, the TV and bike are long term investments that I won’t have to buy again for a few years. I really needed to invest in some new work clothes too. The iPhone makes almost everything in my life easier, especially since I use it for investing, running this blog, and I will have access to the newest phones in the future. I think these purchases will be worth it over the long term. What I really need to do is start making lunch and dinner and bringing them to work to save on food costs.
- Buy an apartment – I am looking to save enough money to start looking for apartments by June. I will continue to make payments on my student loans over this period, but my main goal is to save and invest to be able to put a down payment for an apartment. Of course, investing instead of paying down debt is risky. But I am young, and am able to take the risk, and I am investing in companies I have followed for years. I am also buying long calls on undervalued companies to reduce my risk. My goal is to have enough to put a down payment on an apartment by July, one year from what I started working full time.
- Stay healthy – I completed the Tough Mudder this year with my brother and colleagues from work. The Tough Mudder is one of the toughest obstacle courses in the world and raises money for veterans. The challenge was absolutely the most physically demanding tasks I have ever completed. Continuing to push myself and staying healthy will help financially in the long-term. The better care I take care of myself now, the more it will pay off later in life. Staying healthy also means I will be sick less often, and I will likely be more productive and happier over time. I will eat better and work out more. I will complete the Spartan Race and the Tough Mudder in 2014.
What are your financial goals for 2014? Please feel free to comment and share!