I didn’t start out life with money. My roots were pretty humble. Grandpa Tako (my father) worked blue-collar jobs his whole life, and Grandma Tako (my mother) worked as a low-paid office worker (sometimes a secretary, or administrative assistant). We didn’t have a lot, but it was enough.
Growing up, I wore hand-me-down clothes from my cousins. We ate-out extremely rarely — usually at cheap places where my parent’s didn’t have to tip. Places like McDonald’s and Taco Bell were considered fine dining in my youth.
My net worth was essentially zero for the first 16 years of my life. With no job and no allowance, I had no money and no income.
My first part-time job as a teenager was as a dishwasher at a local restaurant. I made minimum wage. That was my first real experience earning money.
By the time I completed high-school, I saved $7,000 for college. Nothing terribly large, but this was way back in 1995. In 2016 dollars (accounting for inflation) that’s about $11,000.
I paid for college with savings, part time jobs, and student loans…a lot of student loans. When I finally graduated in 2000, I had $50,000 in debt.
This wasn’t a great way to start out life, but I learned some important lessons along the way.
How did I go from being an indebted student, to being worth more than $2 million in about 13 years?
Mostly by being a good saver, and marrying a good saver. Sure, we’ve had some investment gains over the years, but most of the credit is simply due to savings.
Where Art Thou Savings?
I can’t stress enough how important savings are to building wealth. While many people scoff at frugality as a way of life, it really is the key to building any significant wealth.
Still not convinced? Maybe it’s time for some show-and-tell…
I wasn’t able to find all of our records, but I was able to find the majority of records for our taxable accounts. The taxable accounts are where our dividend income is derived today. All of that came from after-tax wage savings.
Our retirement accounts (401k’s, IRA’s, Roth’s) are separate accounts, which we don’t intend to touch as part of our financial independence plan. They’re not included in the table below.
We’ve published our net worth already — it exceeds $2m (and continues to grow). But where did it all come from? How much was actually from savings? Take a look:
Our after-tax savings added up to 896 thousand dollars in 13 years. We used the same frugal principles I blog about today.
We always tried to save at least 50% of our salaries in each of the 13 years listed above. In later years, that savings rate was closer to 70% or 80%.
We both worked and both saved. Our lives are simple and relatively inexpensive. Over the years, Mrs. Tako and I saved a lot of money. We had a lot of fun, but we’ve always been good savers.
We tried not to waste money on stupid shit, but still enjoyed a lot of travel over the years — with trips to Australia, China, British Columbia (Canada), Mexico, England, Ireland, Scotland, Japan, Alaska, Florida, New York, California, Idaho, Georgia, Oregon, Nevada, and Arizona.
We had a ton of fun during the years we did all this saving, and not once did we feel like our lives were deprived!
Additional details and comments about our savings:
- 2003 & 2004 savings data is actually about $40,000 less than it should be. The data was missing from Account #1 records, but should have been about $20,000 each year. Rather than put in undocumented numbers, I omitted this savings.
- 2009 numbers are lower because of the purchase of our home, and job loss due to the Great Recession.
- 2013 marked the birth of Tako Jr. #1. Savings was not affected by this event.
- 2015 marked the birth of Tako Jr. #2. Savings was not affected by this event.
- 2016 savings numbers are Year To Date (YTD).
- 2016 is also the first year of early retirement for Mr. Tako. Savings are lower as a result
Having the Right Partner
There’s a reason why I title this post “The Tale of Two Savers”. If you want to save lots of cash, having the right partner is extremely important.
With Mrs. Tako, I got a real gem. I give her most of the credit for our wealth building success.
She was always a saver, even before I met her. When we started dating, she had absolutely no debt. She was already frugal, and had a far better financial situation than my own. Thankfully, she was humble about it, and didn’t criticise my negative net worth when we talked about money. (I was loaded down with student debt at the time)
Most surprising though, she didn’t invest money beyond her 401k. She had all her taxable money sitting in a bank account, earning a paltry interest rate. But Mrs. Tako is a smart cookie, and she learned fast.
Within a year or two of our meeting, she’d learned the basics of investing! Her cash balance got invested, and she put those dollars to work! After that, she never looked back!
It’s also important to understand that Mrs. Tako isn’t the kind of lady that buys designer handbags, luxury cars, or expensive jewelry. Those kinds of things don’t interest her. She’s smart enough to see how shallow and pointless those displays of wealth really are.
On top of that, she’s a thoughtful, caring mother — A mother who also understands that love doesn’t come from buying stuff for our kids.
Honestly, I don’t know how I got so lucky. Somehow I ended up with the best wife ever. There isn’t a day that goes by that I don’t thank my lucky stars I have her with me.
We’ve been on the same page about money since day one, and we’ve been on the Road To FI together since day two.
The two of us are gears that work in tandem to drive that wealth-engine forward.
Practice Makes Perfect
Being good savers isn’t something that happened to us overnight either. We got better at saving as time went on. Salary increases had something to do with that, but we also had large cost increases that offset those salary gains — We bought a house and had two kids.
A large chunk of our increased savings over the years was from “getting better at saving”. We stopped eating out so much, and started doing most of our cooking at home. We stopped buying flavored waters, and lunches-out every day. Now, we use the slow cooker more.
Most changes were gradual. It didn’t start out that way, but eventually we started doing most of our grocery shopping at our local asian grocery store to save money.
We’ve learned all kinds of saving tricks over the years, like using Amazon to save money (No tax, and free shipping!!) on practically everything. Using programs like Bing Rewards to generate gift cards helped too.
We try not to be expensive parents either. Most kids don’t need a whole lot, and our kids already have far more than I ever did.
Sometimes I worry my boys will grow up to be the arrogant wealthy if they don’t experience any hardship in life. But, then again, don’t many people view frugality as deprivation or hardship?
Mrs. Tako and I learned patience and appreciation for our imperfect lives over the years. Our wealth wasn’t built on big salaries or windfalls, it was built on savings.
We don’t feel deprived at all. At this point we haven’t even started on many of the money saving tricks you see posted on the internet — common stuff like credit card hacking. We’ll get to that stuff eventually, but there’s just sooo many places to find savings!!
Want to save more money? All you really have to do is try!
What’s your favorite money saving tip?
[Image Credit: Flickr1]