Saving

I paid off $29,000 in debt and saved $100,000 in 6 years: Here's my best advice

Invested Wallet's Todd Kunsman shares the steps that helped him save and invest $100,000.

Todd Kunsman is the founder of Invested Wallet.
Courtesy Todd Kunsman

In 2014, I was 26 years old and I knew that I needed to make some changes to my financial life. I had $29,000 in student loan debt, a car loan, barely $1,000 in an emergency fund, and just over $4,000 in a 401(k). 

As I started overhauling my approach to money, I read a quote from Charlie Munger, the famed investor and longtime business partner of Berkshire Hathaway founder Warren Buffett, about saving that resonated with me: "You gotta do it. I don't care what you have to do — if it means walking everywhere and not eating anything that wasn't purchased with a coupon, find a way to get your hands on $100,000. After that, you can ease off the gas a little bit."

With Munger's advice in the back of mind, I decided that one milestone I really wanted to hit was my first $100,000.

Now, six years later, I'm debt-free and I have $100,000 put away. I've made some mistakes and I've learned a few important lessons that helped me achieve my goal. 

Budgeting plays a bigger role than you may realize

I'll be honest: Prior to 2014, I had no desire to budget and thought I could keep tabs on my finances without writing anything down. Boy, was I wrong. 

Once I started going through the budgeting basics and putting the numbers down on paper, it became clear that I truly didn't realize how much I was spending. 

Understanding what money is coming in and where my money is going every month has been instrumental in reaching that first $100,000 goal. A budget is key, and it doesn't have to be complicated. My first budget was a simple spreadsheet that I could update when needed, and it's the system that I still use to this day.

You can build wealth with a 9-to-5

While many wealthy people built their financial empire through their own business, not everyone wants to work for themselves. That's OK. If you love your 9-to-5 job, and want to increase your income, I've found that investing in yourself is a great way to maximize your salary. 

For me, it was reading books about marketing, studying others in my field, taking some online digital marketing certifications, and asking for a raise when I felt necessary. 

When I would get a salary increase, I made sure that I was saving and investing that difference from the new amount. It can be tempting to start splurging, but living within your means and saving or investing the rest is just another step toward that larger goal.

My first budget was a simple spreadsheet that I could update when needed, and it's the system that I still use to this day.

Side hustles can help you hit saving goals faster

Since it was taking some time to improve my career and build my income at my 9-to-5, the best way I could reach my goals of paying debt down faster and increasing my savings was to create other streams of income. 

I took on freelance marketing jobs, which not only benefited my career but also allowed me to boost my total income. We're all busy with our existing obligations, and it can be hard to find enough hours in the day. When you're looking for additional streams of revenue, think about what you are good at and enjoy doing. 

There is no one right way to run a side hustle. You can use your skills to freelance or consult, or even launch an online course, which is just one of many remote side gigs that can earn you steady passive income.

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Invest as much as possible 

Reaching $100,000 saved can be challenging if you are not also investing towards that goal. By investing you get that extra advantage of returns and even dividend payouts. Although it won't be much in the early days, every little bit helps your money work for you. 

I chose Vanguard index funds for their simplicity, broad stock and bond exposure, and consistent growth. I wouldn't recommend trying to time the market. It's important to consistently invest as much as possible to take advantage of compound interest.

Investment growth can be slow in the beginning. Over time, I started seeing a hockey stick growth among my returns, which helped me hit my $100,000 goal a bit sooner. If I had not been investing, I would probably have needed another two years of saving to reach my goal. 

Don't compare yourself to others

So many of us, myself included, struggle with the fear of missing out. Social media can make it even tougher to stay the course. But it's important to remember that images of vacations or nights out or new homes only tell part of the story. 

I know that I often felt that in order to keep up appearances, I had to buy things or upgrade my lifestyle. It's easy to get self-conscious and want to match what friends or colleagues had. But that is a recipe for ending up in debt and having very little to save or invest. 

Once I read a book by Thomas J. Stanley called "The Millionaire Next Door," I realized many people are broke or in debt as they are trying to keep up with or impress others. With that in mind, I was able to dispel that urge to compare my path to anyone else's and put more focus into saving and investing instead of spending. 

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Find a consistent and positive routine that works for you 

For me, at first I was really excited about making changes and getting started, but then that adrenaline started to wear off. This is when I caught myself skipping a week of saving or treating myself to something and then later wondering why I spent so much. 

Too often breaking our routine is easy because the initial thrill wanes. But it's imperative to practice consistency and get into a recurring routine with your finances. I found sending calendar alerts for my pay days helped ensure that no matter what, I put a recurring amount towards my savings and investments.

I also created various milestones towards the $100,000 goal that if I reached, I'd treat myself to something then, but not before. This routine helped me stay focused and motivated to keep going. This doesn't have to be exactly what you do, but figure out what a positive routine looks like for you.

Todd Kunsman is the founder of Invested Wallet and has been featured in publications like Time, Business Insider, and HuffPost. He's passionate about financial freedom, investing, side hustles, and helping others realize they too can transform their finances. You can find him on Twitter at @InvestedWallet.

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