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I went from owing $53,554 to a net worth of $200,000 in 6 years: Here's how I did it

All of the money that I was using to pay down my debt, I’m now using to save and invest.

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Tim Stobierski is the founder of Student Debt Warriors.
Courtesy Tim Stobierski

I used to think that growing wealth was beyond my reach. In my mind, being rich was either something that you were born into or that you fell into through sheer luck, like winning the lottery. Even succeeding with something like a great business idea or a bestselling novel had an element of chance. 

The truth is, I discovered, lots of people grow their wealth slowly over time, and I could too. I made that realization roughly six years ago, when I first sat down to figure out the state of my finances. Since then, I've been able to go from a net worth of -$53,554 to $0 to $100,000 to just over $200,000 today. 

While I know that I achieved this in a rather short period of time, I want to make it absolutely clear that I was able to do this by taking the same small, straightforward, and consistent steps month after month, and by watching my efforts compound over time.

Here are steps that I took to get where I am today, and how you can use them to set yourself on the path to growing your own wealth.

1. I learned as much as I could about personal finance

When I first started thinking about my financial situation, to say that I was overwhelmed would be an understatement. I had a lot of questions. What is the best way to pay off my debt? How do I start investing? How much money will I need for retirement? I wasn't quite sure how to even begin answering them. 

So I started small and began reading as much about personal finance as I could, from a variety of reputable familiar business news sources and websites with good beginner explainers.

Over time, it started to click. As I learned more and more about saving, budgeting, debt, and investing, I found myself growing more confident that I could do this. 

If you're an absolute beginner when it comes to money, my best advice would be to start educating yourself about the basics. Simply reading one article a day about personal finance can help you begin laying the foundation you need to be successful.

2. I found others who share my goals

It was during those early days of self-education that I stumbled on the FIRE movement, which stands for Financial Independence/Retire Early. Though their personal objectives may vary, members of this community share similar wealth-building goals

While I wouldn't call myself a proper devotee of the FIRE movement, as I learned more about it I realized that it aligned pretty closely with my own goals and aspirations with regard to financial stability. I began following the journeys of those in this space, many of whom started out in a similar situation to my own. I even connected with a few who gave me advice that I still follow today. 

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In doing so, I was able to learn from their experience and incorporate those lessons, like the power of compound interest, into my own plan. I attribute a lot of my early motivation to getting inspired reading about the experiences of people like Kristy Shen and Bryce Young of Millennial Revolution, and J. Money

The FIRE community might not be the right one for you, but I promise you that there are people out there who share the same money goals that you do. Finding those people and learning from them can go far in setting you up for success.

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3. I started tracking my net worth

Having a money goal is great, but if you don't know where you're starting from, then it will be next to impossible for you to create a plan to get there. That's what makes calculating and tracking your net worth so important.

Your net worth is essentially just a number you can calculate by adding up all of your assets (your cash, savings, investments, etc.) and subtracting all of your debts. 

The act of calculating your net worth lets you know where you're starting from. It makes you sit down and catalog your financial life. And keeping track of your net worth over time lets you see how you're doing as you work toward your goals. 

The act of calculating your net worth lets you know where you're starting from. It makes you sit down and catalog your financial life.

The first time I sat down and calculated my net worth, I was forced to confront the fact that I was more than $53,000 in the hole, due to credit card debt and student loans. It was a wakeup call that I personally needed, and that I recommend to everyone.

While it may sound complicated, in my experience, calculating your net worth takes about an hour at most. There are plenty of free apps that track your net worth automatically. But all you really need is a spreadsheet that you update on a weekly or monthly basis.

4. I found ways to immediately reduce my expenses

In calculating my net worth, I was forced to look at exactly how I was spending my money, and in doing so, I realized that I was wasting a lot of money each year on seemingly small indulgences that added up to a whopping $6,717 per year

The worst part? These were mindless, small purchases that at best brought me no real joy and, at worst, were doing me harm — I'm looking at you, cigarettes. That's why the first thing I did was cut out those unnecessary expenses. Takeout coffee and lunch at work, happy hour drinks after work. And cigarettes? They had to go, too. 

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The result was that I not only began to feel better and healthier, but I immediately had an extra $6,717 per year to put to work toward my financial goals. That's more than enough to fully fund an IRA for a year.

I've found that most of us have some room to trim in our budgets. Identifying spots were you can be more intentional about your spending, and then redirecting those funds toward your goals is one of the simplest steps that you can take.

5. I built an emergency fund

If there's one thing that I've learned, it's that life is full of surprises. That's why the very first thing I did with the money I saved was to begin building an emergency fund to see me through any unexpected expenses.

I started by setting aside $500, which took a few weeks' time. Then, I bumped it up to $1,000. Each time I hit my goal, I would set an incrementally higher new one. And every day that I didn't buy one of the purchases I would normally make, like a pack of cigarettes for example, I would transfer that money from my checking account into my savings account. 

It was a way of rewarding myself and almost gamifying the experience, and helped me break those habits that weren't serving me. I primarily used that money to begin building up my emergency fund. Once I'd gotten up to $1,000, I also began investing $5 per week through an app, so that I could get into the habit. The bulk of the money that was left over I used to pay down my student loan debt.

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Over time, I built up enough money in my emergency savings account to cover three months' worth of expenses. Over the next 12 months, my goal is to have six months worth of expenses set aside.

My emergency fund has served me well over the years, providing me with money for replacement glasses, an emergency cavity filling, and a new car transmission when mine suddenly blew on the way to work. Without the fund, I likely would have turned to credit card debt in each of those cases, which would've set me back further.

My best advice is start small and if you have to tap your fund for an emergency, don't panic: That's what it's there for. Once you're able to, aim to replenish whatever funds you withdrew.

6. I came up with a plan to pay down my debt

At the start of my financial journey, I carried about $15,500 in credit card debt and $45,000 in student loans. I knew that this debt, and the interest it carried, was dragging me down and limiting my ability to grow wealth. That's why I made a plan to tackle my debt and pay it off as quickly as possible. 

By far, my credit card debt was the most expensive debt that I carried, charging about 15% interest, so the first step I took was to convert that debt into a personal loan charging 4% interest. 

That simple act allowed me to save thousands of dollars in interest over the life of the loan. Then I closed my credit card account. And while I do have a card today with a low credit limit for the purpose of building a credit history, I rarely use it. 

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For my debt repayment strategy, I chose the snowball method. That method prioritizes paying off the loan with the lowest balance first so that you free up money that you can use to pay down the next loan, and the next, until you're done. 

As of today, I'm officially debt-free. I paid off the last of my student loans in January of 2020, and my personal loan this past February. All of the money that I was using to pay down my debt, I'm now using to save and invest.

7. I invested on a regular, consistent schedule

At the same time that I was beginning to pay down my debt, I knew that I needed to start investing regularly and consistently in order to build my wealth. 

Because I had access to a 401(k) through my employer, and they offered a modest company match, I began first by ensuring I was contributing enough to capture that match. I started contributing around 5% of each paycheck automatically, but slowly increased it until I was contributing about 10%. When I left that employer, I continued investing for retirement in an IRA, and then in a SIMPLE IRA offered by my new employer.

At the same time that I was investing for retirement, I knew that I wanted to begin investing for other goals I had in the future. That's why in addition to my retirement accounts, I opened a brokerage account where I invest a set amount each into exchange-traded funds. These funds offered me instant diversification and a certain peace of mind that is invaluable. 

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While I primarily invest through ETFs for broad diversification, I do occasionally pick individual companies to invest in if I feel strongly about them. I think it's important to note that I vehemently do not day trade, and only invest in individual companies with a long-term horizon (20+ years) in mind. These individual stocks form a small part of my portfolio.

Investing doesn't need to be difficult, and there are a lot of ways to make it painless. Investing through retirement accounts and in ETFs is by far the best advice I can give to anyone, especially new investors

8. I found ways to make more money

Reducing your expenses is a great way to boost your financial health, but there are ultimately only so many cuts you can make to your budget before you can't cut anymore. When I got to that point, I started looking for new ways to bring in more money to support my efforts.

First, I decided to follow through on a career change I had long been thinking about, and moved from the publishing industry into marketing. Though I took a pay cut at the beginning of this pivot, I would quickly meet, and then exceed, my former salary. Next, I started a freelance writing and editing side hustle business.

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At the same time, I launched a website, Student Debt Warriors, with the goal of helping college students and their parents understand the complicated world of student loans. Since launching both of these side hustles in 2016, they have brought in just under $150,000 before taxes. That's money that I've funneled back into hitting my financial goals.

Regardless of how far I've come or how far I still have to go, regardless of whether the market is up or down, I keep at it. I am consistently saving and investing money for my future. This is probably the most important piece of advice that I can give. You might hit stumbling blocks as you work toward your goals, but as long as you're consistently working toward them, it's a victory.

Tim Stobierski is an inbound marketing consultant at Pepperland Marketing, a freelance writer and editor, and the founder of StudentDebtWarriors.com, a website dedicated to helping college students and graduates understand the complicated world of student loans. He was formerly in the publishing industry.

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