my journey from negative net worth to financial freedom

Walking into the FIRE

Walking into the FIRE

Allow me to reintroduce myself, I’m BG and I think I’m on FIRE. I didn’t even know what FIRE meant until a couple of weeks ago. I’d been googling “house hacking” to find some podcasts I could listen to while cleaning up my place. I stumbled onto the podcast page for ChooseFI, hit play and in a few minutes heard the hosts mention the “FIRE community.” No lie, my first thought was: “WTH does Burning Man have to do with financial independence.” Then I googled it and found FIRE stands for “financially independent, retiring early.” Ah, OK, simple enough. It’s basically an acronym succinctly describing what I’m trying to do with my life.

But doing a bit more digging I found out that FIRE is a community of people who have or are on the road to retiring early. These are people taking drastic steps and sharing effective strategies to: save 50-75% of their income, pay down large debts in 3-5 years, invest in ways to maximize income, find creative ways to cut down expenses…all in the name of retiring early and living a life full of experiences. This last bit is an important one for me. I’m trying to live a life that’s not about being caught up in material possessions or keeping up with the Joneses. Things at the end of the day mean very little and are often valued even less. Extracting myself from the rat race of ending consumerism means, with action and intention, I can retire in a time frame that’s actually doable to reach.

Stumbling onto the FIRE community, of fellow millennials (mostly), has me refocusing my energies away from just real estate investing (REI) to improving my overall financial picture. So, I revamped my blog. Being a complete WordPress newbie, it’s taken awhile to finish – but here it is, new and improved. This blog will reflect my new thinking and open space for me, and anyone else interested in the discussion, to talk about the journey to FIRE and financial freedom. I’m actually hoping to meet more people like me, those starting from a point of literally negative net worth. 🙁

Way down in the hole

My truth: according to my MINT app, my current net worth is: -$112, 423. When I saw that figure I had to laugh at the ridiculousness. I’d never actually calculated my net worth before. Here’s how my numbers break down:


ASSETS

Cash: $1,150

Investments: $2,119

Real Estate (value): $111,000

 

LIABILITIES

Credit Cards: $11,243

Loans: $215,449 (lmao)

 

ASSETS ($114,269) – LIABILITIES ($226,692) = NET WORTH (-$112,423)


From my first credit card at 18 to my ballooning student loan debt after grad school, my negative net worth has been well in the making. Yet, I’ve been able to maintain a good credit score (750s) and purchase a home. I think it’s telling, though. I’ve been for the most part financially stable (as far as being able to pay my bills) but broke at the same time (debts>assets = in the hole). Debt rules the world. But for me, it’s now time to face the realization that I can’t reach financial independence without addressing the elephant in the room. My (-) net worth is a hurdle but it’s one I know I can overcome. I’m going to start by doing my research. There are a few finance gurus like FabFinance and Boyce Watkins (thanks Siwatu for the suggestion!) that I’m following. I’m also going to start cataloging and practicing the many strategies I’m reading about in the FIRE community. I’m actually pretty excited!

No way but UP

Right now, my REI plans stay the same. But as I learn more strategies to improve my net worth, I’ll be adding more specificity on the personal finance front. Thus far my plans, simplified, are:

Sell primary residence

Pay off credit card and personal loan debt

Get a job and start saving at least 50% of my net income

Initially, start making income based payments on student loan debt

Couch surf/live with mom until I find a multifamily property to hack

Buy said property and live there for a year

Buy at least two properties per year until 25-30 properties cap is reached

Use cash flow to accelerate debt pay down on properties (debt snowball)

Use savings from job to make large payments on student loans until paid off

Retire early in 13 years, debt free, living life how I want

Ha! Reading this out loud it all seems so easy. I’m know it won’t be – but I’m committed to sharing my ups and downs. In future posts, I’ll talk about how I got myself in a hole and add details on how I plan to climb out.

 

Am I the only one with a 6 digit negative net worth? Please leave a comment below!

 

Motivating Mantra: “Time Heals, Writing Cures”

I’ve kinda been in an episodic mental apathy for a bit and finding it hard to concentrate (</3). But time has truly been a friend. Not only that, I’m remembering that writing is really cathartic for me. I’d stop writing down my deep, inner thoughts years ago. I guess because life caught up with me. But it’s an activity I’m restarting. I won’t necessarily be spilling all my tea on this blog, but I’m committed to becoming intentional about writing, especially when I’m dealing with difficult emotions.

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