What makes me qualified to give anyone financial advice? My last name is not Gates, Buffett, Bezos, or Zuckerberg. I’m not even a 1-percenter.
You are right. I am not an expert in all things finance. I am not a billionaire. But, I have a system that has worked so well for me that I wanted to share it.
The hustle and bustle of the rat race isn’t for everyone. I decided to leave that life in my mid-30s using the system I describe in my book. I don’t know if you will be able to do the same thing, so I’m going to share how I did it and hope you can find something useful that can help make your financial life better.
I grew up on a family ranch in southwest Montana. We had cows, chickens, horses, sheep, and occasionally pigs. Those animals, and the land that sustained them, did not know about holidays, weekends, vacations, or birthdays. They needed to be tended and cared for every single day.
I don’t claim to have internalized that work ethic. But, I do think that my work ethic was heavily influenced by growing up on a ranch. I start my days early. I feel like I cannot put off things to tomorrow if I can get them done today. I feel like I need to accomplish something every single day. And, when I notice that things are starting to get difficult, I put my back into it.
But, I also found that a lifestyle that is so dependent on your work that you can never take a vacation or sleep in on a Sunday was definitely not for me. I have friends that are still in agriculture, and I have nothing but respect for their way of life. I see pictures of them out on a tractor on Christmas morning in sub-zero temperatures with snow blowing all around as they feed the cows, and I respect them even more.
But, it just serves to confirm: that life is not for everyone.
In 1998 I left Montana and headed to Oregon for college. During high school I had worked at a radio station, and thought broadcast was my future.
Then, I went to my first economics class. Econ 101: Principles of Microeconomics. I was hooked. I had never been exposed to anything like this in high school. It was like everything that happens has an explanation. Every choice people make, every competitive action taken by a firm, every policy enacted by a government… they all just lined up behind a handful of economic principles. And, I loved it. (Of course, I now know that the world is infinitely more complicated than Econ 101, but at the time I thought it was the one unifying principle of the universe)
By the end of the first semester, I knew that my major needed to change. By the end of my second semester, I was the university’s economics tutor. I ended my time at the university radio station and joined the Business and Economics Club. I held a few offices in the club, including one semester as president.
When I graduated in 2002, it was with a BA in Economics with a business administration minor. I graduated Summa Cum Laude, and was awarded Outstanding Student in Economics.
My first job after college was as a personal financial adviser.
I absolutely loved the analytical side of the job. I got to sit down with people and really go through their financial life to find ways to help them get more from their money. I helped people set budgets, start investing, understand mutual funds, protect themselves with life insurance, and set up their estates so that they could leave a legacy to their heirs. It was exciting, interesting, and rewarding.
But, the other side of the job was sales. I needed to sell or I could not eat. That meant cold calling friends and acquaintances. Just like most people, I hated that part of the job. I definitely had the best intentions, but could not help but feel a bit slimy sometimes. I had to ask people to share their financial details with me so that I could make appropriate recommendations. And, it turns out that my recommendations always included buying a product from which I would make a commission. Coincidence? I think not.
After about two years in this job, I wanted to focus more on the analytics, and less on sales. So, I researched what that would look like, and I found that working in the company headquarters would provide infinite opportunities to analyze either financial markets or the firm’s programs to find ways to better help our clients.
But, the jobs I wanted required more than a bachelor’s degree. They either required 10+ years of experience or an advanced degree. Well, I could get an advanced degree faster than I could get 10 years of experience. So, after 3 years of financial advising, I moved to Chicago to go back to school.
As I researched graduate schools, I learned something that I had no idea existed: sometimes grad school is “free”.
If you have a good academic history and you apply to the right schools, you may be awarded a tuition waiver and either a research assistant or a teaching assistant position. This also generally comes with a small monthly stipend for living expenses and helps many graduate students avoid having to work off campus, and to finish their programs with minimal additional student loans beyond what they incurred in undergrad.
But, even if you do not have to write checks to the business office, graduate school is not free. You don’t have to spend very long in an economics course to hear about opportunity costs: the things you have to give up if you choose a certain path. While you are in grad school, you are not out in the work force, earning your full potential.
When I started my graduate work, I intended to get my PhD in economics. However, in the first semester, I had another eye-opening experience. I learned that most of the jobs for folks with a PhD in economics are in academia. In the private sector, at the time, there was almost no difference between the compensation for people with a Masters in Economics versus a PhD in Economics.
So, if I was going to go into the private sector after graduate school, and my salary was going to be pretty much the same whether I had my MA or my PhD, why would I spend the additional two years (at least) in graduate school that it would take to get my PhD? I would have to give up two years salary!
Sure, I was not incurring huge out of pocket education expenses. But, I was expecting that my starting salary was going to be between $50,000 and $80,000 per year. So, if I spent two additional years in graduate school to get my PhD, that would cost me at least $100,000. Maybe even $160,000! Um, no.
There are lots of reasons for going to graduate school, and I cannot comment or judge others for making their own choices. But, for me, I went back to school to advance my career. So, it made no sense for me to drag my graduate program out any longer than absolutely necessary.
So, I enrolled in as many classes as possible, and finished my Masters in 3 semesters, and immediately went to work. I didn’t even attend graduation, I was busy.
My first job with my masters was incredibly interesting. I worked at a major credit card issuer in the department that manages risk. That department has access to a ton of data, and is responsible for setting the secret, proprietary rules that govern whether an applicant will be approved for a credit card and how much the credit limit will be.
The work was fascinating. I got to understand how credit cards work for consumers, how consumers use credit cards, and how credit card companies work.
But, I was not meant to have that job for very long. I was only there for 18 months before a recruiter friend of mine called and said that he had heard about the perfect job for me. I was relatively happy at the credit card company and not really even looking to change jobs. But, he said I should go to an interview, learn about the position, and I would realize that it was like the job was made specifically for me.
He was absolutely right.
The job was in the analytics department at an advertising agency. The department was responsible for determining if the advertising campaigns they were executing for their clients were actually working. In the early days in advertising (in the Mad Men era), spending on advertising was an expense. It was necessary to get the message out, but results were not obvious or trackable.
Then, in recent decades, advertising slowly transformed from an expense to an investment. Chief Financial Officers were starting to require their marketing counterparts to provide them with return on investment (ROI) estimates. For example, if the organization invests $100 million on a new building, they know exactly when they will get their money back. And, the CFO wants to know the same thing for their $100 million advertising budget.
So, advertising agencies had to beef up their analytics chops. And, my recruiter friend was exactly right, it was like the job was made for me. I absolutely loved it. I got access to data that I could never even imagine from my time in grad school. (Side note, if we could ever find a way to get academics access to the troves of data inside our private organizations, we could find the answers to ALL our great questions) I got to lead a team of incredibly bright and curious minds. I got to travel all around the US and a bit in Europe. And, I got to meet and provide advice to decision makers at some of the biggest and most successful businesses in the US.
It. Was. Awesome.
A few years into this job I noticed that when the work got difficult, there were quite a few people that kept their regular amount of effort, some that disappeared, and even fewer who put their back into it. There were tons of late nights that turned into early mornings at the advertising agency. And, over the course of years and a bunch of different projects, there was a handful of people that I kept seeing work on the hard projects. And, those people kept getting promoted.
From that I learned two things.
First, hard work pays off. It may not pay off every single time, but if you really put in the effort to do your best consistently, then you will be rewarded. Just keep it up.
Second, hard work breeds more hard work. Yes, there was a relatively small group of super hard working, high performing people at the advertising agency. And there was another group of people who were quite good at their jobs, that put in a normal-slash-reasonable amount of work. Both groups were paid and praised for their work. The difference was that the super hard working group was asked to take on more and more work. Sure, they were promoted and their compensation increased faster than the other group. But there was a trade-off.
I was at the credit card company for 18 months, and I received a promotion while I was there. I was at the ad agency for six and a half years, and during that time I was promoted four times, including being made the co-department head, managing a team of 30 people with the other co-head.
I was pouring everything I had into my career and it was paying off.
My work life was going great. But, it was my only life. Every plan I made with friends and family between 2008 and 2014 was tentative. I would always say, “I’ll totally be there, unless I have to work.” There were nights that we would break at 3 am and be back to work at 7 am. Most weeks were six days at the office, some were seven. And, when I was not at the office, I was glued to my phone, and I would drop everything to respond to a message if it came in.
That was the trade off. I could see the cycle emerging in my own life: do work, get paid, buy stuff, get promoted, get paid more, buy more stuff.
At some point, I realized that my spending was entirely too connected to my income. If I continued in that cycle of increasing my income, increasing my debt, and increasing my spending, I would never be able to afford to quit. It was like a drug, once you are hooked on spending, you cannot give it up!
In 2010, after two years at the advertising agency, I was thoughtfully living the financial life you are going to learn about if you read through the book. I decided that I was not going to let my spending increase with my income. I had separated my income from my spending. I was building my credit while reducing my debt. I was getting paid for having money. I was running my personal finances like a small business.
I was lucky to have a job that had enough compensation so I could save a significant percent of my salary. By 2013, I was saving over 52% of my salary. This put me on the fast track. It allowed me to achieve in a few short years what it would take others with lower salaries longer to achieve.
If your circumstance is different than mine was, don’t let it discourage you. I think that there are things in my approach that will help anyone get a better handle on their own personal financial situation. Yes, people that start out in a better financial situation will see different results than folks with lower income and higher debt. But, in every case, applying the lessons from Practically Independent will help you become more free. Allow you to live more independent. Allow you to build wealth.
In the middle of 2014, I was able to shift my career again. I set up an online business, replaced my main income with my side hustle, and was able to leave the rat race behind. I’m not going to go into how I set up my side hustle in the book. That is a very specific path that is not right for everyone. Instead, I want to focus on financial advice and tools that are right for everyone. I want to share my practical tips to become financially independent. I am going to focus on tips that will work whether you earn a salary, an hourly wage, commissions, or are self employed.
My life is dramatically different now than in was 10 years ago. I am able to make plans with friends and family that are not dependent on whether I get called into work. I can prioritize my life on my terms.
Starting in 2014, my life was my own to direct. I could set my own schedule, move at my own pace. So, I decided to learn to paraglide. In the Spring of 2015 I took my first flight.
It. Was. Awesome.
I’m not going to bore you with a bunch of paragliding stories. I’ll leave that to Instagram. Instead, I invite you to explore the book, keep an open mind, and hopefully you will find some nuggets that resonate with you and help set you on a path to live your own financially independent life.