The following is a guest post by Dominic. He shares his story about escaping the life of trouble and poverty towards one day reaching financial independence. Reading different perspectives is what makes the Financial Samurai community so awesome. – Sam
They say the best time to plant a tree is 20 years ago. You know when the second best time is? TODAY!
As you are about to discover, it doesn’t matter where you start in life, what matters is how you play the hand you were dealt. You can stand around and complain how the world is unfair, and yes it is very unfair…get over it. Complaining and dwelling on your dire circumstances will do nothing to improve your life, so don’t waste your time. The thing to remember is that successful people do what unsuccessful people are unwilling to do.
We live in unprecedented times with more opportunity than any other time in history. You just have to decide if you are willing to put in the work to achieve your vision of success.
You could say I am one of those rags to riches stories in the making. I entered this world like most, in a hospital room naked and screaming. However, I entered the world with absolutely no advantage. Some might say I was dealt a crap hand. I grew up in a low income area, where my family and most other families were on welfare or some kind of government support. Growing up I slept on the hard-floor of my grandmother’s 2-bedroom apartment with my 3 brothers, while my grandmother and mom shared a bed, and my uncle had the other room.
Shit, we were so poor that my grandmother would use the oven to heat the apartment (not cooking for, but cracking the oven door while it was on with nothing in it). That could not have been safe. And to this day I don’t really know if it was actually cheaper to heat the apartment using the oven vs. the actual heating unit. Either way my grandmother was determined it was the best and cheapest way to heat the house.
MY PARENTS WERE NOT ROLE MODELS
My mom never held down a job longer than a few months and is both an alcoholic and drug addict. You can imagine that it would be pretty hard to hold down a job under these circumstances. I still remember days where she would pile my brothers and I into a car to go and buy drugs with her food stamps. Luckily, we lived with our grandmother who always made sure we had something to eat, even if was just a bologna sandwich.
Oh and my dad was a real winner himself. He is a drug addict and meth manufacturer. A real pair if you ask me. I can actually recall memories of being in a trailer out in the middle of nowhere, while my dad was extracting the pseudoephedrine from cold medicine to use in his meth cook. There were times when he would come home from a cook gone wrong and had his hands wrapped in gauze. You could only guess that the batch must have exploded (later in life he confirmed this by the stories he told). This might all sound like a scene out of Breaking Bad, and after watching the series, that wouldn’t be too far from the truth. My father has been incarcerated more times that I can count and has spent at least 10-years of his life behind bars.
My parents and friends just like them were the kinds of “role models” I had around when I was growing up. If that is what you want to call them. I could probably count on one hand how many of them actually finished high school. I had to reach out to people outside my circle of influence and live vicariously through the people I admired. From an early age I knew I wanted nothing to do with the type of lifestyle I grew up in. I realized early on that education was important and would be my ticket out of poverty. The recurring theme from successful people I met during my childhood was that they all had a college education.
THE REALIZATION TO GET IT TOGETHER
My ah-ha moment didn’t really come until I had a mentor who entered my life sometime in the 6th grade. At the time I had a 1.33 GPA and my school performance didn’t really get much attention at home. However, the new mentor held me accountable and made me bring him weekly progress reports. Soon enough I was getting all A’s and my first of many 4.0 report cards. This mentor took me under his wing and spent a lot of time with me. He was an entrepreneur that owned several pizza places where I spent a lot of my time studying, doing homework, and learning about business. By the time I got into high school I knew I would study business in college.
Let’s face it; statistically I should be in prison based on my background. Instead I went to college, graduated with honors, and got a high paying job in finance out of school. I can’t remember exactly when I made the goal to become financially successful and eventually reach financial independence. Now I make more money in a month than my mother has ever made in a year. Ok, my father may have had some good months when he was selling drugs, but in the end he is almost 56 years old and has nothing.
Over the years I have tried to help both my parents get their life together and have even helped out financially. However, I eventually learned that I was only enabling their lifestyle as they were not willing to change. They just saw me as the bank, and I will warn you that this is the risk you run when doing well for yourself. It’s sad that the only time I hear from most of my family is when they need something from me (and its usually money).
Don’t take this the wrong way. I am not opposed to helping people out, I have spent thousands of dollars over the years helping out family and friends. My goal is to use the money I make to make sure my wife and our future family will never have to worry about money.
Over the years, many people have asked how I turned out the way I did, in light of the shitty situation. I almost always start with a famous study I remember hearing in my college psychology class that followed two brothers over a 30 year period in a very similar upbringing and family background to mine.
One brother went on to be very successful by American standards (he was earning a 6-figure income, was college educated, owned a home, drove a nice car, and took nice vacations with his wife and kids) while the other brother ended up in and out of prison. Like his parents he was addicted to drugs and hadn’t amounted much. At the end of the study the psychologist ask both the brothers the same question…Why did you turn out the way you did?
And you know what they said?
They both answered the question the same, when they said “how else would I have turned out when you come from a family and upbringing like I did”.
The moral of my story is that you can use circumstance as a crutch or as a motivator. This country has always been filled with endless opportunity for those willing to play the long game and put in the work. And some might even get lucky here and there and end up with some sort of windfall.
MAIN THREE STEPS I TOOK TO BUILD WEALTH
1) Work Harder Than Your Peers – If you want to be successful, you have to be willing to put in the hard work. You have to be willing to do what other unsuccessful people are unwilling to do. I was able to double my income and ear over 6-figures because I put in the extra hours when everyone else was running for the door at 5 p.m. And it wasn’t always in the office. A lot of the extra hours I put in was learning new skill sets that would make me better and more efficient at my job.
2) Get A College Education – The studies continue to show that there is a direct correlation with income and education level. If you want to earn more than you need to learn more. If you want to enter the workforce making $50,000 to $100,000 year, you need to get an education. Yes, there are successful people without college educations and they are the exception to the rule. And you don’t have to go to a Ivy League either. I went to a state school that cost about $10,000 in total for my bachelor’s degree.
3) Pay Yourself First – I learned early on in my career that you need to pay yourself first in the form of savings for retirement and investments. I have maxed out my 401K for years now, My wife and I own an investment condo and are always looking for other places to put our money to work. This also means that I don’t drive a fancy car or live in a house that is as much as I can afford. Instead we live slightly below our means. This doesn’t mean your standard of living is degraded. The perfect example is the house we just bought. Instead of buying in Orange County where we were approved for a $750K loan, we opted to move inland and buy a huge house for $370,000 (something way less than we could afford). Our standard of living actually increased, based on the increase in disposable income for both investments and the things we enjoy.
Growing up I promised myself that I would never be anything like my parents and that I would not take the opportunities in this country for granted. I found people that were where I wanted to be. I studied them intently and listened to advice that was so generously given. I have been fortunate to find many mentors help me along the way. I would argue that there is a bit of luck in every success, but luck is really found at the intersection of preparedness and opportunity. If you never prepare yourself by doing the work and making the investment in time and effort, you will never be “lucky.”
You make your own luck based on the decisions you make on a daily, weekly, and monthly basis. You are either preparing yourself for success or you’re preparing yourself for failure. I was on welfare as kid, but I haven’t let that hold me back. I graduated college at the top of my class in December of 2009 and got hired as a financial analyst with a starting salary of $58,000/year. Then in 2012 I joined the trade desk and took my salary to $85,000/year (which was way less than market at the time, but a great experience). Now in 2014, back in corporate finance, I am earning over 6 figures and on a combined basis brought in almost $214K in 2014.
JOURNEY TO FINANCIAL INDEPENDENCE
I had nothing to lose and everything to gain. Why wouldn’t I work my ass off to take advantage of the abundance of opportunity staring me and the rest of the world in the face. My ultimate goal is to produce a monthly income of $50,000/month. That means I need a net worth of around $10M that earns 6% interest annually in order to never touch the principal. 2015 is the year I start tracking net worth and marching toward that goal.
If you are not where you want to be in life then do something about it. Take action. Or as Ghandi has so famously said “be the change you want to see”. Or take a lesson from the late Jim Rohn. He says “If you want to have more, then you must become more.” There is no way around it that it will take time and effort, but if you are willing to pay the price of success you can achieve anything. It’s never too late. Yes the best time to start to achieve financial independence was 20 years ago.
You know when the second best time is?
– Gen Y Finance Guy
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Financial Samurai started as a personal journal to make sense of the financial crisis in 2009. By early 2012, it started making a livable income stream so I decided to negotiate a severance package. Years later, FS now makes more than I did as an Executive Director at a major bulge bracket firm with 90% less work and 100% more fun. Start your own WordPress website with Bluehost today. You never know where the journey will take you! – Sam