A Journey to Financial Independence

My relationship with money hasn’t always been the best. Before you keep on reading allow me to provide some context and elaborate on specific topics that aim to support my initial statement. I was born in Venezuela in the most beautiful city of the country. I know what you’re thinking … Caracas right? but nope, I was born in Maracaibo. We “maracuchos” are like Texans, our regionalism, festivities and people makes the whole city a pretty unique place to live, at least that was the case back in the 90’s.

Growing up I had side hustles such as washing cars from relatives, painting our apartment during the Christmas holidays and buying mechanical pencils my dad would help me get at our local flea market and then re-sale for a tiny profit at school. I really liked money but knew I had to work for it, there was no such thing as “easy money”. I truly believe my appreciation for working hard and getting compensated were directly influenced by behaviors I saw in my parents. They both came from humble, low class families but worked really hard to give my sister and I an education and opportunities to pursue our own destiny.

One of the best lessons growing up was the discipline my parents had in saying “No” to things I would ask for. As a kid this was really tough because in my eyes I was entitled to everything I wanted. Here I was, getting good grades and helping out at home but still that wasn’t enough. Looking back, I truly believe it wasn’t easy for my parents to say “No”, think about it, who as a parent wouldn’t give their kids the whole world?. I’m not sure whether there was money around or not, but what I do know is the the lesson on the difference between “wants” and “needs” became one of the corner stones in the way I live my life.

Saving wasn’t always easy but it was possible. In my case, this meant putting money in the bank and forgetting about it. Interest rates were high (double digits), as is the case of most developing countries; however, inflation was so high that regardless of what the banks offered you were losing money everyday. I graduated from high school and went to college to get a degree in Mechanical Engineering. Back home we have both private and public schools, but my choice drove me to the public system which, to your surprise, is more prestigious and recognized internationally.

College was pretty demanding and it was during the summer when we had a chance to take a break. We didn’t have a structured internship program other than the one you had to fullfill at the end of the curriculum. Looking back, I think this was a missed opportunity. My hometown had plenty of companies (mostly international in the Oil & Gas sector) looking for people and I could have easily landed 3-4 internships prior to graduation. Learning, getting some hands on experience and networking would have come handy. The money would have been fine but certainly not the main driver for getting that exposure. Regardless of my mistake, I actually landed a job even before graduation. I was 24, making decent money, living with my parents and pretty much 0 expenses. I took advantage of this situation by saving a big chuck of my income. At the same time, I was exchanging every “bolivar” for US $ in an effort to avoid domestic inflation. I opened a savings account in a brick and mortar bank that didn’t require you to have residency in this country. By the time I was 27, I had saved approximately ~ $25,000 sitting in a super low savings account. I’m not sure I’d say this was the right strategy but I found it to be the best one considering the options I had at my disposal.

I moved to College Station, TX at the end of 2007 to attend grad school at Texas A&M University. Considering I was coming from a city that had a population of ~ 1.4 MM, moving to this small town, believe it or not, brought a rush of excitement to this new chapter in my life. I won’t lie … It wasn’t easy leaving family, girlfriend and friends, but today I can say the sacrifice was well worth it.

During my 2  years at Texas A&M, I worked as a research assistant (RA) from day one. I planned on using my savings to pay for school but to my surprise RAs were eligible for full paid tuition as well as salary. Here I was learning, doing research and making money along the way. In the big scheme of things my salary was not the greatest but for me it was huge … $1350/month … boo-yah!.

I cannot say enough about my experience in grad school. I enjoyed every second of it. I made friends who came from all over the world and it ultimately gave me the opportunity to call the US my new home.

I graduated in December of 2009 with a Master of Science in Petroleum Engineering and got hired by an Oil & Gas company right out of school. The offer letter I received included salary and a signup bonus …stop!, I said in my head… what the heck is a signup bonus?. When I read the letter, I just couldn’t believe it. I was happy, excited, humbled and ready for what was coming next. Believe it or not I was off to even a smaller town that College Station, TX. I was on my way to Gillette, WY.

On boarding went great; however, looking back I don’t think they did a decent job explaining my benefits. I heard about a 401K but had no idea what it was. I heard somebody said something about IRAs and also HSA. I didn’t pay too much attention as I preferred not dealing with that. The less I knew about all this weird stuff in the US the better. I had my money in that low interest savings account so life was good. I did know there was a company match and that it was free money so I did set that up. As for the funds in my 401K, I had no clue so I just chose the first options that appeared to be competitive… please JJ define competitive. As a result, this ended up being a mistake on my part.

I was contributing to my 401K up to the match but decided to I increase it to 10%. My selections still sucked but I was fortunate the year I invested everything kept going up. Aside from investing in a 401k I was saving more than 50% of my take home pay. My savings bucket was growing up substantially but guess where I parked the money? …. in an amazing 0.01% savings account.

Despite the mistakes I was making I did make one of the best decisions in my life and that was marrying my girlfriend from Venezuela. Yes! the one I left behind when I came to the US. She joined me in Gillette, WY where we lived as a couple for a few months before I was transferred to Denver, CO. As a married couple we discussed our finances but I won’t lie my wife was not very interested in the topic.

The more people I talked to the more I was hearing about the stock market, investing, etc; however, It was all noise and basically my strategy was turning down the volume and staying the course. I was so scared of the stock market, I had heard so many horror stories that I decided not to entertain any risk associated to it. Years passed and we were now in Texas. In 2011, recognizing my lack of interest in finances and investing I asked for help. My company had this deal with Financial Engines so I went with their service for managing my 401K. When I signed up the cost was 0.53% of managed funds. I remember thinking It was a phenomenal deal.

For some reason, I always felt my relationship was money was at a good place. I worked, saved (low-interest), invested in a 401K, and was headed for retirement right?. Thinking back, my relationship with money was there but we were just not talking to each other. I had many opportunities to learn about strategies for efficient money management but I made a conscious decision not to learn anything about it.

In 2013, we decided to buy our first home and overall I think we did a decent job getting a 3.75% 30-year mortgage on our property. That same year we were blessed with the arrival of our little guy who came right around Christmas. By far, best present ever. I had always felt responsible for my family but this was taking everything to a whole new level. From this point on, I started to see life with a different perspective. Suddenly I found myself doing research around 529s, HSA and a little bit about IRAs. Despite the fact I dedicated a lot of time to learn, there were no actionable decisions that came from that effort.

My 401k was in good shape but still the majority of our savings was sitting in a low-interest savings account. I had set up an HSA at work but still knew nothing about strategies for this type of account. Everything about Personal Finance (PF) just seemed so complicated, and honestly, I was literally overwhelmed by the perceived complexity of the subject. In 2015, we moved to Colorado and during my commute I started listening to podcasts about money in an effort to see if there was a way somebody could democratize the topic for me. Little did I know this would cause an inflection point in my life. The more I listen, the more I wanted to know about tools, resources, strategies and everything about this crazy idea about being financially independent. Early retirement sounded fascinating.

Fast forward to 2017 and I’m glad to say that we now have light of sight. I truly believe my relationship with money has shifted 180° and it feels like we are now on the same page. I hear people in the PF world talking about happiness and what it means to them. For me it’s about my relationship with god, my faith, family and friends. It is also about having options and time to do what I love. I still work full time but I consider myself lucky because I get to do just that.

Today, I see time as a precious commodity and I can’t wait to get to the point where options start to emerge that could provide me with the opportunity to do the things I enjoy the most. I want to continue to grow as a human being and time is a key ingredient of that recipe. I’m a goals-driven individual and as such have put a plan in place to guide us in our quest for achieving Financial Independence (FI). We are not close to retiring but we are actively working on it. So far we have done the following:

  • Mortgage on primary residence – 30Y Fixed  at 3.125%
  • Car loan – 5Y Fixed at 3.125%
  • No credit card debt but we use them for all expenses to get the rewards – we pay them full at the end of each month
  • Maximize contribution to Roth 401K at work
  • Maximize contribution to HSA
  • Maximize contribution to IRAs at Vanguard
  • Contribution to Colorado sponsored 529
  • Emergency fund at Ally Bank
  • Betterment Account
  • Robinhood Account
  • Lending Club Account
  • Rental Properties (3 so far but working on more)

Timing is defined as the choice, judgment, or control of when something should be done; however, the outcome of that decision is a different story. Inflection points are always present in our lives but I think is up to us to recognize these events, and more importantly, decide if we are willing to turn things around. I definitely took myself out of my comfort zone but I couldn’t be more grateful and happy to be where I’m at today.

Sharing with you and those closest to my heart is pretty much the engine behind the idea of creating this blog. I want to use it as a vehicle to be vulnerable and just lay things out there for people to think about stuff. I continue to be fascinated by everything around PF and FI. I’ve discovered blogs, podcasts, strategies, tools… but more importantly, a vast amount of resources available at your finger tips. I’m not an expert in personal finance and I will not pretend to be one; however, what I plan to do is to share my journey including some lessons learned, mistakes, tips, small wins and losses and ideas to keep life simple while making progress toward FI.

Until next time… JJ

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