So…I remember having this same exact feeling – 6 years ago.
It was 2009. I was 26 and living in the very $$ Bay Area. While I was watching my ‘zero-debt’ classmates BUYING houses in the SF Bay Area for 1/2 million (…seriously, 500K 2-bedroom shacks were and are a bargain in that area) I was living debt heavy and struggling to survive layoffs from 38K and 50K jobs. In terms of debt: I had 50K of student loans, and was juggling 5-7K in credit card debt. I also was far from owning any assets – as I was splitting a master bedroom with my future hubby in a 5 person shared house (for a combined 1.2K/mo). My retirement had a measly 2-5K in it (and my then companies 401K stock plan was nuking it every quarter), and I considered it a good month in my emergency savings if the balance stayed above 500.00.
A life without financial struggle – let alone home ownership – seemed absolutely unobtainable to me.
Fast forward to 2015. I am 33. I make over the median income in my field (about 90K – and with stock it is coming out to be 150K before taxes). I paid off all my student loans a year ago (credit cards many years before that). Also, I just closed on a 415K house (10% down – with 12K just added on top of our first mortgage payment) in Seattle (…not as pricey as the Bay Area – but still, not a cheap city). My retirement isn’t exactly flush – but I am in a position finally to max it out every year, and that seems to be a good enough start for now. My Emergency reserves stay between the 5K-10K range right now.
Financially – I’m many light years ahead of what I thought would be possible back in the lean years of 2009.
Reflecting on this, I didn’t know it in 2009 – but I was measuring myself by the wrong financial yardstick. I was comparing myself and my financial circumstances (as a fresh-out-of-grad-school-paid-for-college-herself persona) to people who had completely different circumstances in life. I went to school (a very prestigious state school) with a fair amount of students whose parent’s footed the bill. These kids had never worked minimum-wage jobs (like I had), and they all had ‘near big city homes’ to crash at after college (so they could save for their future downpayments). I really couldn’t emulate their life patterns and financial timelines because I just didn’t have those circumstances. And it was kinda stupid of me to expect that I could.
However those 6 years of me feeling like I was behind the curve weren’t without some serious benefits for myself. The biggest of all was I learned to live well while living cheap. I never acquired the “must-have-it-all” feeling I see with some of my classmates – which I think can be attributed to them really having “it-all” way too soon.
For example: while I was still eating Top Ramen – some of my friends had parent-paid weddings that matched the balance of my student loans (50K). Also, post-marriage, while they were getting weaned off of the parental dole – they still kept up the lifestyle trends (i.e. new clothes, newest tech, new cars) that they had acquired in their single days on their leaner maritial incomes. Some of these luxeries became charges on credit cards.
Some of these early home purchases were tapped for equity pretty rapidly due to extensive decorations – some of which became martial battlefields (one of my friends split during a very pricey and emotionally taxing kitchen remodel). Some added kids – and left jobs to raise them – but still didn’t offset their lifestyle trends to adjust for the income flux. There were divorces too – which are never cheap.
Now in 2015 – my cheap tastes combined with some very good luck on the job front (keep in mind: I was laid off twice and my husband once during this 6 year period) – I am in a very good position financially. 3 of my classmates – not so much.
I’d encourage you – and anyone else – to really value the broke years of your life. They will teach you alot. Not only how to live cheap (because there is no choice), but how to find the ‘gold’ in the cheap. You will develop a good sense of what “worth” is to you. For example – my husband and I didn’t value having a wedding or honeymoon. So we did some pictures in a park with 3 witnesses (no family), a 75 dollar gold band (that did double duty as my engagment ring), and a 100.00 dress. Then we flew around to see the families for a dinner in their home towns. The whole thing – with airfare to two different states – was under 2.5K.
For us – it was worth it – and we had no feelings about trying to “have it all” when it came to our wedding. Could we have afforded to do more (…on a combined income of 250K** – uh, I sure hope so!!!) but we didn’t want more. I think this has been key to my whole financial quest. Keeping the wants in check.
All this came from living cheap by necessity in 2009. Now I live cheap (but not as cheap…there is a 415K house I’m sitting in right now) by choice in 2016.
**obviously, another big key to this picture is the huge income leap between 2009 and 2015. In 2009, my future husband and I weren’t even breaking the 100K threshold combined. With him still in grad school – it was something like 60-70K after tax. Now it is 200K without stock sales. With stock sales it can be between 250-350K. I should add that company stock sales have been huge in this picture. I used them for the down payment and to nuke 1/2 of my student loan balance. When I was buying, I was told by my mortgage broker that most down payments in my neck of the woods comes from vested stock payments.