How I Saved 40% of My Monthly Income & Amassed $100k in Assets Living in San Francisco

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I am not much different than you.

I am a 24-year-old college graduate.

I have a normal W-2 job that pays me a slightly above average wage.

I have over $85,000 in student loans.

I love spending time with friends, watching sports (go Pats!), and traveling as much as I can.

In the past few years, I have traveled to over 25 countries and 20 states. I have skydived in the Swiss Alps, scuba dived in the Galapagos, and hiked Machu Picchu. My extracurricular activities over the past couple of years have not been cheap, and I have no intentions of changing them.

I have also been able to save over 40% of my monthly income and have amassed over $100,000 of assets in under two years since graduating college.

Let me start by saying this: Everyone has a unique opportunity that they can capitalize on. For some, it is obvious. For others, it is not. For everyone, it is extremely valuable to put forth the effort to discover what opportunities you have and how to capitalize on them.

Saving 40% of my monthly pretax income of ~$5,400 and $100,000 in total assets makes me nothing more than a novice in personal finance. Many of my peers, who make significantly more than me, have failed to discover their unique opportunity and find themselves saving very little, if anything at all.

In just a few words, what I have done is discover my unique opportunity, automate my saving/investing strategies, and make better lifestyle decisions. Keep reading to hear how.

Saving & Investment Strategies

Assuming you receive a W2 paycheck each week, there are three times upon this money hitting your bank account where you should save and invest:

  1. Before it is taxed
  2. After it is taxed, but before any expenses
  3. After your expenses

Let’s dive a little deeper into each step.


Step #1: Before it is Taxed

As I am sure you have noticed, the annual salary that you signed for on the dotted line is not the amount that hits your bank account. While it differs by state, everyone’s favorite uncle takes approximately 30% of income each month for people in the 25% tax bracket (including social security, Medicaid, etc.).

One way to reduce the taxes you pay now is by setting up a 401k and investing a portion of your paycheck into it each month. You decrease your taxable income and delay any income taxes paid until after your investments have appreciated and generated a return.

“But, Craig, I can’t spend my 401k without a penalty until after I retire.”

This is true. However, there are many different ways you can leverage your 401k penalty-free. You can take a loan against it. You can self-manage it. You can even take advantage of the tax system by rolling it into a ROTH account in a year where you realized less income and are in a lower tax bracket. The opportunities are limitless, and there are strategies out there. Consult a 401k wizard for what works best for you.

Related: How I Saved $20,000 in 2014 and Used it to Invest in Lifestyle Design

Many employers offer a match up to a certain percentage. My suggestion would be to take full advantage of that. It’s free money! This was my unique opportunity and one of the main reasons I was able to amass over $100,000 in total assets. My employer matched 100% up to the maximum of $18,000 per year.

“My employer does not do a 401k match, so this is not possible for me.” *Open fridge, grabs Bud Light, and returns to World of Warcraft.*

Keep that game paused!

I did not include any returns or the 401k match my employer provided as part of my 40% monthly savings calculation. This is only the portion I invested.

Since my strategy was to take full advantage of this, I invested the maximum amount of 25% or ~$1,500 of my monthly paycheck into my 401k. Keep reading, as later I explain how I was able to afford this through lifestyle design.

After step 1 (pretax investment), $1,500/$5,400 has been saved and invested, representing 28% of my income.

Step #2: After You Are Taxed, Before Your Expenses

After investing in the 401k, Uncle Sam takes his share. Because I had the luxury of living in California (it truly is a wonderful place), I paid taxes of ~$1,100 each month. This left me with $2,800 for my monthly expenses.

As George Samuel Clason coined in The Richest Man in Babylon, “Start thy purse to fattening.” In other words, “Pay yourself first!” Before paying your landlord, the bank, the local grocer, the gym, pay the man (or woman) in the mirror!

My recommendation is to set aside at least 10% of your after-tax income and put it away in an investment account of your choice. I would advise against a simple savings account. Keeping your money in a savings account is losing you money. You are earning 0.5% interest on 2% inflation. You do the math.

To automate “fattening thy purse,” I have set up an automatic deposit of $400 a month with Betterment, a robo-advisor that invests your money in different stocks, bonds, and mutual funds depending on your risk profile. As I write this article, my annualized Betterment returns are 9.0%—significantly better than 0.5% earned in a savings account.

Now that I have saved an additional $400 to save and invest, my total saved this month is $1,900 divided by $5,400 of monthly gross income to arrive at 35% of my monthly income saved.

Step 3: After Your Expenses

After steps 1 and 2, I now have $2,400 for my living expenses. Enter, a website and phone application that allows you to set a budget and tracks spending in accordance with the budgets set. I set budgets to ensure I do not overspend and am self-disciplined enough to stick by them. I will spare you the granular details of my monthly spending, but here is the gist.

My three largest expenses are rent, student loans, and food and drinks. Reducing my expenses in each and confirming that I am spending wisely in these categories will allow me to save the most.


When moving to a new place, I am a Craigslist fiend. I search and search until I find a phenomenal deal. To spare my previous landlords with whom I have great relationships with, I will not share the details of how much I paid. I can tell you that I have lived in a livable environment with my own room in Boston, Palo Alto, San Jose, and San Francisco for under $1,000 a month. Here in Denver, I pay ~$600 and live in a brand new apartment complex in one of the most desirable areas.

Rent remains one of my largest expenses. To eradicate it completely, I am looking to house hack my first multifamily property in the next few months. This is an option for everyone, and I highly recommend considering it.

Student Loans

Student loans cost me $700 of principal and interest each month. Other than pay it down, there is nothing more I can do to reduce this monthly payment. Since my interest rate is ~6.0% and I am confident I can make more than that in Betterment, I choose to continue to pay the minimum payments until I cannot make 6.0% or greater.


Food & Drink

Personal health is one of my greatest values, and I can tell you I am not merely surviving on Ramen Noodles, Lean Cuisines, or Hot Pockets. In fact, you could not pay me to eat any of these things. Believe it or not, I cook! I purchase organic groceries at Trader Joe’s or Safeway and eat like a king! I cook my meals 3 to 4 days in advance, which ensures that I eat healthily and limit my restaurant and fast food consumption.

When an opportunity arises to go to dinner or out with friends, I rarely say no. Instead, I go and get a small appetizer or eat before and enjoy the time with my friends.

Cutting back on drinking will also save your more than just your wallet, but your body and mind as well. I encourage you to try not drinking for an entire week and see how good you feel.

However, I do realize not drinking for many people my age is out of the question. How about limiting it to one day a week? Rather than getting trashed at the bar, pregame (or pre-drink) at someone’s apartment.

At the end of the month, my food & drink expenses account for about $275, and I set aside another $175-$300 for gym membership, travel, and other miscellaneous expenses. In this example, I will use $200 as my miscellaneous expense.

Related: How I Went From $0 Net Worth to Qualifying for $1M in Real Estate Financing in 2.5 Years

After all of my expenses are accounted for, any residual income I have, I save and invest. I use an app called Digit, which tracks spending habits and automatically transfers money that you should be saving from your checking account to your “Digit” account. With this, I save an additional ~$250 per month after all of my expenses.


After putting money aside in each of the following steps, I save ~$2,200 per month on $5,400 of monthly gross income. I’ll save you the calculation. That comes out to saving 40% each month. My employer’s 401k match along with compound interest, the eight wonder of the world, has allowed me to grow my savings from $30,000 to over $100,000 in under 2 years.

I’m not an angel (sorry, Mom) nor am I a financial guru in personal finance. In fact, I have NEVER taken a personal finance class in my life. I am a young and dumb 24-year-old kid who has committed to living life to the fullest while putting myself in a financial position such that in 5-10 years, working will be an option for me, not an obligation.

The strategy and examples I outlined above work for me and my unique situation. It may not work for you. What does work for you? What is your unique situation? Think creatively. How can you save 40% or more of your W2 income? As the old adage goes, “Whether you say you can or you can’t, you’re right.”

[Editor’s Note: We are republishing this article to help out our newer readers.]

What outside-the-box strategies do you use to save a significant percentage of your monthly income?

Leave a comment and let’s chat.

About Author

Craig Curelop

Craig Curelop, aka thefiguy is an aggressive pursuer of financial independence. Starting with a net worth of negative $30K in 2016, he has aggressively saved and invested to become financially independent in 2019. From sleeping on the couch and renting out his car, he was able to invest in two house hacks in Denver and a BRRRR in Jacksonville. He plans to continue to investing in both Denver and Jacksonville for the years to come. Craig's story has caught the attention of several media outlets, including the Denver Post, BBC, and many other real estate/personal finance podcasts. He hopes to inspire the masses to grab hold of their finances and achieve financial independence. Follow his story on Instagram @thefiguy!


  1. Cristina Abellar on

    Wow, such an amazing information from a gal your age! Thank you Craig for taking the time to share how you manage your finances in a strategized intelligent way. I’ll forward your article to all my friends & relatives. I’ll put it in a frame & hang it in my children’s room & in my room as a constant reminder. 🙂 Kudos!

      • Craig Curelop

        Hi Hersh,

        Here is what I do when I travel in terms of traveling on a budget.

        1. Flights – Take a look at for cheap flights. On Twitter there are a few accounts such as TheFlightDeal, TravelPirates, Secret Flying, and TPG Alert that announce cheap flights. Also, take a look at overnight train and bus options. You save on lodging for the night and usually cheaper than a plane ticket.

        2. Obviously, staying in hostels is the way to go. It’s cheap and you make tons of friends. A lot of these hostels provide free breakfast. Take full advantage of that. If you can, take seconds on the free breakfast and you’ll have lunch too.

        3. Adventure sports – Something I choose to pay for. Though, everything is negotiable, especially when abroad.

        Hope this helps!

  2. Victor Su

    Interesting article – I have a few questions though:

    $275 / month on food & drink? So, that’s an average of $3 per meal (assuming you eat 3 meals / day), which does seem like you’re eating a lot of ramen (or pasta)!

    To second Hersh, travel expenses seem low to me, unless you got some serious travel hacks I don’t know about.

    I don’t see how you went from $30k to $100k (3x return) using Betterment in 2 years, when you said it’s 9% annualized.

    • Craig Curelop

      Thanks for reading, Victor! All valid questions.

      1. I purchased most of my food in bulk and meal prepped it. Obviously, this limits the variety of meals I ate on a weekly basis, but I didn’t have a problem with that. There were also opportunities for me to have a free meal here and there throughout the week at work or at certain events. Sometimes, it would be more and I would have to dip into the “misc” expense.

      2. I replied to Hersh’s comment above with a few travel hacks that I do. This includes searching for good deals, staying in cheap hostels, and using overnight bus/train transportation. I also have a Chase Preferred card that allows me to cash in my points for travel.

      3. The $30k to $100k was not solely from using Betterment. That included my 401k which my employer matched 100% up to the maximum. A rarity, I know, but that was my “unique advantage” that I exploited.

      • Ben Rice

        Hey Craig,

        Congrats man! You are on a great trajectory for someone your age. But to clarify, your employer matches all $18k? So over the last 2 years they have matched $36k? That is quite unreal, and good on ya for taking advantage of it.

  3. Ed Perez

    Craig, Good for you that what you’re doing is working for you. I know most people already know what you were discussing. There’s nothing new to your article. The only thing that separates you from others, who cant seem to amass a larger nest egg, is your DISCIPLINE! If others have the same discipline, they will be in the same position that you’re in. Once you start a family, however, you will notice (guaranteed) that you will spend a lot more on food, clothing, utilities, toys, etc and a lot less of your traveling leisurely, eating out, etc.

    • Craig Curelop

      Thanks, Ed!

      Without a doubt. What I am doing is certainly nothing new. It’s just taking the time to think through one’s financial situation and make the most of any opportunities at hand. I totally understand my expenses will significantly increase as I get older and start having a family. I think it’s smart to do everything in one’s power to grow one’s income at a higher rate than one’s expenses.

      • Ed Perez

        Amen to that!!! Sometimes people in their 20s have never thought about taking advantage of their employers 401k plans, traditional and Roth iras, having EFs, etc. My three kids (20, 18, 14) are investing their CESA accounts on RE. Every single month their college funds are growing. In addition, my two older kids already have their Roth IRAs accounts set up. I think, financially, they’re ahead of their peers.

        • Craig Curelop

          That’s awesome, Ed! They definitely are ahead of their peers.

          Just make sure they are aware of the comparison trap (something I fall into and am working on). Comparing themselves to those who are behind them, will cause them to ease up and go backwards. Comparing themselves to those ahead of them will push them forward.

  4. John Murray

    You got yourself a great start! $15K in net worth at age 24 is something to be proud of. I’m 59 and at your age I got out of the Army after 6 years and was worth about $20K and started building my future.Used all my GI Bill and got married to my best friend and biz partner. Now I’m worth about $2.5M all passive income with 8 SFH rentals. Paid for my 2 kids to get bachelors and they have a bright future. There is hope for the millennials.

  5. Chris B.

    While your discipline should be commended, your numbers don’t add up (or I’m not reading your story correctly). Are you claiming that you visited 25 countries and 20 states in the last 2 years on a “misc and travel” budget of $175-300 US a month? Where are these countries that you are visiting located? Are you taking a bus to Canada and back 25 times for day trips? Or am I reading this wrong (i.e. you did those things prior to starting this savings plan or when others were paying for them)?

    You certainly aren’t traveling to those countries using nothing but the travel points on the chase sapphire preferred even with the 100,000 point sign up bonus (which I believe you needed to spend $4,000 in 3 months to get). It doesn’t really matter how much you travel hack. There are only so many counties that you can take a bus or train to. International flights only get so cheap… and one only has so much vacation. Things like skydiving and scuba also cost money.

    You could have went from 30k to 100k in 2 years (not including returns) simply by maxing your 401k (with employer match), so I assume that more of your money could have been used for travel.

    In any case, you are doing good work.

  6. Amanda Woolever

    Love your financial management Craig! I’m in the San Francisco area and have a very similar budget and lifestyle. I use Wealthfront instead of Betterment and Personal Capital instead of Mint. I’m in my 30’s and have only become more financially educated in the last couple of years. Wish I would have started in my 20s like you! I just paid off my student loans and my next step is to start investing in real estate. I just discovered BP and am working on my education. Maybe a house hack here, or invest out of state….prices are insane here and scary for a newbie!

    • Craig Curelop

      Thanks, Amanda!

      It definitely sounds like you are on the right track. WealthFront and Personal Capital are great too. Congratulations on paying off your student loans! I’m sure that’s a huge load off. BP is definitely a great place to be to learn about real estate so keep reading and listening to the podcasts.

      That’s a big reason why I moved out of San Francisco. The prices were so high that it was extremely difficult to make the numbers work. If you are looking to stay in the Bay Area, I’d recommend checking out some places that are ~2 hours away. You should be able to find something!

  7. How I amassed a million dollars in SF in under 20 years: Bought a house.

    And the plus side is I paid less than renting an apartment would have been and I didn’t have to “save” any money to do it. Not to negate this persons story I am just saying that there are easier ways to make get a big nest egg.

    • Craig Curelop

      Kurt, I appreciate the response!

      Sure, you could buy a house in SF and have a million dollar asset. It’s likely you also have debt that’s ~$800k+ as well. Also, it is difficult to purchase a million dollar property without at least $100k as a down payment.

      • Hi Craig, Well you gotta start somewhere. And it sounds like you are onto the fact that $100K isn’t a great deal of money in SF. But at least you should also understand most SF owners made a lot more than you did during those couple of years just because they owned property in SF. And long term you are in for a long tough series of setbacks trying to keep up with what a house will do appreciation-wise. It’s simple math. A million dollar house goes up 5% that’s $50K and the owner did no work whatsoever to make that. Whereas you had to do all kinds of calculations and sacrifice just to keep up.

        • Kurt, you owned a house for 20 years and only made a million dollars?

          You could have just invented Tinder or Uber and made millions in months. You could have just won the lottery and made millions in seconds. Not to negate your story, but there are easier ways to make a big nest egg. It’s simple math. And you had to pay taxes and do all kinds of maintenance and up-keep.
          /end sarcasm.

          What makes Craig’s story more interesting than your anecdote is how disciplined he is with his finances, and how that strategy has built his wealth. That discipline and those skills (cooking, looking for deals, investing) will serve him well, even through housing ups-and-downs (will your house appreciation do the same?).

  8. Jessica Renard

    Great article!! Thanks for sharing your commitment! It’s inspiring, and nothing hurts that you manage to make life enjoyable without emphasizing materials a lot, and can position yourself like Kurt did too. Travel can be a luxury – I can see where the costs you mention pose a question. But even if you set it aside to reach your goals, I’d give a salute and appreciate your reveals.

  9. Craig Curelop

    Thank you, T!

    And double thank you for your concern around my student loans. Right now, I’m looking to purchase a property that will earn me more than 6%. Until, I feel as though I can’t generate a return >6%, that is when I will pay down some of the student loans. 🙂

  10. Nathan Gogo

    Great work, Craig! I enjoyed reading your story and you’ve encouraged to save even more!
    Quick question: Do you own a car?
    Also, I find it incredible that you’re able to travel the way you do on the budget you have. Do you have any tips for cutting those costs?

    • Craig Curelop

      Thanks, Nathan!

      In San Francisco, I did not own a car. However, since moving to Denver I just purchased one. I also started driving for Lyft to try to turn the car from a “liability” to an “asset.”

      As for traveling, I would just continue searching for cheap flights on sites such as andTheFlightDeal or SecretFlying on Twitter. When you can, book overnight trains/buses when going from one place to another. It’s a cheaper mode of transportation and you save on lodging. Take advantage of any free food given to you at hostels. Also – only go out to eat a few times a week rather than everyday.

  11. Barbara Rogers

    Great info and inspiration Craig! Keep up the good work and caring about others by sharing your tips and success. Savings is so important, I wish I would have had the discipline and drive to save like you have when I was making good money. Our biggest return on investments were the homes we bought and sold. Our biggest downfall was crefit card debt and taking equity lines of credit out on our homes along with overspending. Unfortunately I had a passion to spend money instead of saving money! I have had to learn from my mistakes.

    • Craig Curelop

      Thanks, Barbara!

      Credit card debt can definitely be tough to get out of. It is good that you have recognized and learned from your mistakes. You are steps ahead of many other people who make the same mistakes over and over again.

  12. Silas Caporal

    Hey Craig, great post! As someone in the same age group, i was just wondering what your Betterment profile looked like during this time in your life. Were you playing it moderately safe or aggressive? Did you have it set up for long term returns or for the regular dividends? Thanks!

    • Craig Curelop

      Hi Silas, thank you! I’m glad you liked it.

      There’s not a really a right answer for this and aggressive to you may not be aggressive to me and vice versa. Since I am a not a stock market guy (I don’t want to be), I allocate my stocks to bonds ratio by this very simple formula.

      % of bonds = my age. I’m 24 so I have 24% bond allocation.
      % of stocks = (100 – my age). 100-24 – 76. I have 76% equity allocation.

      Again, not rocket science by any means, but it works for me.

      I let Betterment do the long term returns/dividends for me. They reinvest everything.

      Hope this helps!

  13. hugues Armand-Delille

    Awesomeness Craig!
    Well done. I have been on a similar journey.
    And I find that when there is a vision and a true “why” behind financial discipline, saving become a source of joy rather than sacrifice.

    Best of luck to you.
    Regards from Berlin, Germany

  14. Nate Richards

    You’ll have to switch it up dramatically when you see market adjustments, which are eminent. You’ve been riding one of the best stock market investing periods in history, 2009-2017.
    Also, how are you going to maintain this rate when your salary growth pushes your 401k contribution past the allowable limit? When the market is flat or negative and you pull your Betterment account contribution to pay off student loan principal how will you maintain 40%?

    40% is nothing to sneeze at, but make sure it’s not just a flash in the pan, you’re headed for some mandatory adjustment periods, it’s just the law of averages.

    • Craig Curelop

      Nate, thanks for your comment!

      I do not plan on continuing this strategy. I am expecting to close on my first property here in the next couple of months. This article is what I do to save in order to get a down payment on that first property. I recently switched jobs and no longer live in San Francisco. Since I’m not getting the 401k match anymore, I don’t think it makes sense for me to invest into it. I’m now investing more into Betterment while further reducing my expenses.

      Once I close on a property, I will have significantly less expenses given my rent will either be completely or almost eradicated. As I progress through my career, I will ideally make more money and keep spending steady (or slightly increased) to maintain.

  15. Dominick Dahmen

    First off out of full disclosure, I am an insurance agent and somewhat of a finance nerd. I have two comments:

    1. Putting money in a 401k, especially with that match is awesome! But you don’t really have control of it. Even if you put it in the “safest” account, generally money market, they can get hit pretty hard too. Also you’re not saving for retirement you’re investing. Totally different. You can’t control the stock market. That’s why I love business and especially real estate. If you’re the owner, you can (mostly) control the outcome. You also might want to be making mire money so you may be in a higher tax bracket and tax brackets will most likely change by the time you want to take the money out.

    2. Annualized return is not the same a compound return. First, the money can’t even compound because you have to pay tax on money in stocks, mutual funds etc. every year. Now you can pay the tax out of pocket to avoid taking it from the account, but then that’s more expense. Second, let’s say your account is at 10,000 for easy math and in a given year it goes up 19% and down 10% for a net annualized return of 9%. 10,000×1.19 is 11,900. But 11,900x.9 is only 10,710. That’s only a 7.1% return. Obviously better than a 0.5% but not what was stated. And I realize that’s your return and you weren’t quoted an exact return so I get that. But that could change in an instant. Sure you may have control of the money, but what if one day you’re walking to your computer with a cup of coffee in the morning, get on your betterment account and dang, where’d the other half of my money go?? By now it’s too late to take it out. The damage has already been done.

    Just some things to think about!
    Thank you for reading my rant. What are your thoughts?
    Thank you

    • Craig Curelop

      Hi Dominick,

      Thanks for reading and you bring up some valid points.

      1. Having that 401k match was great and I was fully aware that I would not be able to use it directly. However, there are plenty of options I can do to leverage it. This includes taking a loan out against it, self managing it, rolling it into a ROTH account in a year when I’m in a lower tax bracket, etc. I just could not pass up a free $18k a year.

      2. I appreciate you getting down into the details here and you may be correct. However, saving 40% of my income and accumulating $100k in assets has little to do with my 9.0% (or even 7.1%) return. That was just illustrating a point as to why I do not use my capital to pay off my student loans right now. I do not include any returns in my 40% calculation and the $100k in assets largely came from the 401k match that grew quickly. Though, you’d be surprised how many people did not take that match.

      Again, I appreciate your thoughtful comments and I hope I answered some of your questions.

  16. Rachel Bier

    Hi Craig,

    I spent some time with you at the Bay Area REI Summit in Oakland last August, I’m so happy to see you’re now working for BP and have are such a personal finance guru. Big congratulations and I wish you every success in Denver and with your REI goals!

    • Craig Curelop

      Thank you, Rachel!

      Of course, I certainly remember spending a good amount of time with you at the conference.

      Also, now that I’m much closer to KC, you’ll have to let me know the next time you go out there. I want to check it out!

  17. Ro Gela Washington

    Great article! I recently graduated from college also and I’m at the stage where I’m trying to aggressive save to get into real estate (want to start househacking soon). Glad to see practical, relevant savings advice that goes beyond “cancel your Netflix subscription.” I’ll be checking out Betterment (definitely seems like a better savings vehicle than just my bank savings account). Thanks for sharing your tips!

    • Dominick Dahmen

      Hi Ro Gela! I love the saving in Betterment account to get that money away from spending, however it is not really “saving.” It is “investing.” Stocks, bonds, and mutual funds get a better return theoretically because you take on risk. In my opinion, you should try and save that money for let’s say a low down payment on a househack using an FHA loan.

      Just a thought!

      • Craig Curelop

        Hi Ro Gela!

        Thanks for reading! Dominick makes a great point here. Betterment is passive investing. You don’t pick the stocks or the bonds. You just pick how risk averse you are and they do the rest. I’ve had success in Betterment, but that certainly does not make me smarter than the next guy. The market has improved nicely since I initially invested.

        It is entirely possible to lose money with Betterment. That is part of the risk of taking your money out of your savings account. Though, I’d argue having your money in a savings account is pretty risky in itself. Assuming an inflation rate of 2.0% and an interest rate of 0.5%, you’re literally losing money by keeping it in a savings account.

  18. Ramon Purifoy

    Great write up Craig.

    I just want to note that at this time Digit is no longer a free app.

    I used it for over a year and thought it was an awesome app but they have recently begun charging $2.99 a month for their service. You get a 1% return so as long as you keep at least $300 in the account it evens out.

    • Craig Curelop

      Thanks for the update, Ramon!

      I will have to look out for that charge and consider whether it’s worth it. At first thought, it seems extremely worth it to me. Especially if I just need to keep $300 in the account.

  19. I’m so inspired being 43 years old and scared for my future retirement. I am inspired by your story and trying to take better action for my future. I do have a question for you or anyone who can give me the best sound advice. I’m open to all opinions please. I make an about $63,000 per year on salary. I put 8% into my 401k which I check every 30 days to adjust any changes needed. My company ONLY matches $500 per year, which is pathetic. I have credit card debt that is about $6,000 with 0% interest for 2 years. I am going to try and pay that debt off by then by being mindful and frugal on my spending now. I have a 30 year mortgage which I only pay $879 a month. Do you think it is wise to refinance again in a 15-20year loan or invest in a condo I can rent out for extra income? I’m stuck on what I should do here. My credit is excellent but I wasn’t sure if I was able to do both. I know I just put my whole life on the table, but I need to try and make extra income to put away for my future. I don’t want to work till I’m 70 or 75 years old. Thoughts?

    • Dominick Dahmen

      Hi Larissa! I’m not an expert, just a personal finance nerd, but I think I cam help. I work in the world of finance and what I teach my clients is to not put more money in then what your employer is matching. Up to the match is great because it’s free money, but past that is not. 8% of $63,000 is $5,040 per year. I have certain financial vehicles I sell toy clients, but for you, even putting the extra 4,540 away is better then in the 401K. In the 401k you don’t really have the LUC factor: liquidity, use, and control. Do you have any other debt to apply that money to besides the credit card? Also, I wouldn’t advise refinancing unless it’s strategic. Ifyou’re just doing it to pay your hiuse off faster then don’t. A 15 yr mortgage will have higher payments then a 30 yr. What if you fall on hard times and could only afford the 30 yr payments. Just putting extra money towards your payment would be better, even though I wouldn’t recommend that either. I would try and make more money on the money you are saving, such as using it for real estate! I wouls try and use the extra 4,540 (minus the extra taxes on that since it’s not deffered) and try to build a down payments for an investment property. Use that to snowball and that can be your retirment when you get to enough properties. Also, I have learned from listening to the podcast here at BP that It’s the best idea to invest in condos because of HOA fees and the special assesments. Lastly, if you want more money to snowball faster you could transfer your 401k (under certain circumstances) and put it in a short period annuity, allowing you to get your money faster without the 10% penaly. You could then use that money to buy more properties. Let me know what you think!!

    • Dominick Dahmen

      Hi again, that last post I made was very unprofessional. The main I would like to stress is that it’s NOT a good ideaa to invest in condos in my opinion because of the HOA fees and special assesments. Sorry for the confusion!

  20. Larissa Macatangay

    Thanks for your input, you really put a lot in perspective for me to think about. So basically your saying that putting 8% in my 401k is not a good idea? Is there a website you can recommend for short term annuity, which explains more about this? I do not have any other major debt except for my car and my utilities. I am actually looking to relocate to Florida in 8 years, once my daughter graduates high school. I travel there often on my miles that I accumulate to get away from the horrible Chicago weather. At any rate, I was going to purchase a condo to rent out since it seems more financially practical for me, if a renter defaults on payments. I am fully aware of Assessment and HOA fees. I looked into homes, but they are a little higher then I would like to spend. I don’t ever want to be house poor. Once I leave Chicago, I will rent my condo out there, which is in a highly sought out area with excellent school districts. I am able to rent this place out for $1850 to $2000 per month. This would be great extra income for me, since my mortgage is only $879. Any input is always appreciated!!! Thanks again!

    • Craig Curelop

      Hi Larissa,

      Thanks for reading and I’m glad you enjoyed it! I 100% agree with the advice that Dominick gave you in his first response. Going beyond the 401k match is pointless because you can’t use it! I would put $500 into your 401k a year which your employer will match. Then always remember to pay yourself first! Setup an account (I chose Betterment) that deducts 10% or more of your after tax pay before you start paying for anything else. Then pay for all of your other expenses and invest whatever you have left over.

      On the mortgage front – I agree with Dominick. Don’t refinance unless there is a strategy behind it. Maybe you refinance to get some cash out so you can purchase that house/condo in Florida? Doing so JUST to pay it off quicker is silly. You can likely earn more on your money elsewhere.

      Condos can be scary because of the HOA that you really have little control over. However, you also won’t need to pay for any external CapEx, just whatever is inside your unit. I wouldn’t limit yourself to just condos.

      • Joseph M.

        Going past the match isn’t pointless – this is still pre-tax money that can grow tax free up to the contribution limit. That is a massive advantage. If the point is to amass net worth, then it makes no sense to put even a single dollar into a post-tax equity investment vehicle. This topic has been written about quite extensively in the personal finance blog world, this is my favorite article on the topic:

        Now there is definitely merit to keeping it in a post tax vehicle if you need it to be liquid for something like a real estate investment

        • Craig Curelop

          Thanks for this, Joseph. You make a great point and articulate it nicely in your comment.

          For someone like me, who wants to be liquid so I can deploy my assets and use the passive income generated towards financial independence, contributing to a retirement account does not make much sense for me.

          Thanks for sharing this article! I’m a huge fan of the mad fientist.

    • Dominick Dahmen

      First I forgot to mention that out of full disclosure I am a life insurance agent and financial strategist, however anything tax related should be consulted with a CPA. Now that that’s out of the way, it is my opinion that putting money inside your 401k past the match is not advantageous for self-employed people and w-2 employees wanting to invest in real estate. Once the money is in the 401k it’s tricky to get out (talk to a CPA). The stock market is kicking now, but that could easily change. By saving the money over the match amount you also create an immediate source of funds for a reserve account for you real estate. Also I can’t believe I messed this up, to avoid the 10% penalty you’d have to do a lifetime annuity, which at your age wouldn’t pay much per year (or month). However I teach my clients that sometimes that penalty may not actually be one. What I mean by that is you are 43, you would have to 16 years until you are 59 1/2 to take the money out penalty free. The problem is that keeping your money in may be a penalty because say you have 250,000 in the 401k. You pay 25,000 (10%) and about 30% tax on the whole 250,000 which is 75,000. You’re left with 150,000. Even if you don’t use leverage and buy a whole house with this money at a pretty conservative 10% return in cashflow, you would have $240,000 in 16 years which is you’re 150,000 back plus the 25,000 for a total of 175,000. 240,000-175,000 is 65,000. You would create $65,000 is 16 years over what the penalty was AND the house. So now over the 16 years You have $65,000 minus tax (however if you have depreciation on the house your tax could be nothing), the house PLUS appreciation over the 16 years and the cashflow the house still brings. Or you could wait this long and pull out your 250,000 now let’s assume it’s 400,000 and save 40,000 in a penalty. That’s how it works. Almost forgot that you still have the money you saved by not contributing to your 401k. Still I believe that you must be separated from your employer to take the money from the 401k. Again, please consult a CPA because I am not one. If you’re aware of the HOA fees and special assessments and still can be profitable then go for it! I think that’s everything. There you go!

  21. Scott Hibbert

    Hey Craig,

    Great article! As someone who is about to do the reverse relocation than you, any recommendations about moving from Boulder, CO to Oakland, CA? I’m relocating for a new job and planning to cut my housing expenses from $2250/month mortgage to under $1200/month in rent until I find a live-in fix house hack multi-family to buy.

    • Craig Curelop

      Hey Scott,

      You’re moving on us?! My suggestion would be to scour Craigslist over the next few weeks until something pops up. You’ll likely have to live with roommates, but you can definitely find something ~$1200 a month. Especially in Oakland.

  22. Jerry W.

    Since they reposted this I will recomment. You might consider for your next article the advantages of HSAs, health savings accounts, and Roth IRAs or other Roth options. If the money going into your betterment account is classified as a Roth investment then all the money it makes is tax free. With the HSA you get to use that money tax free for health expenses. You will have some health expenses you might as well make it fully tax deductible. Again great article, one of the best.

    • Craig Curelop

      Thanks, Jerry! My last employer did not offer an HSA, but I agree. An HSA is a great option and paying for those inevitable (hopefully rare) health expenses pre-tax is a very good idea.

      Roth IRA and other Roth options are valuable tools as well. Though, I admittedly am not contributing to any Roth accounts right now.

  23. Jackie Young

    Great article for a 20-something. Would love to see a similar article from a 30-something with kids. Doubling, tripling or quadrupling your normal expenses listed above (plus some, because most employers don’t give free healthcare for the employee’s whole family—the employee has to contribute something) and add in college savings and second mortgage (aka daycare)—and things get expensive really quickly.

    • Craig Curelop

      Thank you!

      Yes – I would also love to see that article as well. 20-somethings and 30-somethings are a very different demographic. Obviously, a 30-something year old will need to save on the big ticket items such as housing, transportation, child care, etc. I don’t have an answer for you right now, but as I approach my 30s and start thinking about these things, maybe I can come up with a solution :).

      • Sara S.

        That would be me!! Well I’m not 30 yet but almost. I save about 35% of income. Single parent. 1 child. I pay all expenses. I never had the opportunity to take full advantage of single high income without kids, cheap rent split among a bunch of roommates. I wish! I had my son during my senior year of college. I was very bitter about it for a while but then I just focused on my own path and in a few years I’ll be far ahead of most families I think.

        I’ll try to explain my budget succinctly. My pre-tax monthly income is about $6300. Health, dental, life insurance, plus dependent care and medical flex spending accounts cost me $700. IRS Max to my Roth 401(k) is $1540. Plus I donate $100 to the United Way. My take home pay is just under $3000. I then put $458 into a Roth IRA (doubles as a college fund if I choose) and save $200/month for a new car fund. My mortgage, utilities, internet is $1300. Student loans ($62k left) is $386. The rest is groceries, cell phone and activities, about $600. I paid off my car last year and pay off my miles credit card every month. I use sign on bonuses and miles hack a free 1.5 week vacation every year.

        It took me 3.5 years to get to this level of saving. I bought my first house at age 26 with no money down and rented out 2 of the rooms, worked a 2nd bartending job for a year and basically flipped my first house to sell it for a $20k profit. That, along with my side job and the renting allowed me to put 20% down on my current house, 15 year mortgage, pay off $25k in credit cards and home improvement loans and a 3 year old Chevy Volt. I would like to buy another house next year after I BRRR my current house, in the rehab phase right now.

        I’ll admit it’s hard to save this much without feeling restricted but I worry about what would happen if my income decreases and I wasted the high income when I had it. I’m aiming for financial independence by 40.

      • Raymond Wai

        30-something with a kid here. This is a great article and I did much of what Craig mentions as soon as it was an option for me when I was a 20-something (401k matching, set aside money after-tax, reduce expenses). Today, I still practice all of the saving techniques I did as a 20-something. In addition, we use a Dependent Care FSA to take some of the sting out of daycare costs. Although not very glamorous, we also aggressively paid off our mortgage principal, which in addition to reducing the interest owed also allowed us to refinance multiple times to more favorable terms (no more jumbo loan, 30 yr fixed -> 10 yr fixed).

        Also, Craig mentioned buying food in bulk in one of his earlier comments. No reason to stop at food because it’s even easier with non-perishables assuming you have the storage space. You know you’ll be using those diapers, detergent, and paper products (TP, kleenex, towels), so might as well stock up on them when they’re cheap. I personally bought a year supply of diapers before my kid was even born. It’s not going to net you tens of thousands in savings, but every bit counts.

        • Jackie Young

          Hi Raymond, would you consider writing an article mirroring Craig’s with real numbers etc.? I think it would be very interesting!

  24. Derek Luttrell

    It’s fantastically simple, and this article does a great job proving it. I suppose a big part of the issue is that people wait too long to start. They live out their 20s saying “I have my whole life to save” (actual quote some friends have said), and then their 30s come along and marriage and kids come into the picture, and all of a sudden it’s too late to keep up.

    I’m 25 and have done pretty well at my commissioned sales job (doubling my W2 year over year since graduation in 2014), with my yearly average coming out to $91,000. I put 11% of my post-tax pay into an employer-sponsored Roth 401k, though they only match 1.5% (your 100% match is absurd, in an awesome way). I know there are ebbs and flows, but last year that account saw 27% gains, so I’m happy I contributed that amount.

    I spent two years renting in Chicago, and 6 months ago I bought a 3-bedroom, renting out the other 2 rooms to friends. Because of them, I now pay $250/month for housing, and when you add liquid cash+cash investments, I have $135,000 in savings to date. I close on my first rental property next Thursday, so subtract about $26,000 for that down payment. I plan to learn the landlording ropes for about 6 months, and then cut the check for #2 by this summer.

    • Craig Curelop

      Thanks, Chris!

      I pretty much funnel everything into my Betterment account. I always keep this above a certain amount as an “emergency fund.” I do not keep my “emergency fund” in cash at this point. Maybe this is risky, but I just don’t think the funds I invest in will all be worth nothing and I feel as though I’m leaving out significant potential returns. As my liquidity position improves, I will then likely have a $15k-$20k cash reserve.

  25. Nathan G.

    Excellent article, Craig. I sincerely hope you and Scott Trench take your respective parents to dinner and thank them for the upbringing! People usually don’t discover these things until their 40s or 50s and the kids are gone. Most never learn at all.

    I learned the basics of living within my means but it wasn’t until I was 30 that I realized I had the ability to better my station in life. I saved up and bought my first house. Even then, I was haunted by limited beliefs reinforced by family, friends, co-workers, and society in general. I bought my first investment property at 35 and then stopped there. Why? Because I was already better off than my family and friends so why strive for more?!? I mean, I can’t possibly be wealthy when I came from a poor family, right?

    It took another 10 years before I realized I didn’t have to settle for “above average.” Naturally, this realization came at the same time I was in the process of adopting two more kids. The additional responsibilities and expenses have limited my opportunities to invest but I don’t care because kids are more important.

    I guess the point is that I wish I had broken free of those limiting beliefs earlier. I wish someone had sat me down and showed me the potential in all of us. I don’t mind being limited because of circumstances but I don’t want to limit myself!

    • Craig Curelop

      Thanks, Nathan! I will be sure to show my parents this comment, they will appreciate it!

      I think everyone wishes they discovered this sooner. It’s great that you figured it out at all and are now making it work very nicely for you. No limiting beliefs! Set your goals high and if you hit them great! If not, you’ll be better off than if you set your goals low!

  26. i don’t make as much as you but i save up to 90% of my post tax salary. But what about car and gas and phone and wireless internet and insurance and utilities and cleaning and washing clothes and, well you get the point there is a lot missing in this article in regards to expenses.

      • Craig Curelop

        Ken & Harry,

        Saving 90% of your post tax salary is great! To answer your questions, I was living right next to public transportation in SF so a car and gasoline was not necessary for me. Admittedly, I am still on my parent’s phone plan. If not, I’d be paying about $50 a month… I don’t think that would have a significant impact on this article.

        My apartment included utilities and had in unit washer/dryer. I did not talk about common expenses that I DO NOT have because that would take forever. I only talked about expenses I do have.

    • Craig Curelop

      Hey Laurel,

      So Digit has a $3 monthly charge now. I like to keep $300 in the account so it makes me feel like I’m paying just a 1% fee. Might just be a mental thing, but that’s what I do. At the end of each month, anything over $300 I move over to my Betterment account.

    • Craig Curelop

      Thanks, Noreen!

      A little upset you aren’t going to be cheering for the Patriots in the Super Bowl next Sunday, but I won’t hold it against you :).

      Thank you for the luck! Happy to see the duplex has really changed your outlook too!

  27. Lee Ripma

    Hi Craig,

    Great article on how to pay yourself first and aggressively save liquid capital. When you have an employeer sponsored 401k you can borrow 50% of its value up to 50k which can be a great way to save on taxes and still get use of your money (I’ve done it). So I’m a fan of that strategy.

    I don’t like any platforms with fees, so Robbinhood is a great place to have your brokerage acount. When you do the math on fees, even 0.35% fees they really are significant! You can make the same portfolio that the robo advisors suggest (if that’s what you’re into), those funds are publicly traded so available on all platforms.

    I think that saving that first 100k is much harder then the second 100k. Same with properties I hear, just bought my first 6 units so hopefully the next deals follow quickly.

    I think that you do need some capital to invest in RE. It’s easier to learn with your own money, then start partnering with others.

    I also do a TON of traveling for really cheap and agree that it’s totally possible. I buy ticket on sale, which Scott’s cheap flights alerts me too, and stay with friends or go backpacking. I also buy tickets and hotels with my chase sapphire ultimate rewards points.

    Great article!

  28. Craig Curelop

    Thanks, Lee! This is a great comment.

    I will have to look in other places to hold my liquid capital. I do like Betterment because it’s so easy and passive. I also agree! Investing with your own money is a lot easier and a good way to start out. After you gain some experience, it makes sense to start using OPM.

    Scott’s cheap flights? I have never heard of that and I’m a pretty big traveler. I might have to get on that list. I have the Chase Sapphire too! It’s an awesome card!

  29. Dillon Reilly

    Thanks for the info on Betterment, Craig! I came to the conclusion that the banks “savings” account is a farce many times, but haven’t found a valuable alternative. I’ll have to check it out 🙂

    Also great point on recognizing the 6% loan vs 9% return, I know many people fear debt and want to pay it down as quickly as possible but the best part about math is that it’s right whether you believe it or not!

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