The other day, I was talking to my 23-year-old, soon-to-graduate sister about retirement. She was asking to borrow $300 to put as a deposit on a program and I was noting that she could keep the $300 if she put it into a ROTH IRA when she was paid for her hours. She didn’t seem all that excited in learning about IRAs, but I’m determined to teach her just how important it is to start investing in her 20s to take the first steps towards a reasonable semi-stable life in the middle class.
On a separate note, I’m living in the world of the wealthy, where somehow company founders walk away with millions of dollars from failed companies, while early employees who exercise their stock early enjoy virtual wallpaper. I always say founders deserve what they can get, if they can get it, so less bitter and more back to a realistic view about my own potential for wealth. Sure, for a few minutes there owning a large chunk of stock in a company was exciting. Anything was possible. It could have gone the other way. I mean, I knew it wasn’t going to for a variety of reasons within the company, but I kept dreaming. I got lost in the dream. Even if I wasn’t going to get rich off the shares, why couldn’t my 200,000 shares, priced at $.10 a share, turn into $1.10 a share (which, by the way, they were once priced at on paper.) $200,000 would, at that point, double my networth. It wouldn’t make me rich, but it wouldn’t hurt either. It certainly would make it more possible to afford a life in Silicon Valley.
That’s what I risked $20,000 plus whatever it is interest I paid for a loan to early exercise my stock options. And that’s why I lost the money. I also gained valuable work experience. I gained a lot. But I could have gained that experience elsewhere making potentially more money and not taking such a huge risk on the dream. It’s unfortunate that the dream is necessary to afford life here. At this point I’m committed to saving up as much as possible from the reasonably good salaries in the Bay Area until I have a family of school-aged children, and them moving to another state where costs are more reasonable.
Which is why right now saving is everything. I have to earn my full bonus this year. (I don’t really need to sleep.) Hitting $250,000 in networth last year was a major moment for me. Graduating college without a full time job and without a car in my name and just $10,000 in my account, it seemed impossible to get anywhere with my own financial goals. Somehow I found the world of personal finance online and learned that I should save versus splurge, that a little bit of savings would slowly add up. And while $250,000 is not going to make me financially secure for the rest of my life, I do feel like it’s the second level of the personal finance game. $100k is the first. That’s a biggie. $1k. $10k. $100k. $250k. $500k. $750k. $1M. $1.5M. $2M. $3M. $5M. I think those are the major milestones. Of course, not everyone will hit all of them. Heck, I probably won’t hit all of them. My goal is $3.5M by retirement.
It does get easier once you pass certain milestones because interest starts working for you (although some down years can be painful.) I’m trying, for the first time ever, to increase my networth by $75,000 versus $50,000 this year. It’s possible with my increase in salary but I’m also increasing my rent from $650 per month to $1300 per month in May. So we’ll see how that goes. However I’m determined. I’m no longer able to get lost in the dream that my stock options will magically make me a millionaire or anything close to it. The only way stock options will make me a millionaire is if I become a founder and can trick people. That’s not my style. I admire those who can get away with it. It was an entertaining movie to watch play out and I learned a lot, now it’s time to get serious. My stretch goal with a bull market and NO MORE EATING OUT is $350k this year, but that will be difficult seeing as it’s already half-way through March and I’m only at $260k — and I’m missing out on one bonus this year due to switching jobs! Then again, I haven’t received my first paycheck for my new job yet, so we’ll see. Somehow I need to make up for this lost $17k due to my own stupid dreams.