Reaching a Positive Net Worth: A Personal Finance Journey
In 2021, I achieved a significant milestone in my financial journey – for the first time in my adult life, I reached a positive net worth. As a first-generation college graduate with a Master’s degree, who had spent most of my working life underemployed, this accomplishment felt truly amazing. However, it is important to acknowledge the privileges that have played a role in my financial journey. As a white person from the suburbs, I had the opportunity to attend an elite university with a substantial financial aid package. Additionally, my choice to pursue experiences like a Fulbright scholarship and an AmeriCorps position, instead of a stable and well-paying job, was a privilege not everyone has.
Despite these privileges, I did not receive any cash windfalls or inheritances. Prior to 2021, I had never earned more than $40,000 in a single year. However, within the span of just six months, my net worth increased from -$15,000 to $15,000. Here are some of the key strategies that helped me achieve this financial milestone.
1. Changing Mindset and Adjusting Planning
For a long time, the burden of student debt from my Master’s degree overshadowed my financial outlook. With over $50,000 in student loan debt, I felt compelled to prioritize debt repayment above all else. However, I realized that I could shift my mindset and focus on building wealth rather than solely focusing on debt repayment. By pausing my federal student loan payments and redirecting my focus towards investing, I was able to see significant growth in my net worth. Maxing out my Roth IRA for the first time and rebuilding my emergency fund were pivotal in increasing my net worth by $12,000.
2. Setting Obtainable Monthly Goals
Setting realistic and obtainable monthly financial goals had a profound impact on my financial progress. By establishing specific goals for each of my accounts and diligently working towards them, I was able to see exponential growth in my investments. Reinvesting all interest and dividends further accelerated the growth of my accounts. This goal-oriented approach helped me increase my net worth by $6,000 within six months.
3. Dedication to Seeking Additional Income Sources
While side hustling and freelancing may not be feasible for everyone, finding ways to increase income is essential for financial growth. Despite living in a remote area with limited opportunities, I dedicated time each week to explore additional income streams. By building up my freelance portfolio and leveraging opportunities within my full-time job, I was able to invest an additional $5,000+ over six months, surpassing my original net worth goal.
In conclusion, my journey to achieving a positive net worth is a testament to the power of consistent financial choices and strategic planning. While I still have student loan debt to contend with, I am committed to achieving financial freedom. By changing my mindset, setting clear goals, and seeking additional income sources, I was able to make significant strides towards building wealth. This journey serves as a reminder that financial success is attainable through perseverance and dedication.
