The two paycheck strategy
When I got my first job out of college, there are really only 3 things I did.
On the weekends, I got Mexican food at this dope ass restaurant (which I forgot to save to google maps) and a smoothie.
The rest of the time? I was working on saving and investing.
My First Paycheck
With my first paycheck, I paid off my car. I only had two car payments remaining, so I didn’t feel there was a need to wait.
I was not thinking about shopping. I was not thinking about buying a new car. I was not thinking about anything other than paying off my car. I was laser focused.
My Second Paycheck and Beyond
After paying off my car, I focused on saving in two different ways.
- Build Emergency fund
- Continue my investment path
I had anywhere from 5–8k in credit card debt, but instead of focusing on going all in on that, I focused all in on getting my net worth to the point that it was higher than all the debt I had collected from student loans and then some minor debt on credit cards.
People Mess Up From Day 1
The problem with increasing your paycheck especially when you have no kids, low overhead, and fewer responsibilities is that you think you can handle your money in whatever way you want.
But that first job out of college is prime time for elevating yourself financially, so you don’t have to work the remainder of your life.
Here are some other opinions:
- Don’t have kids too early: Many people have kids, which is a joy, but before they can actually afford them.
- Don’t get tied down in a relationship too early: Relationships are great, but they will also always be there. If you can, enjoy building wealth solo
- Don’t buy a house, YET: Houses have that shadow effect. A lot of the expenses come after the buy, and they never really stop. Fixes, insurance, taxes, maintenance. Always question your reasoning for buying and if it needs to happen now.
- Don’t rent a pricey apartment: Modest living is KING. I kept my rent before 1,000 for about five to seven years after I got my first job.
- Don’t let everyone and their grandma know about your new gig: Share your wins with people who are also living productively in their life. I recall people constantly asking about what I got going on in my career, but it was not from pure and genuine interest. It was to measure how I could help them financially.
- DO keep roommates if you can: These are little hackers that help you keep your expenses low indefinitely. Now the trick is to avoid spending money on other things since you can technically afford it. When you have roommates, keep all your other expenses low as well, and you will propel yourself into financial independence faster.
- DO keep your head low and mind your business (avoid drama): The best life is one without drama, unnecessary obligations, and one with peace. Work on yourself, building wealth, and meeting your financial goals.
- DO stay focused on paying off debts: Some debt can feel less urgent, but at the end of the day, it’s still in your name and needs a payoff date at some point. Focus on the debt that’s eating away your riches first (eg car payments, credit cards, and personal loans). Then you can tackle the low interest debts (eg student loans).
- DO prioritize investing and with CONVICTION: When you’re young, this is prime time to start investing. But if you don’t start when you’re young, any time is a good time to get started. The only caveat I’d add here is to invest with conviction. Don’t just buy anything. Know exactly why you’re buying and how it fits into your overall investment thesis.
- DO keep your expenses low: This is the time when your purchasing power is higher. You have more options. You don’t have to delay purchases, because you can afford it whether via credit or cash. Don’t allow temptation to get you off track. Stay on the path. Continue moving your net worth in a positive direction. Avoid maximizing what you own, and instead maximizing your financial rewards with discipline, and minimizing the burden that comes with constant accumulation.
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This article is for informational purposes only and should not be considered financial or legal advice. Consult a financial professional before making major financial decisions.