The US stock market grew 25.7% in 2021, causing a lot of personal finance influencers to show off their investment gains. They posted about passive six-figure growth over 6-month periods and preached about the power of investing.

The same was true for us, actually…Investing is awesome!

But here’s the thing: Those stories are only really exciting if you already have a bunch of money working for you. Investing is like a money amplifier. It doesn’t do as much without some up-front input.

So, instead of talking about the huge, effortless gains we’ve experienced during early retirement in our 30s, let’s rewind and look at how we got here in the first place: intentionally low living expenses paired with average, middle-class jobs in our 20s. Here it is…the history of our first (and slowest) quarter-million dollars.

College Graduation to Grad School Dropout (May 2012 – May 2013)

Let’s start at the beginning. Did you notice how the graph above doesn’t start at $0? That’s because we didn’t really track our finances until we first calculated our net worth in January 2013. So I’ll try to recount what happened before then the best I can.

In college, Lauren and I were pretty frugal by default (like most students) — living with roommates, using public transit to get around whenever possible, and getting as much free, on-campus entertainment as we could.

Lauren didn’t have any financial support from her family, and she rejected all student loan offers. Instead, she paid her own way through school with a combination of part-time work (like waiting tables at Chili’s) and scholarships.

My college story is less impressive: I bridged the gap between my expenses and my scholarship with help from my parents. That represents some luck and privilege on my part, and it made my life a lot easier. On the other hand, it’s worth noting that if I had taken student loans instead, we’d only have been set back about a year on our financial journey together. So if you have debt, don’t let it discourage you too much!

Soon after graduating in May 2012, we probably had a combined net worth somewhere in the $18k – $25k range, just sitting in our bank accounts.

With diplomas in hand, no debt, and nearly a full year’s living expenses in the bank, Steps 1 and 2 of our Financial Roadmap were mostly taken care of by the time we graduated college — except the part about getting full-time jobs!

I got accepted into a particle physics Ph.D. program at UC Irvine, where I would get free tuition and a ~$22k/yr stipend in exchange for working as a teaching assistant. Lauren followed me to California and picked up her first full-time job as a secretary making ~$34k/yr. Combined, we had a salary of ~$56k/yr, pre-tax.

Our rent was more than we were paying during undergrad in Florida, but living in a perfect-weather paradise did come with some advantages. We spent a lot more time outdoors, so we found ourselves getting all of our entertainment for free, in nature. That turned out to be a good habit that would stick with us for a long time.

We also sold our second car, which was one of the most impactful financial decisions we have ever made. It seemed scary at first, but we found that it was surprisingly easy to get by with one car by making frequent use of our bikes. (Actually, for the last decade, we’ve continued to be a one-car family, saving us a ridiculous amount of money while making us healthier, too!)

We shopped at Costco, ate our meals at home, and skipped all TV subscriptions. Keeping our household expenses super lean and working some side hustles allowed us to save more money, even with low-paying jobs in high-cost California. We didn’t track our expenses very carefully during this time, but I would guess we were spending around $24-26k/yr combined, with our rent being the largest chunk of that.

Financial Snapshot, May 2013 (age 22):

• ~$24k in cash, between our joint checking account and high-yield savings accounts (we like to keep around 1 year’s living expenses easily accessible)
• ~$10k in our taxable brokerage account, invested in PTTAX (a mistake we were talked into by a commission-based advisor at Chase bank and would soon sell out of)
• ~$11k in our Roth IRAs, invested in various stocks (we weren’t smart about index funds yet)
• ~$2k in employer-sponsored retirement accounts (which would later get rolled into our IRAs)
• Total net worth: $47k, or a bit under 2× our combined annual expenses in California

I soon discovered that I didn’t have enough passion for research to power through a 6-year Ph.D. program, so after about 9 months there, I dropped out, and we moved back to our (lower-cost) home state of Florida in mid-2013.

First Dual Full-Time Jobs (June 2013 – June 2015)

Main article: How We Saved $100k in 2 Years on Teacher Salaries

Don’t worry; we didn’t move back to Florida defeated.

I got accepted into another (shorter) grad school program at the University of Central Florida, near Orlando. I’d get a tuition-free master’s degree in science education if I agreed to teach a STEM subject at a nearby public high school while earning it. My salary started at $38k.

Lauren soon found a job in marketing with a company specializing in self-directed IRAs. Her starting salary was pretty close to mine (slightly lower).

This might not sound like a huge financial turning point, but it was. In California, we’d trained ourselves to enjoy simple living — it was the only way we could save money in such an expensive place. Now, we were moving back to a low-cost area and getting a significant pay bump. Our combined, pre-tax salary of ~$74k felt like an absolute fortune.

Since we were already content with our lifestyle, we decided there was no need to upgrade. No second car, no bigger apartment. Our combined annual expenses clocked in at about $22k per year — rent and all.

With higher incomes and lower spending, we found ourselves with a torrent of excess cash, and we started investing…a lot.

In addition to claiming the full match on employer-sponsored retirement plans and continuing to max out two Roth IRAs, we let our paychecks start gushing into a taxable brokerage account as well (this type of account has no limits and no withdrawal penalties, but also no special tax advantages like retirement accounts do).

Inside all of these accounts, we stopped messing around with individual stocks and bought low-cost index funds for the long run instead. We had finally figured out a winning investment strategy, and this is what we’d continue to do with our money from then on.

But even though we’d finally figured out how to invest, we still didn’t have a huge portfolio. Our investments weren’t ready to work for us yet, so we had to keep working for them. We went harder on our old side hustles, like photography and tutoring — and we found some new ones, like credit card churning and eBay flipping. This stuff helped supplement our salaries.

Overall, we were probably saving something like 60-70% of our post-tax total incomes during this time, and it felt fantastic.

In 2 years, we had absolutely smashed Step 3 of our Financial Roadmap.

Financial Snapshot, June 2015 (age 24):

• ~$40k in cash, between checking and savings accounts (admittedly more than we really should have kept idle)
• ~$67k in taxable investments, mostly stock and bond market index funds (plus a few silly experiments like a small amount of gold and silver)
• ~$39k in our Roth IRAs, invested in stock and bond market index funds
• ~$7k in employer-sponsored retirement accounts, invested in stock and bond market index funds
• Total net worth: $153k, or about 7× our combined annual expenses

Oh, PS — We also got married, and I did finish grad school this time. 🙂

An Unusually Long Honeymoon (July 2015 – December 2015)

Main article: How We Took a 6-Month Hawaii Honeymoon for $0

Two nonstop years of full-time jobs, side hustles, and grad school was rewarding, but it wasn’t exactly relaxing. We used every vacation day allowed in those two years, but we both felt burned out — in need of a bigger break. That’s when we truly realized the power of all this money we’d been saving.

Rather than treating ourselves to an expensive, luxurious, one-week vacation, we decided to buy some time.

While we were far from complete financial independence, we did have seven years worth of living expenses saved up, which meant that we didn’t really feel anchored by our jobs. We could quit them at any time, enjoy a break, and then take our time finding new jobs whenever we felt like it — worry-free.

Our first idea was to take ~6 months living in Hawaii, and we just kinda rolled with that.

With such a large time horizon, we’d be able to lease an apartment instead of paying for expensive hotels. We could get good food from Costco and Walmart instead of eating at restaurants like vacationers. And we could buy a cheap, used car and resell it instead of dumping money into rental cars and Ubers.

Rather than “living it up” like tourists and spending thousands of dollars in a single week, we planned to live like locals instead. And it worked. Our total living expenses on Hawaii’s Big Island turned out to be under $1,900 per month for both of us combined.

Even with $0 salaries, we could have paid for everything out-of-pocket and still had plenty of money left over when we returned, but we actually set a goal to come home with the same net worth as the day we headed to the island. We didn’t want to backtrack.

So instead of quitting her job, Lauren negotiated a little part-time remote work with her employer on the way out. I quit my job as a teacher and started doing more freelance tutoring for income. We continued to do a bit of photography together, too. We each worked about 10-12 hours per week for the 6-month period, which was enough to support our entire lifestyle (without any left over to save).

Financial Snapshot, December 2015 (age 25):

• ~$36k in cash, between checking and savings accounts
• ~$74k in taxable investments, mostly stock and bond market index funds
• ~$37k in our Roth IRAs, invested in stock and bond market index funds
• ~$6k in old employer-sponsored retirement accounts, invested in stock and bond market index funds
• Total net worth: $153k, or about 7× our combined annual expenses (still!)

By taking this break, we set ourselves back $0 (and, admittedly, six months of lost opportunity to save more money). In exchange, we gained new friends, unforgettable moments, and a renewed energy to race toward our big goals again.

Quitting your job mid-career definitely isn’t financially necessary, but it was such a rewarding (and recharging) experience that we included it as Step 4 of our Financial Roadmap. Life’s not all about accumulating money as fast as possible. Make sure you slow down and enjoy it, too.

Better Jobs; Bigger Snowball (January 2016 – February 2017)

Before we left for Hawaii, we were warned by a lot of well-meaning people that having a “resume gap” would damage our careers and cause us to save money slower going forward. That turned out to be totally wrong.

First, being forced to “job hop” actually increased our incomes, and we think that’s likely to be true for most motivated young professionals.

See, when you get your first full-time job, your skillset starts to increase at a faster rate than at any other time in your career — you’re learning something new every day. Those new skills increase your value, but a lot of times, your employer won’t increase your pay in proportion. Finding a new job lets a new employer evaluate you for what you’ve become, rather than what you used to be.

That’s exactly what happened to Lauren. Soon after our Hawaii trip, she started a new job at a salary of almost $50k/yr. I turned my tutoring side gig into a full-time business of my own, paying myself a “salary” of nearly $50k/yr without the need for an employer at all. We were making close to $100k/yr, pre-tax, combined (without accounting for smaller side hustles)!

The second way our Hawaii trip accidentally improved our financial situation is that it forced us to re-evaluate where we lived. Rather than blindly moving back to the Orlando area, we considered where we could live even cheaper.

That led us back to our college town of Gainesville, Florida, where housing was so affordable that we were able to buy a 3-bedroom condo outright for just $71,000 as soon as we got back from Hawaii. With no rent and no mortgage, our expenses got as low as $18,000 per year combined during this period — our lowest ever.

After accounting for some side hustles, we were saving close to 80% of our post-tax income for much of this time. And our investments were beginning to grow a little faster, since our portfolio wasn’t so small any more. Over the course of a year, our net worth increased by almost $100k, even though the combined salaries from our full-time jobs were only about $100k — pretty crazy!

In 2017, we were well on our way to completing Step 5 of our Financial Roadmap.

Financial Snapshot, February 2017 (age 26):

• ~$31k in cash, between checking and savings accounts
• ~$74k in taxable investments, mostly stock and bond market index funds
• ~$63k in our Roth IRAs, invested in stock and bond market index funds
• ~$5k in a Traditional IRA, invested in stock and bond market index funds
• ~$9k in employer-sponsored retirement accounts, invested in stock and bond market index funds
• ~$72k in home equity (this is a conservative estimate; we always use 90% of our Zillow Zestimate)
• Total net worth: $252k, or about 13× our combined annual expenses (with around 10× our combined annual expenses in investable assets, not including home equity)

The Rest of The Story (2017 – 2022)

By early 2017, we were worth over a quarter of a million dollars, with about 10× our combined annual expenses in investable assets. To become completely financially independent and retire early, we’d need to have at least 25× our annual expenses invested (a good rule of thumb for anyone).

So, it might seem like we were less than halfway to financial freedom — but that’s actually not true.

Lauren got a significant raise, and I was convinced by a local tutoring company to give up my business and work for them at an even higher rate of pay. Meanwhile, our investments grew faster and faster each year due to the effects of compounding. Over the next few years, we’d see some of the quickest and easiest money ever, thanks to the effort we put in up-front.

Aside from that, our 6-month adventure in Hawaii gave us some perspective that we didn’t have before: We learned that full financial independence isn’t really all that important.

It’s hard to imagine we’d ever completely stop making money this young, even if we “retired.” And nothing could ever take away our ability to be happy with low consumption — not even a market crash.

So by the time we had 15-20× our annual expenses saved up, we felt pretty much financially invincible and totally free. That’s why we say you really don’t need 25× your annual expenses invested to move on to Step 6 of our Financial Roadmap. You can cut back on work much sooner if you want to.

We eventually entered into a sort of “semi-retirement” around 2019-2020, at age 29, working part-time and stacking more money at a leisurely pace while traveling a ton. Our spending also increased modestly, and we bought another house in cash (converting the old one into a rental property). Soon afterward, we crossed over into full financial independence — which honestly didn’t seem like that big of a deal any longer.

As you get richer, you’re supposed to care less about money — not more. That’s actually kinda the whole point. The sooner you start, the sooner you’ll feel that freedom.

— Steven