Has mastering your money and an interest in personal finance always been the case for you?

It has been for as long as I can remember. While I may not have had brand name clothes or European vacations, I did not grow up wanting for anything. Still, during my childhood, I noticed early on how important money was to live the life you wanted. My parents actions taught me about the value of a dollar and frugality.

In college, I learned about investing and most importantly, the magic of compound interest.

When signing up for benefits and a 401(k) contribution on day one at my first “real” job, I knew I wanted to do my best to optimize every personal finance decision I made. I started reading as many books and other financial media I could get my hands on.

See, I told you I was a money nerd.

As you’ve progressed in your financial life, what have you changed or implemented to set yourself up for the most success?

Understanding the magic of compound interest has always motivated me to build a nest egg large enough that it’s returns will cover my needs. I wanted to get it built as soon as possible.

I’m not sure how many 22 year olds graduate from college with that goal. I’m weird.

Even though I had a great job, I lived with my parents for two years post college to build up some savings. They were happy to have me back in the house for a while and I was thrilled to not have to pay any real amount of rent.

I began contributing to my company’s 401(k) plan up to the match amount to take advantage of the free money my employer put in plus the tax advantages. I also maxed out a Roth IRA at the time thinking that my tax rate would never be lower than it was at my first job. I started investing the rest of my savings in an after tax brokerage account to save for a down payment. I eventually bought a condo when I was 24.

The condo I bought was in the location I wanted but it was tiny because I set my budget to afford it on my income alone. My wife (girlfriend at the time) moved in when I bought it and paid a portion of the mortgage. Both of our careers progressed nicely while our home expenses stayed low for many years.

I’d inherited a gently used 2006 Altima around that time when my grandmother passed away. My wife and I have shared it as our only car since. Neither of us has ever made a car payment. We’ve both always taken public transportation to work and sharing a car on the weekends has never been a problem.

Increasing income by being a high performer in a high paying profession, keeping housing and transportation costs low and investing the difference is the classic formula to grow wealth.

Have you made any major financial mistakes? If so, what was the outcome and what did you learn from these mistakes?

My biggest mistakes include not investing in myself, investing too conservatively, being lazy about personal finance, avoiding negotiations and buying the condo discussed above “as an investment.”

The other two that I’d like to spend a little more time on are not setting SMART goals and succumbing to lifestyle inflation.

The beginning of my adult life was well before the current financial independence movement began. I knew I needed to save but in my 20’s did not really know how much I needed. Being a conservative person, I did some quick mental math and decided that I needed about $10M. Since the banks were paying 1% interest at the time, that amount would’ve allowed me to spend 1% or $100K of the portfolio each year and it would never run out. Had I really sat down and defined my goal, I’d have learned the key relationship between spending and the 4% rule of thumb to calculate how much savings I really needed.

By chasing this massive of a number, I realized it would take a while to get there, motivation declined and I started to let lifestyle inflation take over a bit. We went on expensive vacations, ate out often and spent money shopping for things that were not needed and not huge priorities.

I never really created and tracked a budget until my wife and I decided for her to leave her job to stay home with our children. Being naturally frugal, I had not really worried about my spending before then. Looking back, I now realize that we had allowed for some pretty significant lifestyle inflation. Doing a better job setting goals and tracking against them may have helped us reach our financial goals sooner.

Is there an area or area(s) of your own personal finances that you’re still looking to better master and improve?

One of my favorite aspects of personal finance is that there’s always something new to learn. There are countless ways for you to create assets, invest and mitigate risk. We’re all presented with countless financial decisions (many through advertising) every single day. I don’t believe anybody has it 100% figured out all the time. Plus, as life changes, so too must your approach.

Right now I’m working to overcome the mental hurdle that maximizing net worth is not the goal. The reason I’ve always saved is to live the life I want, not to end up with a giant pile of money. Making a career change to work with individuals and not corporations will reduce my income in the short term and probably over my lifetime. I’m still working up the courage to choose the career of my dreams rather than the biggest paycheck and fastest net worth accumulation.

Where do you plan to be in 5 years with your money and life? How does that change if you shift to a 10 year outlook?

In five years, I hope to have transitioned my career to be a financial planner. I hope to build a thriving practice that supports my family and more importantly, helps my clients reach their financial goals. I want to be the first person my clients call when they have a question related to their money. I also want to have educated them enough along the way that they already know the right answer before they call and are just looking for confirmation.

In ten years, I plan to be financially independent and able to live on my assets. My financial planning practice will keep me location independent. I’ll be living in a ski town in the western US. I’ll work part time because the work is rewarding.

I’ll use my financial freedom to spend my time doing what I love while making a difference to the world with my continued work. I hope to enjoy the work enough that I continue to do it, even without needing the money. From what I’ve seen, very few people would continue their current work if it was not for the money. Finding work that I’m passionate about and is purposeful has been my lifelong goal.

What are some of the most influential resources that have shaped your money mindset or financial situation?

Books

Podcasts

Blogs

This is so hard. I follow 100’s of great blogs. If I have to keep the list short I’ll go with:

Apps or Services

I use Mint to aggregate my spending data and then drop it into a spreadsheet each month.

I’m also a big fan of cashback sites like Ebates to reduce the cost on stuff you were going to buy anyway (Scott: Use my link when signing up to Ebates to get a free $5 bonus). The trick I have with those sites is to make sure you don’t see the emails. They are very good at showing you “good deals” on stuff you don’t need.