I used to owe $40,000 and now I’m on track to retire at 65 with over $1.5 million: Here’s my best advice

Four years ago, my wife and I had a combined $40,000 debt that we were struggling to pay off. We were living paycheck to paycheck, had no savings, and we weren’t tracking our spending or our overall money goals. At times, we would sell some of our clothes to thrift shops to get gas money until our next paycheck.

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Today, we are debt-free, I have roughly $113,000 invested in the stock market, and including my investments, I’ve saved a little over $160,000. 

Even if I never invest another dime in the stock market after today, with compound interest and an average annual rate of return of 10%, I am on track to retire at the age of 65 with nearly $2.9 million. Using a more conservative annual rate of 8%, I’d still be able to retire at 65 with a little over $1.5 million.

So how did a Latinx, queer, and nonbinary former shopaholic and people-pleaser go from a negative net worth to being on the path to financial independence? 

These are the steps I took to get here. 

First my wife and I put together a budget, assessed the debt we had, and we began to pay it off via the debt avalanche method. Some of our goals, like starting emergency and travel funds, were more immediate. Others, like ramping up our retirement savings, were more abstract at first. 

We understood investing was important, though we did not know much else about how to do it. I did know that I didn’t want to hold off on planning for the future while we were tackling this debt. 

We both had individual IRAs, though initially, I thought I needed to have it linked to an employer to do anything with it. Once I realized that I could contribute on my own, I started putting in a little bit at a time each month. 

Two years into our debt payoff process, I started a new 9-to-5 after being laid off, and I opted for my company match, which was 10%. Consistently contributing to both those accounts became one element of our broader investing plan. 

We started making some headway, but in order to save as much as we wanted to and work toward our bigger goals, we needed to make more. My wife and I were both able to negotiate for higher salaries at our day jobs, and we began taking on side hustles as well. 

I’ve been a side hustler since I was in high school. I’ve always loved the fact that I could generate money from my own creative energy. If I ever needed more money, I knew how to go out and be innovative and scrappy with my resources.

We took on a variety of side hustles, including reselling and flipping items online using sites like eBay, Poshmark, Mercari, freelance writing and design, blogging, establishing affiliate marketing and sponsorships with several partners through my blog, speaking engagements, and online workshops, selling digital products online through my blog and Etsy, and even pet sitting on Rover.

Side hustles have always been about more than extra money for me. They have helped me hone certain skills and learn new ones that I can put on my resume, have helped boost my confidence, and have given me more options when I needed to leave a toxic job situation. 

They can also compound as an asset over time and become mostly a passive source of income, which is where I am almost at with my blog. Over 50% of my blog’s monthly income is completely passive, and we have invested much of that income into our retirement funds. 

In 2019, about two years into our debt-payoff journey, I learned about the Financial Independence Retire Early movement, and it completely changed my perspective.

A central concept of the FIRE movement is that if you save and invest enough money, you can retire before the more traditional age of 65. If you calculate your annual expenses and then multiply that figure by 25, that will give you the amount that you need to have in savings and investments to become completely financially independent from a 9-to-5.

There is some flexibility if you have multiple passive sources of income and can expect to earn money from something like a blog or a rental property. 

I never thought early retirement was an option for me. I didn’t come from a wealthy family or have a trust fund. I had no idea how this could even be a realistic goal. But then I started to do the math. 

Even though we were paying off debt, my side hustle income and my passive income streams could provide me with funds to invest in my future, while still having enough to live a comfortable life where we weren’t depriving ourselves. 

For a long time, I had worked either partially remote or fully remote so I could travel whenever I wanted, but I still felt like my time wasn’t really mine. I didn’t want to work until my old age and I didn’t want to live my life anymore on someone else’s terms. 

I didn’t want to wait any longer to get more of my time back. I wanted to invest in myself and start buying back that time now.

As I started sketching out those plans, I realized that I didn’t want to completely retire, because I wanted to continue to do creative work that I enjoyed. 

I calculated that my passive income streams would allow me to do the kind of work I wanted, while being location independent and financially independent from a 9-to-5.

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My financial independence number to leave my full-time job is $500,000 and I am currently at $160,000. I also have a flexible goal to leave my day job in the next four years. 

Last year, I reached what’s known as “Coast FI.” Coast FI is a FIRE term that means that you currently have enough saved that even if you never invest another dime, you can “coast” to retirement at the age of 65. 

Today, I maintain a number of different retirement accounts. I have a 401(k) with my employer that I max out every year. My employer offers a Roth 401(k) option, too, and I contribute 25% of every paycheck to it. That account has a 100% match on up to 10% of my contributions. 

The traditional 401(k) contributions help me keep my tax bill lower now and the Roth 401(k) contributions help me keep my tax bill lower in the future. 

I also have an HSA, which has multiple tax advantages, and an online brokerage account that I contribute $2,000 to every month. I’ve rolled over all my previous IRAs into my 401(k). And I’ve recently learned how side hustles can give you an additional leg up in investing, too. 

If you have a side hustle, you can get access to more retirement account types including solo 401(k)s and SEP IRAs. I have been working with my accountant to see if investing with these options would make sense for my goals.  

I think the most important thing to remember for anyone who is new to investing is to keep things simple. There is no specific amount of money you need to get started. 

You can get started investing with as little as $10 or $20 a month and work your way up from there, which is what I did with my personal brokerage account at first. If you have access to a 401(k) with your employer, I recommend opting for a match if it is offered, because it is essentially free money. 

There are also a variety of online platforms and apps out there that can help you select your own IRA, choose what you want to invest in, and automate your monthly contributions. 

If it starts to feel overwhelming, my best advice is to take a step back and remember that you are doing this for “future you.” Our most valuable asset is our time, and investing is a way to make sure that we have the ability to spend it on the things that are most important to us.

Daniella Flores is a software engineer, serial side hustler, and creator of the blog I Like to Dabble. She has grown I Like to Dabble on the side of her full-time job to become a globally recognized and Plutus Award-winning side hustle and money resource with 100,000 monthly users between the website and social media. She has been featured on Business Insider, MSN, Huffington Post, CNBC, Refinery29, L.A. Times, and more. 

The article “I Used to Owe $40,000 and Now I’m on Track to Retire at 65 With Over $1.5 Million: Here’s My Best Advice” originally published on Grow (CNBC + Acorns).