The Road to being Financially Solid By 30 or 7 Steps to Buy the Shoes You Want By The Age of 30

From what I can tell (I’m 31), the 10 years in your 20s pass by like a rocket. This is also a very important space in your financial life. Most people ignore these 10 years and only start thinking about their financial future once they are settled down with a family, a house and the white picket fence. The problem is that you might not be able to afford everything you would like if you waste these 10 years.

By the time you turn 30, you should already be heading into a good financial situation. Here are 7 steps to get there based on my own experience:

#1 Get a Second Job – Work 50-60 hours

As there are many young “ex-students” that are just out of school with their bachelor degree, I got an entry-level job that didn’t require much brains. Besides my diploma and a brand new job, I was saddled with student debts on the side.

The first thing I did was to budget with my day job salary and found another job so I could work 50 to 60 hours. The plan was to live off my regular pay check and use the extra 10-20 hours of work to create additional cash flow. At that time, I was working full time from Monday to Saturday with only Sunday as a day off. It was hard but it’s quite feasible without a family!

#2 Start a Debt Snowball

With my extra money, I started to pay off my debts. As soon as one payment was off my budget, I was using this money to pay off the next debt on my balance sheet even faster. Within a year, I completely covered my student debts and credit cards. Having a second job definitely put a huge fast forward on my debt repayment schedule. I remember that for my last debt, I was able to put $800/month to pay it off. This was a combination of my 20 hour job on the side + the debt snowball results from my other paid-off debts.

#3 Start Systematic Investing

As soon as I finished paying off my debts, I used a part of my budget that was reserved to pay off debt (the snowball part) and opened a retirement savings account (RRSP for Canadians and ROTH IRA for Americans).

I was already used to see this amount exiting my bank account to meet my financial obligations. I simply changed my debt payment for an investment payment. At that time, I was “paying myself first” and my investment account was growing without me realizing anything.

#4 Consider Having Good Debts

At one point, I was left with rent on an apartment and a cheap car payment in my budget. This is when I saw the potential of borrowing to buy an asset. This strategy is also called leveraging.

You might have heard of good debt vs bad debt. Bad debts are used to finance consumer goods (vacation, house, clothing, cars, etc). Good debts are used to buy an asset. I looked at my budget and calculated how much I could afford in additional monthly payments.

At that time, I was able to afford the payment on a personal loan of $25,000 on five years. All I needed to do was to find something to buy with 25K that would generate more money in the future.

#5 Buy a Piece of Land

This is when I’l started to look to buy land. I didn’t have enough cash down to buy a house and there is only so much you can do with $25,000 when you want to improve your balance sheet. I finally found a plot of land for $26,000 that was in a great area where many properties were being built.

Since the land wasn’t bought to be flipped within a few months, I didn’t mind waiting on my asset to see it grow. Since I was easily able to afford the personal loan payment, I then bought my first asset with good debt.

#6 Buy Real Estate

It turned out that my wife got pregnant the following year. Our plan to move into a house became more urgent and I needed to build my down payment faster than expected. I was 26 and already had 10K in my savings plan ready to be used for a down payment. We put the land up for sale and made $5,000 of profit within a year of ownership.

The best part is that I didn’t put a single dollar out of my pocket to buy the land since it was 100% financed by the bank. During that year, I paid a part of the loan so I was able to get another $10,000 ($5,000 from my profit and $5,000 from reimbursed capital on the loan) to buy my house.

I bought my first house at 26 and sold it at 27 to buy a bigger one. Three years later, I sold my second house for a healthy profit of $75,000. That was more than enough to buy the house of my dreams.

#7 Take More Courses – Improve Your Skills

Along with working 2 jobs and investing early in my life, I also spent a lot of time at school during my 20s. I earned a professional certification in my field plus an MBA to make sure I get a promotion and work in the field I truly like. With more diplomas and competencies, you become more valuable to your company and more “employable” for other employers. Therefore, I don’t fear recessions anymore as I know that it will be easy for me to find another job elsewhere.

These seven steps to become financially good by the age of 30 are quite simple and require a lot of will. I often saw myself working crazy hours and wasn’t able to see my wife and kids as I wanted. Fortunately, I was able to grow enough assets and concentrate on my career young enough that I can already slowdown and enjoy life at an early age. When I look back at those 10 years, I can tell they went by very fast but they were key to my financial future. I’m definitely glad I was able to make those sacrifices at a young age!

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