Money Moves to Make In Your 30s to Retire BEFORE Your 40s

Your 30s are some of the most important wealth-building years of your life. Because of the decisions we made in our 30s, we were able to reach financial independence within just 8 years- 2 years earlier than we had planned for! Keep reading to learn how we retired early and secured our financial future.

Our 30s was a crossroads period for Amon and me. We had to make an intentional decision to pursue financial independence. It was also a point in our lives where if we happened to make the wrong decision, our financial independence journey could have been completely derailed. Suffice to say, our 30s was our make-or-break decade.

Insurance

Insurance- whether health insurance, life insurance, or car insurance- was crucial during our financial independence journey. Insurance helps to preserve and protect you and your assets when something goes wrong. And believe me- something almost always goes wrong. Let me tell you a bit of a personal story that really helps this point hit home.

When we were in our 30s, Amon got sick. Now, he’s a very healthy person. He eats right, he exercises, and he almost never gets sick, so it came as a real shock to us when out of the blue he got an incredibly bad case of food poisoning that had him in the hospital for an entire week. The shock, though, was nothing when compared to how we felt when we saw the bill.

We were charged over $100,000! For many families, a bill like that would be life-altering! It’s enough to bankrupt people, not to mention completely halting your FIRE journey! Thankfully though, because we had insurance, we were able to avoid this situation.

No one likes paying for insurance, but when you need it, you’re always glad you have it!

Minimize Debt

In our 30s, our goal was to chip away at as much debt as we possibly could. As part of our FIRE strategy, we invested in real estate. This meant that we had to take out mortgages on those properties. One of the main things that we thought about when picking these properties, though, was how we didn’t want to buy “too much home”.

What I mean by this is that we focused not on buying the biggest, fanciest house we could afford, but on limiting ourselves to buying a home that fit our needs. This meant smaller homes with lower mortgages and lower monthly payments.

For our family of 4, we bought an 1100 square foot house and this was an intentional decision. We knew exactly how we were going to use our home, and we were aware of exactly what we didn’t need. No man cave, no foyer, no study. And this works perfectly for us!

Another common source of debt is student debt. In the U.S alone, outstanding student loan debt in 2019 was over 1.4 TRILLION dollars, and over 50% of those loans are in deferral, forbearance, or a grace period. This means that 50% of these loans are not being paid down. Worse still, these loans are collecting interest! Remember, compound interest is still working against you, even when you’re in a deferred payment plan!

There is one thing that I want to highlight here for you guys: the Student Loan Forgiveness Program. Take my word here: you need to be VERY careful with this program. A lot of people don’t actually understand if they’re eligible for the program. Case in point: out of 29, 000 applications for loan forgiveness, only 93 were actually approved as of June 2018. You do NOT want to be caught off guard with the fact that you’re on the hook for a loan you hadn’t planned on paying.

Also, be aware of the fact that FORGIVENESS does NOT mean FREE. There may actually be a tax bill due after your loan has been forgiven, and this tax might be a lot more than you expect. My advice? Talk to a professional if you’re unclear about any of the details of your loan. In fact, talk to 2 professionals! Student loans are notoriously complicated and sometimes even the people who are supposed to have the answers don’t know everything. So make sure to not only get the information you need but also to confirm it a second time.

Keep Your Expenses Low

For instance, during this period we were bringing in more money than we ever had been before and with this increased cash flow came the risk of increased spending. Things could have ended up very differently for us, had we not made the conscious effort to keep our expenses low, even though we could afford not to. We chose to buy a smaller house. We chose to buy a used $800 car. It’s these choices that eventually add up. Maintain a more minimalist lifestyle instead of trying to keep up with the Joneses, and you’ll be surprised at how much more you can save!

Identify future Obligations

For most people, by the time you’re 30 life often becomes more clear. In this decade you’re able to identify the future that you may be responsible for. A prime example? Kids! I love my kids and wouldn’t trade them for the world! That said, they are EXPENSIVE! We are responsible for their health, safety, well-being, education, and happiness from the moment they are born to the moment they head out the door, and sometimes even longer than that! These are expenses that you need to anticipate and in you’re 30s you’re typically able to plan for that life.

Understanding Credit

In our thirties we made a real effort to not only understand the specifics of our credit but also how to use our credit wisely. Our family travels a lot, but we always do it in a way that saves us the most money. Often this involves travel hacking using credit cards to be able to travel for free. This wouldn’t have been possible if we didn’t both have good credit. The reason we had good credit? We understood how to use our credit wisely and increase our credit scores. Credit is so important in your thirties because this is usually the decade where you’re making big purchases, like a home, and your credit is what determines the type of loans you can get and what interest rates you pay on those loans.

Max Out Retirement Accounts

Every single year we maxed out 3 accounts: (1) our HSA, (2) Roth IRA, and (3) 401(k), which all together I call the 3 pillars of FIRE. By maxing these accounts out you are taking full advantage of your tax benefits.

Focus On Your Financial Relationship with Your Partner

In your thirties start developing a financial style that meshes the styles of both partners in the relationship. If one partner is constantly saving while the other is scrimping and hustling, well that might just be a recipe for disaster. You need to get on the same page financially for the most successful relationship and FIRE strategy. Being on the same page as your spouse pays dividends for the rest of your life.

Develop your Financial Literacy

We read books, read blogs, listened to podcasts, etc.- everything that we could do to learn and develop our financial literacy, we did. This is very important especially in your thirties because this is a period of your life where you’re starting to make more money and you’re going to have to put it to work. For us, doing all that learning prepared us for whenever this money came into our lives. We knew where to put it and how to direct it and this is something that will continue to pay us dividends for the rest of our lives.

If you’re in your thirties, take a look at this list and see if you can implement these things in your everyday life!