How I saved and invested $100K in 2 years
I’ll spare the details until a bit later, but I found myself with zero dollars to my name some time in late 2020. This lasted until June 2022, effectively putting me through the most broke (and generally the worst) year and a half of my life. I didn’t have a bank account, nor a few dollars to walk down to a cafe and spend on an americano to go. (I am not a latte girl, no milk in my coffee, please.)
A few short months earlier, I was a professor of literature at a prestigious university in Turkey, chairing a large department. I was 37 years old, and had two graduate degrees, including a Ph.D. from a well-known public university in the U.S. Now I was penniless. How did I get here?
Before I get to that part of the story, I want to give you the happy ending (which would probably be more interesting to you anyway): When I finally found a job and could generate an income, I went at it full-speed, with a fool-proof system that allowed me to build a net worth of $100K in a little less than two years, on a salary of $66K for the first six months, and $85K for the remaining year and a half.
You can find the exact process I used below (under “How I got out”), but first a little backstory.
The (heavily abridged) backstory of how I got here
A few years into working as a professor, it became painfully obvious to me that I didn’t care for teaching. I went to graduate school because I loved writing, and because it gave me a way to move abroad from my native Turkey to experience different cultures and lifestyles. Now that I had received my degrees, I was back in my home country, and opportunities for writing were few and far between.
The department and the university at large were filled with unhealthy dynamics that included faculty emotionally abusing students and trying to stab one another in the back. I was spending my days in a place where I didn’t want to be, doing things that I didn’t want to do, while looking like a success story to the outside world.
So I decided I was going to leave. I started saving money to buy myself some time to travel around the world, do some introspection, recuperate, and come up with a new strategy. As I began doing that, the Turkish lira (the currency I was getting paid in) began its long and dramatic dive against the dollar, making it so much harder to accumulate cash that’d be valuable while traveling. Still, I managed to sock away about $30K in a couple of years.
I eventually told my boss that I was leaving and probably not coming back. (I was cautious enough to leave the door cracked just in case, which helped a tiny bit down the road.) The date was December 2019. Little did I know that it wasn’t going to be the greatest time to travel, but more on that later.
I first landed in Seattle in early February 2020—I was going to see friends I’d made in the nine years I spent there as a graduate student, go to my favorite cafes, and solidify my travel plans. Maybe a month in Japan, followed by a few weeks in Buenos Aires, before I head back to Europe, or perhaps to Southeast Asia, where I could make my funds last a bit longer. I felt free as a feather, even when I didn’t know what was next for me, and despite the news about a strange, new development: the coronavirus spreading around the world.
The few months that followed were a whirlwind of lightning-speed events and decisions: I met a guy as the world was about to completely shut down, we spent the early quarantine days together, decided to get married and apply for immigration as I was about to reach the maximum number of days I could stay with my visa. I’m sure it seemed completely crazy to the outside world, and it certainly looks that way to me in hindsight, but this was a decision informed by years of dating experience (insert emoji with sunglasses) even if it had to be made quickly and under pressure. Ultimately doing what we did turned out to be an intelligent way to respond to the rapidly changing conditions around us.
It was all great, except now I wasn’t allowed to leave the U.S. and I wasn’t allowed to work. I was effectively in this strange limbo where I had to remain on American soil, but couldn’t live like a normal person. My introspective sabbatical had turned into immigration hell: the high cost of living in Seattle quickly eroded my savings while the USCIS took its time evaluating my case. It took a total of fourteen months from the day we filed the application to the day I received my temporary work permit.
(You might ask, “well, you said you lived in the U.S. for nine years, don’t you have citizenship or at least permanent residency from then?” in which case, I would suggest you go read up a bit on U.S. immigration law—or hold out for a future post I will probably write.)
It took another six months for me to interview for and get a job, making it a total of twenty months without an income. The only exception to this was the (short-lived) part-time opportunity to teach remotely at my home university, which paid in Turkish liras. (At this point, the exchange rate was so high that a salary paid in Turkey didn’t have much use at all in the U.S.)
I don’t tell this story to complain but rather to show how quickly things can become precarious, even for those who have had their fair share of privileges (like university degrees, decent social support and connections), in a late-capitalist society with its increasingly closed borders, right-wing politics, and lack of welfare infrastructure.
In any case, when I finally got an opportunity to improve the situation, I went at it with a vengeance and a system based on the months I spent reading dozens of personal finance books.
Here’s what I did to build my net worth as quickly as I could:
1) I kept spending very intentional.
The months I spent without an income really taught me which purchases truly added joy to my day, and which ones I didn’t miss at all. So by the time I could work again I was very careful to keep these lessons front of mind.
I did this for both small and big-ticket items. For example, I passed on most of the clothing I found online, no matter how steep the discount was. (This had the side effect of making my wardrobe so much better—now I wear everything I have and take a lot of pleasure from each item.) We also decided to stay in the inexpensive rental long after we could afford to move to a bigger place with an extra room and more amenities.
I didn’t feel deprived during the process, because (1) I knew what real deprivation felt like, and (2) I was still getting everything I really wanted.
2) I learned the basics of investing and started using my 401(k) right away.
I learned the fundamentals of investing from the Financial Independence books I read, including the importance of keeping the percentage fees as low as possible because they will compound just like my money, the fact that I shouldn’t get worried during market drops because that’s what happens and the market eventually recovers, and that index funds tracking a part of the market are one of the most fool-proof choices one can make.
Equipped with this knowledge, I managed to pick out a low-fee index fund tracking S&P 500 in the ocean of actively managed, high-fee mutual funds the 401(k) company tried to shove down my throat. (Their default investing option was simply terrible, which is something I wouldn’t know if I hadn’t read the above-mentioned books.) It was still a bit scary to get started, but I at least felt like I knew what I was doing.
By learning the basics of investing, I was able to make choices that were right for me without being overwhelmed.
3) I used the rest of my disposable income to build an emergency fund.
Because I kept my spending very intentional, I still had a considerable amount left on my account from each paycheck, which I used to start an emergency fund.
An emergency fund is the general name given to the cash cushion everyone should have in case of job loss, unexpected big expense, or another event that would prevent you from generating an income (for me, it could be USCIS refusing to renew my green card for whatever reason). All potential catastrophes aside, a cash cushion also gives me the courage to explore side projects (like this blog) while being reassured that I could take some extra time to double down on them if I feel so inclined.
The general recommendation is to keep 3-to-6 month worth of basic expenses (rent, utilities, groceries, car payments, etc.), but I would say pick an amount that’s both feasible for you and you’re comfortable with. Because I am an anxious person with a penchant for pessimism, I aim for a full year, but, once again, you do you.
As you keep accumulating your cash, put it in a High Yield Savings account, which is essentially a savings account that (currently) yields about 4-5% APY in interest, compared to a meager 0.58% APY in a regular savings account. Look around for the best option for yourself. I have been using Lending Club since mid-2022 and am very happy with them—they have one of the highest interest rates at 5% APY, and excellent customer service (not sponsored). (By the way, most HYSAs are FDIC insured up to $250,000.)
4) I leveraged all employer resources available to me.
Perks and benefits are part of your compensation and absolutely need to be taken full advantage of. My first job didn’t offer a 401(k) match, but had a decent health insurance benefit, and it was remote. I still contributed 15% of my pretax income to the 401(k), which was the maximum I could at the time without feeling the pinch.
Some months into it, I had an opportunity to move to a company where the salary and benefits were much better, and I jumped at it. This new company offered excellent health insurance with zero deductible, a 100 percent 401(k) match up to IRS limit (yes, I had a hard time picking up my jaw from the floor when I learned this during the initial screening), plus other perks like free concerts, games, a wellness stipend, etc. This increased my speed quite considerably.
One thing I recommend you do when changing jobs is to rollover your old 401(k) to a personal IRA account. This may sound hard and intimidating (which it did to me at the time), but then I decided to use Capitalize, a company providing this very service (not sponsored). They made the whole process seamless and completely headache-free. Both my new 401(k) and IRA are now in one place with Fidelity (also not sponsored) and I am very happy with it.
5) I turned wealth-building into a game.
You know the dopamine-high you get from getting to the next level in a video game? I don’t play video games much, but I still enjoy the nice feeling that comes from achieving an important milestone. I decided to leverage this feeling and keep my motivation high by turning wealth accumulation into a game.
I kept track of my emergency fund and overall net worth every month, which motivated me to move more funds into these accounts to see them grow faster. (I would put the numbers on a post-it and stick in my field of vision, though there certainly are more tech-savvy ways to do this.) This also helped me navigate my consumerist tendencies—the dopamine-high I got from playing this game overpowered the dopamine-high I got from unnecessary purchases.
I also put several self-imposed milestones on my path, like reaching 60K by the end of 2023, $100K before my second workiversary, $150K before the end of 2024, etc. Even if I don’t meet each one, I’d like to think that I would land somewhere close. And as dorky as this may sound, I had fun along the way.
6) I leaned into frugality and simplicity.
Something valuable that happened during this process was how positively embracing minimalism and frugality impacted my mental health. I’ve always battled with anxiety, and during this period of temporary deprivation I truly realized that not having clutter around me made me feel so much calmer.
More surprisingly, I found out this also included having a very limited wardrobe. I realized wearing a similar outfit everyday (a uniform of sorts) helped me with decision fatigue I often feel while still looking good. I stopped experimenting with new pieces I often end up not wearing, and stuck with the style I spent years to build. In the words of Vivienne Westwood, I decided to “buy less, choose well, make it last.”
This had an impact on how I chose to spend my time as well. I no longer wanted to try ad nauseam to nurture relationships that left me feel depleted and put my energy in friendships with people that were truly interested in me.
7) I let my big goals fuel me.
Building financial safety was a burning goal in the beginning of this journey. As I began to feel safer financially, I settled on other long-term stretch goals to keep myself motivated: financial independence, a healthy retirement (no matter what happens with Social Security or other things I can’t really control), taking time off to travel the world with my husband, and so on.
These big goals give me a sense of purpose for the future while I keep enjoying the present time to the fullest.
Lessons I learned
As cheesy as it sounds, I am ultimately grateful for what I’ve been through. No doubt these last four years have been unusual (to say the least). There was a lot of pain in the process and I sort of ended up in a place I would never have predicted, but it somehow all worked out in the end with me having gotten things I hadn’t even known that I needed.
There were three important lessons I learned in the process that I think are worth sharing:
External validation is toxic.
This was a big lesson for me. I realized I had been more dependent on external validation that I would have liked: I had fed on the prestige embedded in being a professor (despite not really liking the work involved), the compliments people gave me, and the advice they imparted on what I should do with my life. I hadn’t really taken the time to determine my own values until most of that validation was gone after I left my academic career.
Defining personal values is imperative.
Personal values are like gauge readers for our individual compass. I found that defining one’s own values is crucial, because your (often well-meaning) friends and family (and society at large) will have a different set of values that they wouldn’t refrain from imposing on you. If you don’t define yours clearly, you may find yourself living according to those of others, which is a recipe for misery and for inadvertently finding yourself way off course.
Good, supportive friends (and family) are worth their weight in gold.
If I wasn’t completely devoured by depression and anxiety, it was thanks to a few close friends who supported me during the process. For every depleting, superficial interaction that I had, I was lucky enough to have many more with caring people who lent a listening ear and compassionate heart. I’m sure they know who they are and that I never take them for granted (ok, end of sap).
In conclusion
For what it’s worth, the last half a decade has been life-changing (I know, how unique!) and my experience has left me with a dorky obsession with personal finance, which I take to be a great silver-lining.
I will continue to share my story, and things that I learned in the process, hoping that it’ll be useful (or at least, entertaining) to those who read.
Thanks, and Rookie out.
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