Immigrant Finances #20: A Journey to FI

Immigrant Finances #20: A Journey to FI

Being an immigrant has its own challenges, and I was curious to know from other immigrants how they were dealing with their finances. I wanted to find out the unique challenges they were facing and how they dealt with them. This interview series is an attempt to share the stories of immigrants and how they manage their finances.

I am excited to present the 20th guest of the interview series, the blogger behind A Journey To FI. In his own words, “I truly believe my journey to FI started with the lessons my parents taught me when I was a kid. I can still remember my dad saying.Son, when things are going great that is when you should be saving the most because you don’t know when things are going to go bad“. In the context of FI, I can say this has been one of the most important lessons in my life so thanks Dad!. The journey continues but now I plan to bring others on my quest for achieving Financial Independence.”

I hope you like this interview as much as I did.

1. Can you tell us about yourself? Please include any details you feel comfortable sharing about how long you’ve been in the US, what you do for a living and your income range.

I was born in Maracaibo, Venezuela in 1980 and I think that makes me a border line millennial with some behaviors from Generation X. I was raised by frugal parents who taught me the value of hard work and saving for the future. I graduated in 2004 with a Mechanical Engineering degree and soon started working in the Oil & Gas Industry. I had always thought about exploring the world but It wasn’t until 2007 when I realized I needed a change. Initially, I started to look for jobs all over the world; however, the competition was fierce and opportunities where pretty much non-existent. As a result, I took a step back and decided that the best course of action was to go back to school. This ultimately led to the decision of coming to the US to pursue graduate studies.

I graduated with a Masters of Science in Petroleum Engineering at the end of 2008 with absolutely “0” debt thanks to a scholarship I was granted from day one. I feel blessed with the opportunity I was given as I realize a lot of folks leave school with a ton of debt. Once graduated things could not have started better; I landed a job with a great company which paid excellent money. Today, I’m still working in the Oil & Gas industry but focusing more on data and analytics. In terms of compensation by annual gross package sits between $125,000 – $175,000 which I think is pretty good considering we are a one household income family.

2. What was your relationship with money during the early days of your life? How did it influence your finances?

My money story begins with some key and valuable lessons from my parents. They both come from low income families, and in South America this meant a dual income was a need more than a want. They both taught my sister and I that money did not grow on trees and that they were exchanging their time (they took away from us) for money.

As a teenager, I remember my dad telling me that it is in times of abundance when your savings rate should be at the highest level. The reason for that was simple, always prepare yourself for when things go south. He wasn’t thinking about a catastrophe, but he was an employee, so he knew that he was not indispensable. He was and still is a big believer in living below your means and avoiding lifestyle inflation. These lessons stuck with me and are probably the reasons why I started saving at such a young age and continue to save today.

3. Do you discuss money with your friends, family or colleagues? How do they react when you bring up the topic of money? Is this a taboo subject?

This is an interesting question that I think is a popular one in the Personal Finance space. To answer your question, YES, I do speak about money with different groups; however, my approach has changed to one that is more easy-going and “friendly” as opposed to one that could be perceived as hardcore. In the past, I used to provide unsolicited advice and it didn’t go well. If I’m honest with you, this came with a lot of frustration because I just kept seeing a tremendous amount of opportunities for optimization that people did not care about. I decided to take a step back and reflect on ways I could be more effective in delivering my message and sharing what I know with others. That led to changing my approach and also starting my blog www.ajourneytofi.com. Last but not least, I’m a firm believer in leading by example, so I think my results have also led to people close to me asking about what I’m doing, so they can evaluate if it would work for them or not.

4. What are some money mistakes you have committed? What lessons did you learn from it?

I actually wrote about this in a post. I truly believe that failures and/or mistakes are key elements of achieving success. Mistakes have been many but If I were to summarize the big ones (along with the learning) and perhaps rank them in order of importance I’d start with:

  1. Buying too big of a house: we love our home but next time we’ll be more thoughtful about balancing wants and needs. Our home payment represents 28% of my take home pay and I honestly believe that’s limiting our ability to save more for the future.
  2. Not starting to invest earlier: start Investing now and let your money work for you by taking advantage of the miracle of compounding. It wasn’t until 2015 when I really became intentional about investing and coming up with my personal strategy.
  3. Carrying debt on credit cards: understand all your credit card debt and get rid of it as quick as humanly possible. Believe or not, I love math so start with the credit card that has the highest interest rate and walk your way down from there. Furthermore, I highly encourage using automation and paying your balance at end of month!
  4. Leasing a car and later buying a brand-new one: stay away from putting a lot of money on depreciating assets. Minimize your losses by considering certified preowned vehicles which have already suffered early to mid time depreciation. Also, forget about leasing a car.
  5. Not tracking my expenses: get to know yourself and understand your spending habits. I recommend using tools like Personal Capital or Mint.
  6. Not trusting automation: don’t be a fool like I was. Pay attention to your expenses but leverage automation in as many aspects of life as humanly possible.
  7. Not opening an online savings account (OSA): do not let money sit in an account where it’s losing value to inflation. I encourage you to leverage OSAs and think about parking your emergency fund in this type of account. I personally use Ally Bank which currently pays 2.20% APY with no minimums and no BS fees. If you have additional money … think about investing in low-cost index funds.
  8. Not getting into real estate investing earlier: it is never too late; however, today more than ever math is key to evaluating deals. Check your numbers before you pull the trigger. In my case, the mistake was not getting in at an earlier time so it has been more from an opportunity cost than anything else.
Related:  Immigrant Finances #8: Rich & Regular

5. What is your view on debt? Do you carry any form of debt? Has it ever been a source of stress in your life?

I don’t have any negative emotions towards debt. I think there’s good debt and bad debt. Examples of good debt are centered around appreciating assets such as real estate (when done right) and perhaps a business (assuming you have a good business plan) the rest is bad. Today, the only debt we carry is a mortgage on our primary home and two rentals. We have credit cards, but we pay them in full at the end of the month. Debt has never been a source of stress because we have always been intentional about not carrying any source of debt.

6. How is your money invested? Does being an immigrant have any influence on your investment decisions?

We take advantage of automation and truly believe in paying yourself first. I put together a financial money map with the intent of sharing some of the buckets we’ve put in place. In general, this is the way we invest our money:

Tax-deferred:

  1. 401(k): Maximize on an annual basis
  2. Mega backdoor Roth: Maximize on an annual basis (via 401(k) after tax)
  3. Roth IRA: Maximize on an annual basis (via backdoor roth)
  4. HSA: Maximize on an annual basis
  5. 529(s)

After-tax:

  1. Brokerage account(s)
  2. Online saving account(s)
  3. P2P (liquidating)

Real Estate:

  1. Passive income from propertie(s)

Being an immigrant has not explicitly influenced the way we invest. The one thing I’d say is that since I came to this country in my late 20s/early 30s I feel I’ve been behind most individuals who began their professional careers early in their 20s. If nothing else, is a sense of urgency in trying to catch up and do whatever we can to accelerate achieving Financial Independence.

7. Do you have any specific money situation as an immigrant (e.g. supporting an aging parent or family overseas) that influences your finances?

I’m fortunate in that my parents always thought about saving for the future, so they’ve built a strong financial position that has helped them in retirement. Having said that, this is something that I think about a lot. They are immigrants to this country so health expenses can be detrimental to anyone’s plan. They have medical insurance but it is quite expensive. This is the area where I find myself helping them out when I can.

8. Are you aware of the FI or FIRE movement? If yes, where did you hear about it? Are you pursuing (or have you reached) financial independence?

Yes, I’ve been aware of the FI/FIRE movement since 2015. During this time I was working in the field and had a long commute. Initially, I complained a lot about it but I had no idea the big impact it would have on my life. Instead of listening to music, I started listening to podcasts and it was one in particular called “listen money matters” that turned my life around. I started listening to other podcasts, reading blogs and essentially discovering a community I had no idea existed.

The more I learned the more I wanted to keep going. Fast forward to 2019 and I now follow more blogs than I can count, listen to a variety of podcasts, have read several books on various topics and, as a result, have completely adjusted the way we spend, save and more importantly …. Invest!.

Related:  Immigrant Finances #12: Sebastian From Money Saved Is Money Earned

Like I said at the beginning of this interview, I truly believe my journey to FI started with the lessons my parents taught me when I was a kid. In the context of FI, I can say this has been one of the most important lessons in my life so thanks Dad!. I have not yet reached FI but the journey continues.

9. What are some of the apps or tools you use to manage your finances?

I use several apps (investing sites, banks) but the main one is Personal Capital along with a spreadsheet I use to estimate my annual savings rate.

10. Are there any specific books, blogs or podcasts on personal finance that you’d recommend to others?

Loaded question but here we go:

Books:

Blogs:

Podcast:

11. What money advice do you have for new immigrants who arrive in the US?

I’ve been in the US for 12 years and counting. The first thing I’d say is that you should forget about the “American Dream”. This country has a lot to offer but you have to work really hard for what you want.

  1. Set goals: This is key. If you don’t set goals then it will be hard for you to know how you’re doing, measure progress, and hold yourself accountable.
  2. Track your expenses: How can you improve that you don’t understand. This will be hard but it will help you create awareness about your spending habits so that you can identify and work on areas of improvement.
  3. Avoid foolish debt: this country is great but it will make it super easy for you to get into debt, especially foolish debt.
  4. Save as much as you can: once you understand your spending habits it is my hope you will see how much money is coming in and how much is coming out. That way you’ll know what you can optimize so that so can start saving the rest.
  5. Invest in you: educate yourself, read a few books about investing and learn how to manage your money. No one will care about your money as much as you do.
  6. Invest in low cost index funds: investing is not rocket science. Read some books, understand investing expenses, consider a DIY approach and start now.
  7. Understand employer’s benefits and maximize them if it makes sense: many employers offer a 401(k) match, HSA match, etc. Know your benefits and bank on them if you can.
  8. Pay yourself first: take advantage of automation and just do it.
  9. Do not let others influence your decisions: have you heard about the saying “keeping up with the Joneses”?. Well, if you haven’t, the bottom line is that you don’t have to impress anyone because honestly no one cares. You don’t have to buy a new car every couple of years. You don’t have to eat at fancy restaurants all the time and you don’t have to spend money just because.
  10. Avoid lifestyle inflation: if your income increases that’s awesome but do not spend more, as a result of that. If more money comes in is easy to start thinking about a bigger house, a new car, expensive vacations, etc. If you end up spending more, the increase in your income might be irrelevant to your net base. Instead, use this situation to increase the gap between your income and expenses so that you have more money available to save and invest.
  11. Enjoy life: get to know yourself and what happiness means to you. Money enables you to have options and to do the things that you love. Why do you want to save and invest? Understand the purpose behind those two questions so that you can have intentionally as part of your plan.

12. How can people connect with you on social media?

A Journey to FI – Happiness is the ultimate goal. 

You can visit my blog at www.ajourneytofi.com where I write about all things personal finance, side hustles, travel hacking and personal stories. You can also follow me on twitter and Facebook under the handle @ajourneytofi


Immigrant Finances - Interview Series
Immigrant Finances – Interview Series

Are you a first-generation immigrant in the US? If yes, would you like to be part of this interview series? This series will focus on personal finance for first-generation immigrants and the unique challenges they face.

You can check out my page Immigrant Finances – Interview Series for more details on how to participate in this series.

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