How I Increased My Net Worth by $30,000 in 6 Months

• In January 2021, my net worth was $ -15,000. Today it’s a healthy $ 15,000 in three steps.
• I stopped paying my student loans while payments were paused and invested that money instead.
• I set myself a savings goal each month and then did everything I could to achieve it, including side work.
• Read more stories on Personal Finance Insider.

Last month – for the first time in my adult life – I reached positive net worth. As a first-generation graduate with a Masters degree who was underemployed for most of my working life, that felt amazing.

Let me first note my privileges: I am a white from the suburbs who was fortunate enough to attend an elite university with a very significant financial aid package. Being underemployed has always been a choice – which is not the case for most Americans in this situation. I opted for opportunities like a Fulbright Scholarship and an AmeriCorps position rather than a stable and relatively well-paying job for the experience. These are privileges that not everyone is entitled to.

However, other than these privileges, I have not received any monetary profits or inheritances. I’ve never made more than $ 40,000 in a single year (although that will change by the end of this year!). Even so, since January 2021 my net worth has grown from -15,000 USD to 15,000 USD. Here are some of the ways I achieved this.

1. I have changed my mindset and adjusted my planning

The student debts from my master’s degree have overwhelmed me for so long and made it difficult to think of anything else. I was in over $ 50,000 in debt after school and I’ve barely made a dent over the years. It quickly became my only focus: every extra bit of money I received went for this debt because I couldn’t imagine feeling happy and free until it was gone. A few years later – and still having $ 37,000 in debt – I realized that I need not continue down this path; I can see it differently.

After realizing this, I made the decision to pause my federal loan payments in February of this year. I had already knocked out the four smallest loans (from $ 1,000 to $ 3,000) using the debt snowball approach and could see that I was making slow progress. At the same time, I realized that paying all my extra money on zero-interest loans (during the pandemic) wasn’t the best way to build wealth.

Instead, I started investing more (both through a robo-advisor at Betterment and through self-chosen Roth IRA trades) and eventually started growing a little. Since February – when I decided to focus on wealth accumulation rather than student loan repayment – I have maxed out my Roth IRA and rebuilt my emergency fund (which was depleted by the chaos of 2020). Together, these made up $ 12,000 in my net worth.

2. I set achievable monthly goals

This step – although it seems simple – was probably the biggest impact on my overall gain. In addition to the regular monthly transfers that I have set up in my accounts, I have set myself a separate, realistic financial goal each month. For example, when my personal investment account was around $ 3,800, my goal for the next month on that account was $ 5,000.

I set myself a goal every month – each for a different account – and put everything extra on that goal (like my stimulus checks). After I deposited this money into my investment accounts, the magic of compound interest took over and my investments began to grow exponentially. All in all, I’ve been about $ 6,000 richer since January because I met those goals and reinvested all interest and dividends.

When I was about to do it but didn’t think I would make it, I looked for ways to make extra money or worked hard to cut my budget in other areas. It was like a video game that I played with myself – except the scores were real money and the prize was a better financial foundation.

3. I spent time each week looking for additional sources of income

I know side hustling and freelancing aren’t for everyone, but usually there is a way for everyone to make a little extra cash. For me this meant devoting a certain amount of time each week to looking for additional sources of income.

As someone living in the Alaskan Bush, my options are more limited than most – there are no Craigslist “gigs” or service jobs, period. Instead, I set aside a certain amount of time each week that I spent looking for ways to increase my income. I used this time to build my freelancer portfolio and to find opportunities that my full-time job offered me that I have not yet used. In the end, these various sources accounted for more than $ 5,000 that I invested over the past six months – which has allowed me to exceed my original net worth target for that period.

Many financial success stories are flashy, but mine is proof they don’t have to be. Making consistent financial decisions really adds up – even if it doesn’t feel like it at the time. I made the first deposit into my Roth IRA three years ago and today that account makes up a significant portion of my net worth. I’m not a perfect example – I still have $ 37,000 in student loans – but maybe next time I’ll write about being out of debt now.

source https://collegeeducationnewsllc.com/how-i-increased-my-net-worth-by-30000-in-6-months/