My journey from debt to financial freedom in 5 years

Alok Vaidya is a successful IT professional who suddenly found himself in a very precarious position in 2018. He was put on the bench.

(A term used in Indian IT services companies to mean that you are in the middle of a project, not generating any revenue for the company, but still on the payroll.)

A week later, he was told that he only had 60 days to find another project/task. If he can’t, they’ll let him go.

Looking at the very real probability of unemployment, he suddenly realized that his savings were zero.

He shares 5 lessons learned from this situation until he achieved financial independence.

Lesson 1: Prepare for the unexpected.

I am here after 17 years of work. A 44-year-old man with a 14-year-old son has a 60-day deadline to find another project or put himself back on the job market. Searching for a new job in a senior management position was stressful for me.

I’m doing great and never have to worry about saving because I’m still a long way from retirement. My wife and I both earn a decent income. I don’t have an emergency fund. There is no financial plan. No investment. On top of that, I have some loans. My only asset is the house we live in.

Mentally and emotionally, I was distraught. What if I don’t find another job for months in a row? Can I still live like this? How will we handle our daily expenses? How do I repay my home loan? How will we finance our children’s education? I panicked.

Lesson 2: Solve the problem from all possible angles.

  • I weighed my professional options.

I updated my resume that I hadn’t seen in ten years. I connected with all the people who could help me find a job. Now we’re always looking for higher-paying job opportunities.

I actively started looking for projects within the same organization. Fortunately, I found one within the 60 day window.

Later, my wife and I negotiated our respective salaries at our company.

  • I looked at multiple sources of income.

I contacted all my entrepreneur friends looking for consulting or part time jobs. I started working on building an affiliate marketing business. I started to provide digital marketing services for some clients to earn more income. I work as a part-time CTO with a friend of mine. Soon I was working 24×7. Well, almost.

  • I started to organize my finances.

At the same time, I started looking up information about personal finance online. That’s when I discovered the FIRE movement – financial independence, early retirement.

I like the part about financial freedom. About saving and investing to grow your money so you can live the hassle-free life you want when you’re not making it.

What I don’t like is the starting point. Everyone is talking about starting early, preferably in your 20s. Is it too late for me?

One thing I can be sure of is that I want to speed up the saving process as much as possible. I want to achieve financial freedom as soon as possible and live a financially free life. Once we reach this point, we can choose whether to continue working or relax on the beach.

  • I readjusted my lifestyle to fit my new reality.

As a family, we started living a frugal life. We cut back on discretionary expenses like eating out or ordering food online. No holiday. There are no subscriptions like Netflix or Spotify. We cancelled our loans (consumer and auto). We paid all credit card dues and stopped using them. We make mortgage foreclosures our number one priority before considering any investment.

Lesson 3: Sometimes, you really need to ask for help.

I’m fairly overwhelmed and realize I don’t have the knowledge or expertise to figure this out on my own. Furthermore, this is very time consuming. Therefore, I decided to choose professional services in financial planning and consulting.

There are many certified financial planners and independent financial advisors. In my searches, I came across many financial advisors who only charge a fee. This suggests that they have no personal interest in recommending investment products as they do not earn commissions from the fund house, but only from client fees. So they are interested in helping you succeed.

If you’re cautious, it might be a mindset issue. You won’t be willing to spend money unless you realize the importance of financial counseling. People will buy luxury cars or iPhones, but are reluctant to pay for financial expertise.

Then there’s the issue of trust. These are some of the problems I’ve struggled with:

  • How do I share my most private information with strangers? Will they keep it a secret? Will they judge me?
  • How do I know if the advisor really understands my situation and my fears?
  • Is the advisor competent enough to develop an individualized financial plan?
  • Is the plan valid after payment is made?

I know I need help sorting out my finances. This is a priority. Even though I couldn’t afford it, I was paying a huge amount for my financial plan.

I couldn’t trust an individual even after being certified and decided to work with a reputable financial institution.

Lesson 4: Ultimately, the responsibility rests with you.

The best part about financial planning is that I have a clear idea of ​​how much money we need before we retire and how we can achieve all of our financial goals.

But when the brutal bear market hit us in March 2020, my investment in the market dropped significantly. No one can save you money when the market is down. Not even the most well-known financial institution. So I decided it was time to take charge of my finances.

I started to read and research this topic seriously. During lockdown, I have more free time and use it to achieve this goal.

Even if you hire the services of a professional, you must understand where and why your money is going. It’s your money after all, so you have to be responsible. Be responsible.

Lesson 5: Write it down for a clear snapshot.

Throughout the trip, friends would often talk to us about these issues. I realize people don’t have any plans. No one knows how much money they will need when they retire. They are doing their day jobs and making money, but not investing enough for the future. In some cases, they are but have no goals. They don’t know if their savings are enough. Most people don’t realize the need for financial planning.

List all your financial goals, big and small: children’s education, children’s marriage, luxury car purchases, annual international vacation plans, etc.

Develop an annual cash flow statement so you know where your money comes from and where it goes. Do this before and after retirement.

Once you have everything ready and documented, the Excel-based template handles everything automatically, including what-if analysis. For example: what if I save and invest more? How soon will I retire? Can I afford a luxury home theater system? I use this excel template now, even for small discretionary purchases (what we want).

Over 5 years…

I made it. I save. I invest. I have an emergency fund. I have multiple sources of income. My income doesn’t just depend on my 9-to-5 job.

We sent our son abroad for undergraduate studies. We can now retire anytime. But we are still trying to take our financial freedom living to the next level; from decency to luxury.

you can follow Alok Vaidya on Twitter.

Related reading about other people’s experiences:

  1. A Simple Habit That Helped Me Create Wealth
  2. A money mistake that cost me dearly
  3. This Advice Will Revolutionize Your Relationship With Money
  4. 3 money lessons you can’t ignore
  5. Advice to your 20-year-old self
  6. How a 54-year-old woman takes control of her finances

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