I Built A 6-Figure Investment Portfolio While Paying Off My 6-Figure Debt: Here’s My Best Advice

 Today I have a six-figure investing portfolio and have paid off $169,000 in consumer debt and counting. But for a long time, the notion of tackling even one of these money goals was daunting, let alone the idea of accomplishing both at the same time.

In my 20s, I was accruing debt, I wasn’t saving — not even a small emergency fund — and I knew nothing about investing. This combination led me to make one of my first big financial mistakes.

I recovered, though, and now, as a confident and consistent investor, I have learned that it is possible to achieve multiple money goals at the same time. Here is my best advice.

Don’t let early mistakes hold you back

At my first job out of school, I started putting money into my employer 401(k). A couple years later, after being laid off, I decided to take some money out of my retirement account to help cover bills and keep me in my home while I looked for another position.

What I didn’t know was that I would be hit with a tax penalty for taking that money out early. It was something of a shock the next winter when I got a statement from the IRS the following year saying that I owed them $5,000. I promised myself then that I would never do that again.

While I did open a new 401(k) and a Roth IRA at my new gig, I still felt like I didn’t have enough financial savvy to make the right calls when it came to my investments. For over a decade, I took this hands-off approach.

Finally, in 2014, when my husband and I got married and we started combining our finances, I decided that I wanted to learn more about investing, especially if we wanted to ensure that we were working together to build generational wealth for our family. 

Ask for help when you need it

In December 2014, I met with a financial advisor for the first time. They walked me through financial concepts like compound interest and helped me understand how mutual funds work. 

Even the meeting with the advisor was new territory for me. I had never gotten help from one before because I always thought they only worked with high net-worth individuals or big financial institutions. 

I started reviewing my investing statements consistently and began figuring out how I could accelerate the growth of my retirement savings.

My husband and I also started having regular discussions about how we wanted to grow our retirement savings over the next 10 to 15 years. That helped lay the groundwork for tackling my other financial goals. 

Start small (it can make a big difference)

When I started investing, the only thing I knew was that my first company offered to match my contributions, so that seemed like a good place to start. At my second job, when I opened the 401(k) and the Roth IRA, I had minimal guidance or training about how to choose the best performing mutual funds, and there were a limited amount of investing options. 

I chose a selection of target funds based on my estimated retirement date, but I rarely tracked their performance or made any changes, like regularly upping my contributions or choosing a better-performing mutual fund. 

When I looked at my quarterly statements, I could see that my investments were growing, if not up to their full potential. But not knowing much about how to navigate the stock market made it feel intimidating, and I didn’t want to make any more mistakes.

After that initial meeting with the advisor, I decided to take control by starting small. In my 20s, I started investing $50 per pay period in my employer’s 401(k) plan, and that strategy remained largely unchanged for many years. But in 2014, after assessing what I was able to comfortably contribute to the 401(k), that amount went up to $300 per pay period and increased over time. 

Make room in your budget to pay yourself first 

When I started budgeting in April 2018 as part of my debt-elimination plan, I created budget items to allocate some of my savings to my emergency fund and my retirement accounts. 

Every month, my goal is to save at least $800 towards my retirement accounts. In order for me to stay disciplined to consistently “pay myself first,” I set up an automated deposit into my retirement accounts every month. 

This system has helped me develop my savings habit because I know my money has been invested before it touches my hands. Now when I receive a tax refund or any additional income, after that base $800 has been allocated, any additional money will go to my retirement accounts. 

I aim to put at least $1,000 a month towards my debt. In the past, any month that I felt I couldn’t cover both debt repayment and save for retirement, I still contributed a reduced amount to my retirement account and prioritized the debt payment. 

Over time I’ve learned how to set up my budget each month and make adjustments to reduce my expenses in order to make it feasible to build wealth and eliminate debt at the same time.

Invest consistently and for the long term

When the pandemic began in March 2020, I made a concerted effort not to panic about my investments. I decided to keep consistently investing $50 each month into my Roth IRA. At one point, all my investments collectively went down $30,000 in a given month. 

I knew based on my previous experience with the economic downturn in 2008 that even though we were going through a volatile period, this was the best time to keep my money in the stock market, because eventually it would rebound. 

At that point, I had been investing in my retirement accounts for several years and I didn’t feel compelled to stop my routine. My investment portfolio lost a significant amount of value in April 2020.

Because I stayed the course, I was able to recover the lost value, though, and make a return on my investment. I’ve learned that if you have the mentality that you are investing for the long term, you will be able to sustain the ebbs and flows of the stock market. 

Stay current and open to learning new things 

After that first meeting with my financial advisor, I wanted to learn as much as I could. I met with them several more times to learn about how to invest with mutual funds and annuities.

I started following financial news sources like CNBC and Morningstar to see if there were any major daily changes in the stock market. I also started following other personal finance experts like Suze Orman and Tiffany Aliche, The Budgetnista. I admired their stories and their advice for women investors inspired me. 

Since the end of 2014, each quarter I make sure to thoroughly read over my retirement account statements to review the performance of my investments. Doing this keeps me current and helps me make informed choices about whether to keep my allocations the way they are or find other mutual funds that have a history of performing well. 

Overall I feel like this investment in my understanding of the stock market has made me more confident about my financial decisions. 

Today, in my financial coaching business, Dollars Makes Cents, I use my experience building a six-figure investing portfolio to help my clients get more confident about their investments. I tell my clients that it doesn’t matter where you are today, it’s all about your belief that you can build substantial wealth. 

By taking small steps and investing a consistent minimum every month, you can develop your savings habit muscles to grow your wealth and create a financial legacy for your family.

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