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Even though I do a lot of frugal things, like buying all my clothes at the thrift store, using coupons, and selling items on eBay in my spare time, the success that I am most proud of is definitely my Roth IRA.
I am 26 years old, and when I was a sophomore in college, I became very passionate about donating to charity. I only had a part-time job but I started saving a piece of my paycheck every week to send to various charities that I truly believed in, that addressed issues like the environment and human rights. Several months passed by, and I realized that I had only managed to send off about $100 to these charities, sending about $20-$25 each time I got a paycheck. By that time I was amassing a huge amount of charity junk mail and free gifts like address labels and cards. I became frustrated that the charities were going to spend more money in marketing to me and trying to solicit more donations from me than what I had sent them in the first place. I daydreamed that someday I would be a philanthropist and be able to give large sums of money to charities, to finance significant projects like land conservation or grants. I realized that if I were going to accomplish this goal in my lifetime, I would need to start early. I would need to save money.
I started researching investing and personal finance when I got home from class each day. I read about stocks, mutual funds, and various types of savings vehicles. I read about the famed miracle of compound interest, and started to get excited. This was how I could make my dream a reality! With compound interest helping me, I could start from nothing and someday be a great philanthropist. It was still going to take a long time. And then I figured out where to put my money while I waited that long time - in a Roth IRA! The Roth IRA was a wonderful concept, and I quickly realized that I would be foolish not to take advantage of it immediately, though I hardly had an income. I started a Roth IRA and managed to scrape together enough from my summer job that summer to reach my goal - an IRA with Vanguard, which cost $2000 to start.
I wanted to max out my IRA every year. However, that was the last summer I would devote to a summer job. In my spare time, I started a nonprofit that works in Africa, and I spent my last two summers (in college and grad school) in Africa, working on projects there. I had to fundraise my airfare and expenses, so I did not make any money for my IRA that way. However, I managed to land a job doing assistance for the US government in Africa, and that paid a little bit. I sold items on eBay and took part time jobs through the rest of grad school. My income was basically zero. And this is my first year in a 'real job' - making very little. Meanwhile, in graduate school, I accumulated $185,000 in student loans. My husband also has $185,000 in loans, so together that is a total of $370,000 just in student loans. I daresay that few people out there can approach this amount of debt that we are carrying.
Now, with my 'real job' (!) I am making monthly payments on my student loans despite the fact that I have an economic hardship deferment and am not required to make any payments yet. I also still make contributions to charities every month. But at the same time, I make sure to max out my IRA with bi-monthly scheduled payments to Vanguard, and by the end of this year, I will have saved $10,000 towards my dream of becoming a philanthropist. If I can do that by the age of 26, I can aim for the stars for when I reach that tender age of 62 and a half! That is my greatest success so far.
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