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Mr. TTF's Early Money Mistakes Part 2 - TICKET TO FI

Mr. TTF’s Early Money Mistakes Part 2

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Money Mistakes

As a disclosure, some of the links in this post are affiliate links, meaning, we can earn a commission on any purchases made through the link, without any additional cost to you!

Alright TTF family. After an extended delay, I am back to talk about me falling on my face some more. Isn’t it funny how we say we never want anybody to fall on their face, but at the same time, we don’t always look away when it happens? So here is me falling on my face for your viewing pleasure. And for the greater good of you punching your ticket to FI sooner than I.

Diving into the Records

To prepare for this article, I had to knock some serious dust off of the old apartment leases. I have to give a huge shout out, and thank you, to Miss TTF. I am REALLY good at keeping things, but I am a 1 out of 10 when it comes to organizing (and that’s rounding up). Miss TTF took note and emptied the entire filing cabinet. In the end, I took out three bags of shredded paper and a garbage bag full of user manuals for a whole lot of crap I no longer had. To be clear, I used to have an Amazon problem….and I will leave it at that because it is another money mistake realization in the making.

In my quest for the numbers, I was also impressed with the number of statements my bank had electronically archived. AKA reminders of how completely broke I was not so long ago.

My old bosses love to laugh at the low ball offer I took working with them. No joke, I am quite certain that they took the lower end of the salary they could offer, halved it, and then presented it to me. Despite the salary, I would do it again, a million times over. They taught me more than I could have ever imagined and to this day are two of my closest friends.

So what does this all have to do with my money mistakes? Well not a ton, but they were some of my thoughts as I traversed the mistakes of my past. While I have talked about several of them already, I am adding a very big one to your reading list. My massive $272,025 mistake was deciding to live by myself for 5 years when I had absolutely no reason to.

My 1 Step Forward

The interesting part about my mistake to live on my own for five years is that I had previously made some good moves in relation to my housing choices, like really good decisions. That has kind of been the story of my life to date though. I have made a number of great decisions only to follow them up with decisions that wiped out the progress of the good ones. One step forward, two steps back has really summed it up for me.

In my first couple of years of college, I lived at home. I know, not the cool choice per se, but I did it anyways. I would love to sit here and say that the reason was to stock pile money away while working and going to school, but I didn’t. Unfortunately, I didn’t save a damn penny during that time. Saving was not even on my radar.

After that, I moved away to finish up my last three years of college. At all times, I lived with three other roommates bringing the cost down considerably. Again, not a saving decision to live with roommates, I just didn’t have money to consider anything else. Then I graduated and boy was I pumped to go out and find that high paying job right out of college. You know the promised equation, College Degree = High Paying Job. Ha! Not the case for my chosen degree which was Biological Sciences with a minor in Chemistry. You really aren’t making money here unless you pursue your Master’s or PHD, but that was not in the cards for me.

Moving Home

So I moved back home for a year, secured my first career job working in a lab (which most people can’t believe when I tell them, even Miss TTF) and continued working my part time college job to make extra cash.

This was the point in time when my living situation really paid off. I was living at home with the goal of paying off my student loan AND stock piling cash. After a year of this, I moved in with a friend and we lived in an absolute dump. We were on the second floor, the floors were slanted (to the point where the refrigerator door closed on its own, and the square footage was close to that of the 50 inch TV that inhabited our living room. During these two years, I was able to save a lot of money. I paid off the $8K in student loans and saved up the $15K that got away.

2 Steps Back

Unfortunately, you know how that story ended: one step forward, two steps back.

After about a year, I moved out to Phoenix, AZ, where again I lived with two roommates allowing me to believe we could afford the more expensive apartment.

At that time, I decided it was time for my mini-retirement. And if I could do it all over again, I would have purchased a house and rented out the rooms to cover my mortgage. That way, I could have taken that same year off (or better yet, not taken a year off), and more than likely come out better than when I began the sabbatical. But hey, if that were the case, I would be writing a very different article like, “Once Upon a Time Mr. TTF was Really Smart.”

So to date, I had been smart about always carrying roommates, but then had an epiphany. I thought to myself, “I have depleted my savings, what’s next on the road to all things good decisions?” Then it came to me! Since I have no money to my name, let’s go out and find an apartment that I can live in, by myself, and pay for by myself. That is a phenomenal way to get from 0 to 0 in five years or less.

Where was someone to shake me out of such insanity?

So, on my way home from my entry level job, making $11-$12 an hour, I saw this b-e-a-utiful place that I knew I couldn’t afford. Until I could, or so I thought.

I guess you could say they had me at hello. The place was gorgeous. It was on the top floor (no dance offs going on above me), it had a built in bookshelf at the entry, gas burning stove, in unit laundry, a walk in closet, a built in desk, granite counter tops, a beautiful pool area with built in gas grills. ALL of this could be had for the low, low price of $652 per month; which, consequently, was a little less than one of my paychecks at the time.

I had never lived any place like this and it is everything we don’t currently have in Southern California. For all intents and purposes, I could “afford” the place by most people’s definition in our Consumerville of a world. One paycheck went to rent, and I had to put the rest to work for other bills and entertainment. Fortunately for me, I had a low cost lifestyle. I can’t tell you if that was out of necessity or by choice or both.

To put this in perspective, my boss lived in the same complex, but literally made twice the salary I did.

Opportunity Cost of Renting Alone

Why couldn’t I actually afford this? Freakin’ opportunity cost is why.

I now tend to see things in terms of the cost over time. While I never missed a single rent payment (in fact, I always pay early), I also didn’t save a penny to my name during that time. Had I purchased a house, I would have at least built equity in that home. Never mind the fact that I could have rented out rooms and likely lived for free. Would have, could have, should have.

I did what was typical and that is why today I am only starting my journey rather than being at the end of my FI journey. Opportunity cost is expensive and to show that, we will relive the tales of the tape.

Looking Back

Before we begin, I would like to review the assumptions that I made in the following opportunity cost calculations:

First, instead of renting alone in a one bedroom, I am comparing what my situation was, to what it would have been to live in a two bedroom with a roommate. To account for this, I took my monthly rent from that time and multiplied it by a factor of 1.5 which I think is a conservative estimate; I think rents for two bedrooms were actually less than what I display here, but felt I should ere on the side of caution.

Additionally, I am assuming a $40 per month bill for internet, and $40 bill for utilities each month, totaling $80 a month for the apartment. And split in half as a shared expense at $40 for each roommate. Sure, these bills could vary widely based on internet speed, where you live, and the season you are in for utilities. With that said, I think it is a conservative estimate (especially the assumption that these didn’t increase over time), but I think it demonstrates the point sufficiently nonetheless.

As is always the case, I assume money saved is 100% invested in an index fund tracking the S&P 500 producing an average annual return of 7%, which already accounts for 3% inflation per year.

Year 1

As mentioned, I depleted what is now known as the $15K that got away so my savings started at $0. My rent for this completely and ridiculously awesome place was $653/month for my first year. After 12 months, I paid a total of $7,836.00 to someone else’s mortgage (making them wealthier with each passing month).

Had I simply purchased a home, I would at least have had the forced savings of equity in the home. I would have 3.9% equity in a $200,000 home, the current median price of a home in the United States.

Had I lived in a two bedroom with a roommate, the approximate rent per month would have been $979.50. When you divide this by two, my portion of the rent would come out to $489.75 per month. Plus the split cost of internet and utilities, an extra $40/month to invest. My total savings per month would have been $203.25. After a year’s time, my would have, could have, should have brokerage account balance would likely sit at $2,609. Of that $2,609, $2,439 would be my own contributions (93%) and $170 would stem from growth (7%).

Year 2

Now that we are warmed up, let’s dive into year two of this disastrous five-year run. There is a great book I read called The Compound Effect. One of the lessons that has stuck with me is that the compound effect can work in either direction. It is either working with you or working against you depending upon your choices. This effect is already air apparent in year one, but it will really start to take its toll as we discuss years two through five.

In year two, rent stayed flat at $653 per month. Again, we are assuming utilities and internet stayed the same at $80 combined per month (Uncommon? Yes. But simple math? Yes, please.). At the end of the year, I paid a yearly total of $7,836.00 in rent and $960 in utilities. After two years, I had spent $15,672.00 in rent (equal to 7.8% equity on a $200,000 home). And $1,920 in utilities and internet.

If I would have bunked up, I could have siphoned off that same $203.25 per month to invest in index funds. Don’t forget, I have the previous year’s balance of $2,609 in my brokerage account working day and night.

With the compound effect at work on my brokerage balance, plus the addition of $203.25 per month to that balance, my brokerage account would have sat at approximately $5,401 at the end of year two.

This balance would have composed of:

  • $4,878 in my own contributions (90%)
  • $523 in growth (10%)

As you can see, 10% of the total balance of my account is from growth alone, which means free money. This is time working its magic and it only gets better the longer you let it go.

Year 3

Wooooooo-hooooooo, the apartment complex decided they wanted an extra $120 from me this year. They raised my rent from $653 to $663 a month. I am sure my internet and utility company did too, but we will treat this as a fixed $80 per month cost. In Year 3, I spent $7,956 in rent and $960 in utilities and internet.

After three years of Operation Renting Alone, I have racked up a spend of $23,628 in rent (equal to 12% equity on a $200,000 home) and $2,880 in utilities and internet.

In year three, we will also assume market rents for two bedrooms went up in proportion to my rent. This would have been $994.50 per month. With a roommate in the equation, this would bring my portion of rent to $497.25 per month. Utilities and internet would stay at $40 per month. This would have allowed me to save $205.75 per month into my brokerage account.

After another year of the compound effect working its magic on my $5,401, plus the monthly addition of $205.75, my year-end total would have come in at around $8,420. Of this, $7,347 were my own contributions while $1,073.00 came from growth (aka FREE MONEY).

Year 4

This year was the biggest change of all. And as the article would go, not to my benefit, financially. On the other hand, I had checked a box on a lifelong dream to move to Southern California; a box that ultimately led me to meet the one and only Ms. TTF.

Trust me, there wasn’t a single television show growing up, that touted how cool it was to grow up in the Midwest. All I ever saw were TV shows of kids and families growing up in Southern California. Lifestyles of the rich and famous, where kids hung out at the beach all day long, nobody owned a real jacket, and where holding a job as a teen was seen as a misdemeanor offense. And finally, all of this was going to be mine. I couldn’t wait to live near the beach and visit it every day for the rest of my life!

The Reality of SoCal

And of course, it didn’t totally play out like my own reality show. I found out quickly that the only place I could afford was a one-bedroom apartment 30 minutes from the beach. Of course, 30 minutes without traffic, which is never actually the case. And remember all of those wonderful things I said about my place in AZ? Well, I quickly found out that for double the price, you will find none of that in Southern CA. If you are willing and comfortable with three times the price, then can you expect some of the same amenities.

But there was one big problem with this: I was not making three times the money I was in AZ. In fact, I was making nearly the exact same thing… So reality set in and I scooped up my first place in Southern CA for $1,075 per month. It had no: granite counter tops; walk-in closet; pool (at least not one that was cleaned on a regular basis); in-unit laundry (biggest heart breaker of all); spacious kitchen; luxurious bathroom; nada, nada, nada!

In turn, my annual rent expenditure increased to $12,900 annually. For simplicity, internet and utilities came in at $80 per month and $960 per year. In four years, my rent total came to $36,528.00 (now up 18% equity in a $200,000 home) and $3,840 in utilities.

Roomies in Paradise

Assuming I had opted for a roommate and picked up a two bedroom apartment in CA, total rent would have been $1,612.50 per month. My portion of the rent would have been $806.25 and $40 for internet and utilities. Had opted for a roommate, I would have been able to save $308.75 per month into my brokerage account. And that’s with my current balance of $8,420.00.

At the end of four years, then, my brokerage balance would be approximately $12,973.00 and:

  • $11,052 would have been my own contributions (85%)
  • $1,921.00 would have come from growth (15%)

I just want to point out that by simply living with a roommate, I would have gone from living paycheck to paycheck, to actually saving money in one of the most expensive areas to live in America. Please also bear in mind, I was making nearly $20k less than the median salary in Southern CA. That is profound.

Year 5

If you have stuck with me through this, thank you. We are on the final year of renting alone a.k.a. flushing mucho dinero down the toilet.

Now unlike AZ, my current landlords wasted no time in raising the rent on this utterly underwhelming apartment to $1,175.00 per month. This brought my yearly total spend in rent to $14,100.00 per year and utilities and internet remaining the same.

After five long years of renting alone, my grand total in rent came to $50,672.00 (25% equity on a $200,000 home) and $4,800 in internet and utilities. All I can say is wow for obvious reasons!

Had I lived with a roommate in my 5th year, rent for a two bedroom would have been approximately $1,762.50. When you split that up, my portion of the rent would come to $881.25 and $40 for internet and utilities. This would have allowed me to save $333.75 per month on top of my brokerage account balance of $12,973.00. Which did I mention works day and night while you eat, sleep, exercise, and hang out with friends and family? If not, it is worth noting. At the end of five years, had I made the intelligent decision I write about today, my brokerage balance would have sat at approximately $18,166. Of this, $15,057 would have been my own contributions (83%) while $3,109 (17%) in growth.

40 years later

So here is where it gets REALLY interesting, like really interesting. Remember the compound effect I was talking about earlier? Remember how I told you it is a total badass, but it is way, and I mean waaayyyy cooler when it is working for you? Well here is where it gets really cool for you if you read this and don’t make the same mistake I did.

Had I let that $18,166 sit in my brokerage account, and never added a single penny to it (even though I highly encourage you to keep adding to it many times over), it would total approximately $272,025 after 40 years of compounding (with a 7% return which is adjusted for inflation)!

  • $18,166 would have been my own contributions (3%)
  • $253,859 would have come from growth (93%)

What??!?!?!?!!?!?!??! This is just plain bonkers! This is the part people have very hard time getting their heads around. How could $18,166 transform into $272,025?

The One-Two Punch

Two very important conditions make this possible.

  1. You must be invested
  2. Most importantly of all, T-I-M-E

These two conditions are a one-two punch.

If you are not investing and keep your money in a traditional savings account for 40 years, you will actually lose purchasing power by a lot. For example, that $18,166 you saved by having a roommate would only buy you, in 40 years, what $5,538.05 would buy you today. I do think you should, however, keep some of your money in traditional savings account, commonly known as the Emergency Fund, or as I prefer, an Opportunity Fund.

But $18,166 + 40 years of the compound effect = $272,025. That should reaffirm the importance of investing. The more time you allow your investments to grow, the less money you have to invest on a regular basis. Again, I would encourage heavily investing up front and for as long as you possible; more money + more time = a heck of a lot more returns down the line.

Balance Percentages

Last thing to highlight the importance of time, is how much of the balance is contributions percentage versus growth percentage.

In year one, my brokerage account balance would have been $2,609.00, 93% contributions and 7% growth. Now look how time has flipped that result on it’s head. After 40 years of work day and night while you ate, slept, and hung out with friends, that $18,166 turned into $272,025, which was 7% contributions and 93% GROWTH!!

And while I am sorry to nerd out for so long, I will leave you with these final numbers. Because hitting FI is all about pushing the boundaries. Had I allowed that $18,166 to compound for 40 years PLUS contribute monthly, just look at what the results would be:

  • $100 monthly contributions for 40 years + 40 Years Compounding = $528,357
  • $250 monthly contributions for 40 years + 40 Years Compounding = $774,668
  • $500 monthly contributions for 40 years + 40 Years Compounding = $1,553,683
  • $750 monthly contributions for 40 years + 40 Years Compounding = $2,194,512
  • $1,000 monthly contributions for 40 years + 40 Years Compounding = $2,835,340

You can always calculate your own projections using our compound interest calculator of choice. I often just do 0 as the current age and use the retirement age as however many years I want to have that money grow (this example would be 0 to 40).


Alright TTF family, I have nerded out long enough on these numbers to relive a very expensive mistake. My hope is that you read this and can prevent this from happening to you. Or adjust course as soon as possible. You can see plainly now, that while I “could afford it,” I absolutely could not afford it; I cost myself $272,025 without thinking twice.

Get a roommate.

If you have the opportunity, which I did and passed up, house hacking can be a very successful way to launch your FI journey and exponentially expedite the timeline to get there. It is an article all to itself, but in the most simplistic explanation I can think of:

  • Purchase a multifamily complex (duplex, triplex, quad)
  • Rent out the units you are not living in


  • Purchase a single-family home
  • Rent out the rooms you are not living in

In either case, the rent you charge either allows you to live for free or substantially reduces your monthly rent. This is not a subject I am as well versed in yet, but Brandon Turner and Scott Trench from Bigger Pockets are rock stars in this field and a great place to start.

There is also option, Live In Flipping. You buy the ugly house in the good neighborhood. You flip it while living in it. And sell it for a profit after 1-2 years for some pretty advantageous tax benefits. Mindy Jensen from Bigger Pockets is a pro’s pro in this field.

In the end, as Craig from Guy on Fire states,

“Live like a college student for as long as possible.”

So there it is. Go get a roommate and get started on punching your ticket to FI!

Tell us how you are hacking your living expenses or totally losing your money because you thought all adults had to live on their own at some point, regardless of how much you could afford.

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  • Our Trial By Fire

    I hate shoulda, coulda, woulda! But at least you can share these experiences could help others think twice about their actions. Sharing our mistakes is probably more important than sharing our successes. Great article and breakdown!

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About US

Hi all! We are Alicia & Nate. We are couple currently living in San Diego learning and teaching the ropes of all things personal finance. We love dogs, chips, and Friends! Hope to see you around! 

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