From $750K in Debt to Over $1 Million in Net Worth: How One Couple Embraced FIRE

She and her husband absorbed as much of the FIRE movement—Financial Independence, Retire Early—as they could, cut back on everyday purchases, invested more aggressively, and paid off their student loans with savings and bonuses from work. She and her husband paid off their debt by 2021, and they’re now slowing down their retirement so they can enjoy time with their kids without making huge financial sacrifices.

“I just want a balanced life and not feel tied to my job,” Spath said. “Instead of racing to be financially independent, we’re trying to get more balance.”

“Overdoing” shopping

Spath said she grew up in a family with financial problems. She moved to the United States with her mother and sister at age 10, with almost nothing in the family bank account. Money was always tight, but her mother encouraged her to work as hard as she could and save as much as she could. She grew up thinking that investing was something only rich people did.

She received a scholarship to pursue her undergraduate studies and went to medical school. She eventually landed a job in primary care and internal medicine, which she admitted wasn’t the highest-paying medical specialty but still a good salary. For several years, she was the sole breadwinner for her family while her husband was still in college.

“I thought that salary would be enough to provide us with a very comfortable life,” Spath said. “But I quickly discovered that it’s very easy to feel like you’re living paycheck to paycheck, no matter how much you make, if you inflate your lifestyle too quickly.”

Her medical school loans totaled $191,000, according to financial documents shared with BI. But while she was a medical resident, Spath and her husband — an Army lieutenant — moved to Nashville and bought a house for about $350,000 using a VA loan, a purchase Spath said she “overindulged” on.

“We had bought into the idea of ​​the lifestyle we were going to have with the income I was making, but that lifestyle seemed very uncomfortable,” Spath said. “I felt like we couldn’t afford it, and I was really worried that we wouldn’t be able to make progress in retirement or save.”

Eventually, they turned the house into a rental property to generate passive income, which allowed her to pay off her student loans faster. Her first job after residency paid more than $200,000 a year, but Spath said she made another potential financial mistake—buying a house in an exclusive gated community in Savannah, Georgia.

Her total student loan debt grew to $237,000 with interest, including $25,000 she paid for tutoring during residency. She and her husband also had $40,000 in car loans, $335,000 in home loans on their Savannah home and $130,000 in loans on their Nashville home, according to documents shared with BI. Although her job paid well, she had to take unpaid maternity leave for several weeks when their first child was born.

Joining the FIRE movement

In May 2017, when their net worth was minus $250,000, she discovered the FIRE movement, which gave them advice on how to better budget and invest for the future. But Spath discovered that not all FIRE strategies were “sensational investment strategies.”

“These aren’t things that pay 30% or anything like that,” Spath said. “This is slow and steady investing in proven strategies — getting rich slowly, essentially.”

With the support of a financial advisor, she and her husband began maxing out their retirement accounts and increasing the amount they were putting toward loans.

The family moved from Savannah to upstate New York—where the cost of living was a bit higher, she said—to be closer to family who could help care for their young children. Instead of buying a house, they first rented an apartment to “simplify” their lifestyle and avoid taking on more debt. They eventually moved to a house near the hospital, where Spath worked for $100 a month less than their mortgage in Savannah, before living expenses.

She said her children, ages 9 and 7, have motivated her to improve her financial situation. She’s set them up with checking and savings accounts, investment accounts, Roth IRAs and 529s. She’s taught them how to invest money they earn from household chores, and her son has saved enough to buy an iPad.

They prioritized saving heavily when their children were older. For their family of four, they spent about $800 a month on groceries and rarely ate out. The lifestyle change was initially daunting and “kind of invalidating,” she said, although she knew she couldn’t compromise on costs like childcare, which cost more than $2,000 a month.

“For physicians in particular, the stability of our jobs is rapidly disappearing, so in medicine it’s very important to have a financial cushion and some kind of financial independence,” Spath said.

The couple adopted strategies like eating out and cutting their hair at home. They increased their monthly student loan payments to $7,000, and she used her productivity bonuses and extra income from her new job to pay off the loans. They paid off more than $100,000 in six months through July 2018, and also moved into a nicer house.

Two years ago, when their debt was written off, they accelerated their investments, including real estate. She said they became much less fearful of investing their money long-term.

“I was able to reduce my hours, and to do that I took a pay cut,” Spath said. “That gave me a sense of comfort, and my total income doesn’t change every time because I tend to fill my time with other things that end up making money.”

Their net worth now exceeds $1 million, and she said they’re both on track to retire in their mid-40s — though Spath may not want to, as her love of medicine has reignited. They’ve become less frugal in the past two years.

“When I first joined FIRE, I was working so much and feeling so burned out that early retirement seemed like a really attractive option,” Spath said. “But we’ve been able to cut back a bit on savings and become more balanced in our lives.”

Are you part of the FIRE movement or do you live by some of its principles? Contact this reporter at [email protected].