How a software engineer went from $ 200,000 in debt to a millionaire
- CJ McGlown graduated with $ 80,000 in debt. After the marriage, the debt stood at $ 200,000.
- Now McGlown has his own business, a stock portfolio and a net worth of $ 1 million.
- He attributes his success to finding jobs, frugality, investing in stocks and generating passive income.
- Learn more about Personal Finance Insider.
For Cadarrius “CJ” McGlown, achieving a certain level of financial security is like having a really good helmet. It blocks out the noise of everyday distractions – bills, debts, work – and lets him focus on the ideas he wants to bring to life.
“I felt like financial freedom was the only way I could be myself,” the software engineer told Insider. “If I can achieve financial freedom, I know I can get distracted trying to put my best skills to work for the world.”
He grew up in Memphis, Tennessee, in a military family and became a millionaire last year. He is now financially independent at the age of 29 and can focus his attention on his true passion: technology and innovation, especially in the area of decentralized finance.
“The goal is to get to a point where I can build my business, innovate and create things; I have inventions in my attic right now,” he said.
But McGlown’s wealth-building journey was not linear. After graduating he had about $ 80,000 in student debt and after marrying his wife their combined student debt became $ 200,000.
However, due to a few key strategic choices, McGlown was able to grow from negative net worth to net worth of $ 1 million in just five years.
“I delayed almost all gratuities until my early twenties,” he said. “It was by no means magic, and it takes sacrifice to accomplish a lot of these things.”
1. He changed jobs to increase his income
McGlown’s first job out of college came with a salary and an enrollment bonus of $ 75,000 per year. With the consultant work he was doing in parallel, he earned an additional $ 30,000 in the first year.
But nine months after taking the job, he realized he had to go and earn more elsewhere because he hadn’t negotiated well enough, and he wanted to tackle his debt more.
While continuing to work alongside, he secured a contract with the Army Corps of Engineers and quickly realized that government contracts were a great way to stay on top of his earning potential. On this first contract, he won $ 85,000. About a year later, he moved to a Department of Defense contract and earned just under $ 100,000.
“I just kept jumping so I could stay at my best,” he explained.
To further increase his income, he held other secondary jobs. “I just started to say, ‘I want to take as many opportunities as possible and learn as much as I can,” he said.
During this time, he also honed his skills and developed his professional network at an accelerated pace by working so hard, which ultimately helped him start his own business, HeySoftware !.
2. He lived below his means while repaying his debts
During those early years, McGlown went out of his way to save as much money as he could. As his income grew, he spent all that extra money on savings and lived as frugally as possible.
“We have minimized expenses and lived extremely under our means,” he said. “We literally only ate peanut butter sandwiches the whole time.”
To some, this may seem extreme. But for McGlown, there was one end goal worth it: “I got that thought [of financial freedom]. That’s what really held me back. ”
His wife’s salary covered most of the daily expenses – bills, food and other basic necessities – which allowed McGlown to allocate “100%” of her income to growing their wealth.
For occasional entertainment, he took advantage of “free days” at local museums and attractions, such as a free day at the city zoo.
After a year and a half of living that way, McGlown realized he had saved around $ 200,000.
“It was a terrible time I was like ‘Wow I have $ 200,000 [saved] and I have $ 200,000 in debt, ”he said. “I made the crazy decision to go to $ 0 [in total savings] and pay everything. ”
3. He learned to invest in the stock market
After paying off his debts, McGlown turned to building long-term wealth. He reverted to a “headlong” work ethic and started to grow his savings again.
“My original strategy to achieve stability [of financial freedom] was to pay off a house, ”he said. “I was like, ‘If I can pay off $ 200,000 in loans, maybe I can pay off a house pretty quickly. “
About three years ago, McGlown bought a house with a down payment. After that, he started saving again and accumulated around $ 500,000. He was going to use it to pay off his mortgage, then the pandemic hit and the stock market collapsed.
With stock prices extremely low, McGlown instead chose to put almost all the money he had saved on the stock market. He used online resources to learn all he could about investing and chose to buy stocks in companies where he saw the value they bring to the world and understood their importance in their industry. .
“When the market inevitably goes down at times, it gives you confidence that it has to go up,” he said.
When the market rebounded a few months later, it made impressive returns on its purchases in the event of a pandemic. However, he does not seek success overnight.
“Most of my portfolio, around 80%, I plan to hold it forever,” he said. “And 20%, I allocate to ‘high risk, high return’ opportunities.”
4. He makes passive income
Less than a year after purchasing their primary residence, the couple also invested in a rental property. They had saved up enough for a second down payment of their work and frugal lifestyle and bought a turnkey home in a beautiful area of Memphis. McGlown chose to put in 35% instead of the traditional 20% to maximize his profits.
“We just had a house that we would like to rent if we rented,” he said.
The house was rented out almost immediately. Subsequently, they invested in a property manager to handle the day-to-day responsibilities of an owner.
McGlown said paying someone else to manage the property was worth it to keep the investment as much as possible – and even after paying off the mortgage and the manager, they’re still making around $ 12,000 a year from the House.
He also earns an additional $ 11,000 in liabilities per year through dividend payouts, mostly through his low risk investments.