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CEDAR FALLS -- Alex Smith shops at the grocery store like a retiree on a fixed income.

“I only buy meat on sale,” the 21-year-old college student said, going into detail about Hy-Vee’s monthly ground beef sales and off-brand canned vegetables, rattling off the prices by memory. “It’s about being smart about buying it, and when you’re buying it.”

In the month of December, for example, Smith spent $190 on food for himself, according to the financial statements he posted to his blog, WealthyDiligence.com. That’s on the “thrifty” side of grocery spending for a single man his age, according to food cost calculators by the U.S. Dept. of Agriculture.

That frugality — in groceries and everything else (he spent just $40 on Christmas shopping last year) — is all in the service of a larger plan:

“The whole goal of this is, I want to be financially independent by 30,” Smith said.

That’s right: Smith plans to be retired -- or able to retire if he chooses -- by the time he turns 30, with enough money saved to last the rest of his life.

"Mathematically, I know I will be able to retire by 30," he said. "Whether or not I actually do that is a totally different story."

That's because he's enjoyed his two internships so far, the type of jobs he plans to continue when he graduates from the University of Northern Iowa in May.

"It's just that I really like the work I was doing -- it was fulfilling," he said. "If a day comes where I lose the love, I could walk away. I (would) have the freedom and independence to do so."

Smith, a senior accounting major at UNI originally from Des Moines, said he wasn’t born rich and isn’t living off of his parents’ largess. And he’s trying to be as transparent about his financial situation as possible on his Wealthy Diligence blog, which he started last year to track his progress on the path to retirement.

“There is no get-rich-quick secret to financial success,” he said on the blog’s About Me page. “But I believe that if I keep my savings rate above 50 percent, avoid frivolous purchases, and make sound investing decisions, I can turn my dream into a reality.”

Beginnings

Smith’s interest in financial success began during his freshman year of high school when he took a personal finance class. Before that, he didn’t know much about money.

“That was my first introduction to anything — savings, investing,” he said.

The teacher gave students an assignment to “invest” an imaginary $10,000 through MarketWatch.com and try to make the most money from those investments throughout the semester. Smith won the challenge, and then won it again as a senior in his economics class.

“I was just so fascinated about the stock market — I couldn’t stop reading about it,” he said.

He began devouring books about personal finance — one of his favorites is “The Little Book of Common-Sense Investing,” by John Bogel, the former CEO of Vanguard Group, one of the largest investment management companies in the world.

But it wasn’t until Smith watched a PBS show about Peter Adeney, who blogs under the name Mr. Money Mustache and retired at age 30 in 2005, that he began seriously considering the idea of retiring at age 30.

“I thought, when I’m that age I’m probably going to have a kid, and I want to be able to spend that time with my kid. I think that would be awesome,” Smith said. “That’s really the end goal. Family, for me, is the most important.”

Student loans

It made sense for Smith to begin thinking about his first big expense as an adult — student loans — early in the game.

“I’m going to graduate with no student loan debt,” he said, before acknowledging, “I know it is a sensitive subject for many people.”

But he’s telling everyone how he did it.

Beginning with his sophomore year of high school, Smith knew he wanted to work in the financial industry. To do that, he needed a college degree. This is his first point about personal finance: See your end game.

“Not every career out there needs (you) to go to college,” he said. “Where do I want to be in five years, and is college going to get me there? I personally have friends right now that don’t know what they want to do, and they’re going to college to find out. That’s wages lost.”

To cut down on his eventual student loan debt, he began taking Advanced Placement courses and applying for as many college scholarships as he could find, including academic scholarships that required an above-average ACT score. And he decided to attend UNI, a state school with much cheaper tuition and housing than private colleges in the area.

He also held a part-time job to supplement his income and declined many high school invitations, he said.

“So many times I had to say ‘no’ to going out on the weekend, because I was studying,” Smith said. “People don’t see the four to five hours of homework I was doing at night to get good grades and a good ACT score.”

All that has set him up for the future, he said.

A public accounting degree normally takes a college student five years to complete, but Smith entered UNI with 27 college credits already under his belt. If things go according to plan, he’ll graduate after two-and-a-half years with his degree and, with scholarships and part-time job money helping out, no student loan debt.

“Getting through college as fast as possible is a good financial strategy because college is so expensive,” he said.

Investments

On the stock market side, Smith has some regrets.

“The big thing that I wish I would have started earlier was investing,” he said. “We all know the power of compounding interest over time.”

Smith incorrectly assumed he couldn’t begin investing in the stock market until he was 18, but “legally, you can open a Roth IRA whenever you have income being paid to you,” he said.

Since he began working at 14, he loathes that his teenage self instead spent that money on “stuff I did not need — clothes now donated to Goodwill or thrown away.”

“That’s something I learned from my parents — they didn’t start investing until they were 30, and they didn’t want me to make the same mistake,” Smith said.

Now that he's investing, he puts it “exclusively” in an index fund of Standard & Poor’s 500 publicly traded companies.

He doesn’t use a financial adviser, instead relying on his own research.

“I can empower myself to do it,” he said. “By reading about it, I can kind of become an insider.”

The S&P 500 index fund, Smith said, historically has provided the best annual return — The Motley Fool confirms it gets about 10 percent returns annually, though the fund has its good and bad years. It’s better as a long-term strategy.

“In an interview, someone asked Warren Buffet, ‘If you die, what are you going to do with your money?’ ... He said he’s just going to put it in an S&P index fund for his family,” Smith said. “If this is what the greatest investor of all time is going to do, I can’t do any better than that.”

Savings

Smith plans to continue to add to his investments — a lot, in fact.

“There’s a really cool theory in personal finance that determines how soon you will reach retirement, and the first one is how much you save,” Smith said.

The theory is simple: The more money you save, the less time it will take you to retire.

“With a savings rate of 50 or 60 percent (of income), you could retire in nine to 10 years,” Smith said.

The practicality of that theory, however, is the question.

“My parents said, 'There’s no way you’re going to be able to save half of your income,'” he said. “But there’s so many examples on the internet, so many books have been written about it. That’s also why I want to do the website, is to prove to people that it can be done.”

To that end, he’s strategizing the best ways to stretch his income before he even starts his professional life — much like he strategized going to college.

First, he completed two internships with two of the so-called Big Four accounting firms this spring and summer -- KPMG and Deloitte, both in Des Moines.

Second, he’s accepted a full-time tax position with RSM, a public accounting firm in Des Moines, where housing costs will be dramatically lower than in a larger city.

“There’s a few big factors that will take out your income,” he said.

Those factors are rent, a car payment, a phone payment and insurance.

He’s scoped out an apartment complex in downtown Des Moines where a friend currently pays just $550 in rent — quite inexpensive for Des Moines, which has an average apartment rent of $877, according to RentCafe.com. And he’ll keep driving his current car, of which he has $1,000 left on a loan.

“(Personal finance expert) Dave Ramsey talks about people buying cars they can’t afford — the top-selling is a Ford F-150 that costs $35,000,” Smith said. (A basic-model 2019 Ford F-150 actually costs a little more than $28,000.) “It makes no logical sense: Why would you buy a car that costs more than half of your yearly income?”

Reaching the goal

Smith wants to retire by 30, sure, but there’s another goal: Help others reach financial success as well.

“The truth I talk about on my website can apply to everybody,” he said.

First, Smith recommends putting together a budget — how much you make and where your money is going.

“You shouldn’t be guessing, ‘Oh, I’m maybe going to spend X amount on food,’” he said.

Next, figure out where you’re spending too much money, and where you shouldn’t be spending at all.

“If you can’t save, but you have a cable package that is $100 a month, that’s something to consider,” he said.

If you’ve stretched the budget as far as it’ll go, consider adding income, either by taking another job or switching jobs. Invest in index funds if you have a savings cushion. Treat debt “like it’s on fire, and I want it off of me,” Smith said.

Ultimately, Smith knows his focus on retiring by 30 may look like it comes at the expense of life’s little pleasures. But he insists it’s all a matter of perspective.

“I don’t feel as if I’m living a financially strict life,” he said. “The only difference is, I spend my money on things that make me happy. Going out to eat doesn’t make me happy. Driving a nice car doesn’t make me happy.”

He splurges occasionally. One of his hobbies is running marathons and ultra marathons, the expenses of which -- shoes, registrations, traveling -- can add up quickly.

"I read a book called, 'I Will Teach You to Be Rich' by Ramit Sethi, and he talks about living your rich life," Smith said. "His philosophy is, spend money on areas that really matter to you, and ruthlessly cut areas that do not."

And he's grateful for the feedback he's gotten on his blog.

"Just being able to help people -- that's been something that's very personally fulfilling to me," he said. "I'm trying to build the community and help people reach their financial goals and lead their best lives."

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Staff Writer

Staff writer at The Courier 2005 (college intern), 2007-2012, 2015-present. Graduate of UNI 2006. Three-time Iowa APME award winner (investigative reporting 2008, lifestyle feature 2016, business feature 2018)

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