How High Crime In Baltimore Launched Me To Financial Independence

My first job out of college earned me $20,000 per year, which is about $35,000 in today’s dollars.  Not exactly a high income start to my career, but I was just happy to land a job.

When I got out of school the US was in a solid recession.  Jobs weren’t easy to come by, and I was more than grateful to just have one.   I worked all through college, sometimes 40 hours a week on top of school, and I was glad to move on from driving a forklift.

Back then, $20,000 was enough to get by in Baltimore, but required shacking up with roommates.  I had apparently not seen the memo that college was over and the party had stopped, so I had no issues with sharing a house with three others.

Two of my three roommates were still in college and the other was a bartender.  Yeah.  Our house was smack dab in the middle of Fells Point in Baltimore which is the biggest party district in the city.  It’s littered with bars and pubs.

Needless to say, life at the house was lively.  Not quite Animal House lively, but it was far from being short of parties and booze.  And the police may or may not have visited a few times.

Then the next year my grandmother, or Nonnie, died.  She had full-on Alzheimer’s and had been in a nursing home for the past year.  She also had a house in Baltimore that she owned since the 1950s.

If you’re not familiar with the workings of a crime ridden city like Baltimore, it’s not wise to leave a house sitting vacant.  It’s not a question of if it will be targeted by thugs and crooks, it’s when.  Those types of folks case neighborhoods and scope things out. 

They usually steal whatever they find valuable, including stripping the plumbing because copper pipes can fetch good money.  It’s just reality.

Well, the house had been vacant for only a few months when sure enough someone broke in and stole some furniture, including a nice 1920’s era end table that my Mother loved.  I was livid.  Short of standing guard with a gun 24/7 there was nothing I could do.

Or was there?

 

Opportunity Knocks

My frugal tendencies had always been with me, but now that I had a better income from a “real job”, I was anxious to find ways to save.  Mind you, I could have simply stopped drinking massive quantities of beer, but at that point in my life some things were off the table…

So I proposed to my mom that I moved to my Nonnie’s old house.  I was fully expecting to pay some rent, but she agreed as long as I paid the utilities and all bills.  The house was paid off, there was no mortgage, so charging me rent would be in essence profiting off me, and my Mom wasn’t going to do that.

She was still, however, paying property taxes which are pretty exorbitant in Baltimore and she did not charge me for those either.  In short, it was a gift.

So I went from paying $400 a month rent for a room in Fells Point to zero rent and just utilities – and having a whole house to myself (kinda…).  Again, this was to “protect” the house by keeping it occupied.  

However, I also moved from the premier party district with good friends back to the semi-ghetto, but that was part of the deal. 

This is where my delayed gratification skills took over.  Instead of transferring that $400 monthly windfall to a new car payment or travel or even more beer (could that have even been possible?), I started stashing it in savings.

Now when you’re only making $20,000 a year, your take-home pay is roughly 15K, which equates to two checks per month at around $600.  My company had a 401k and I started putting money into that right away.

But with my new status living in my Nonnie’s house I was stashing $400 away every month, or about 1/3 of my take-home pay – thanks to my Mom and the high crime rate in Baltimore!  My role was essentially to be a security guard for the house, and to save.

Bottom line I did this for 4 years.  The quick math:

$4,800 * 4 = $19,200.

That $19,200 is worth approximately $80,000 now (at an annual stock market rate of 7%, with dividends reinvested).  I say “approximately” because the contributions to my savings were made in monthly $400 increments for 4 years, and actual calculations will be very complex.

So it’s hard to get an exact number since I dollar cost averaged it over 4 years.  That aside, the important thing is that this gift of free rent was the initial spark I needed that launched my investment career. And my discipline in socking it away kickstarted my net worth and set me toward financial independence.

 

Checked Ego?  ….check

Another thing I learned from this 4 year period in my twenties was some of the principals of stoicism.  I switched from living in a 24-hour Mardi Gras with three other young people, back to living in a poor neighborhood with high crime.  My roots. 

On the surface I wasn’t exactly moving on in life, I was seemingly going backwards.

And no bars in walking distance, the horror.  On top of that, all of my Nonnie’s stuff was still in the house!  My Mom could not yet cope with the emotional difficulties of cleaning out her clothes and possessions, so they stayed put.

It looked almost exactly the same as the last day she lived there.  My Nonnie was born in 1903.  Her style was distinct “Grandma” right out of the Victorian era.

I basically lived around it.  My Mom constantly warned she’d hang me if I threw anything out without asking, so I just made some space for myself, moved some of my Nonnie’s things to the basement, and lived.

All I really needed was a bed, bathroom, and a fridge.  Anything else was a bonus.  It was essentially an extension of college living.

As my friends were settling into their new lives with their new jobs, most were getting nice apartments or condos and of course buying new cars.  American peer pressure kind of makes that mandatory.

Here I was living in essentially 400 square feet of space in a 1400 square foot house and saving tons of money.  And I was also dealing with crime and murders right down the block.

I remember coming home one night and there was a body on my front lawn, laying there, lifeless.  I went inside and called the police, too afraid to check if he was shot.  Turns out he was so doped up he just passed out in my yard and laid there for a while.  The police came and arrested him for all kinds of drug possession. 

Good ole Baltimore…

Another time an 18 year old kid was shot in the head and killed at the 7-11 right down the street – in the middle of the day on a Saturday.  I remember after that incident thinking, “Why am I still here?”.

But in reality my Nonnie’s house wasn’t very far from where I grew up, so it wasn’t a whole lot different then what I was used to. 

 

Good Things Come To Those Who Sacrifice

Part of Stoic philosophy is delayed gratification.  My delayed gratification muscles were still new, but this experience started bulking them up fast!

I’d still go to visit my old house in the party district and hang with my friends.  I saw how they were having so much fun, walking to bars, tons of parties around, tons of young people.  And I would go back to the hood and sometimes find a body on my lawn.

They would ask, “Why are you doing this again?  To save money?  Don’t you have a job now?”  They didn’t get it.  To be honest sometimes I didn’t get it either.

But here I was living in the hood after enjoying a much more safe and fun life for a while, just to bank some coin.  I’m not going to lie, I questioned what I was doing, often. 

At the same time I watched as that $400 kept going into my savings every month.  And the market kept making it bigger, with no effort. 

That powered me.  It was tangible and measurable evidence that what I was doing was worth it – not just to protect my Nonnie’s house, but to teach myself sacrifice. 

What I was doing was laying the foundation to financial independence.

My refusal to inflate my lifestyle at this young age set the tone going forward.  I knew that if I kept my rate of lifestyle inflation well under my rate of income increase, I would win in life.

This was before I knew the math of the 4% rule or the concept of financial independence. But I just knew it was the right thing to do, plain and simple.  Sure enough, it worked.

And I thank my Nonnie, my Mom, and the high crime in Baltimore for a kick start!