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Land of Opportunity

Pratima Gulati

WE MOVED FROM INDIA to the U.S. in 2014 when my husband got a job with a Silicon Valley tech company—and we found ourselves living in one of the world’s most expensive places.

On top of that, when our daughter was born, I left the workforce for a few years to look after her, which meant we had a period when we lived on just one paycheck. Still, within five years of arriving in the U.S., our net worth had climbed from zero to more than $1 million. Here’s how we did it:

1. Pick the right employer. This makes sense anywhere, but it’s especially critical in the San Francisco Bay Area, where you need an income that matches the high cost of living. My husband and I decided he should ignore the charms of hot startups and instead stick with a big tech company with a staggering growth rate. As a former Google chief executive said, “If you’re offered a seat on a rocket ship, don’t ask what seat. Just get on.”

The top tech companies offer generous stock grants when you first sign on and they often award similar amounts of shares each year thereafter. Half of our net worth came from those stock grants. When the stock would vest, we’d sell it, putting the proceeds toward a house down payment and investing the rest in Vanguard Total Stock Market ETF.

2. Fund the 401(k). From the very first year, my husband maxed out his 401(k), earning a 6% match. This meant we were adding some $30,000 total each year to our net worth. Funding a 401(k) might sound like commonsense. But from what I’ve heard, a lot of new immigrants don’t contribute to their 401(k) for the first few years, because they don’t understand the benefits.

3. Live small. In Silicon Valley, we’re surrounded by people who are doing well financially. There’s constant pressure to “keep up with the Joneses.” But for our first three years in the Bay Area, we lived in a small one-bedroom apartment that we sublet from a friend.

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When it came time to buy, we skipped the big expensive house and opted for an older 988-square-foot condo. That meant the mortgage payments were affordable, allowing us to invest every month in the stock market. It also gave us the financial breathing room so I could take time away from work when the baby was born. The condo is now worth 15% more than what we paid.

4. Drive cheap. When we arrived in the U.S., we bought a 2014 Nissan Altima. It was a certified preowned car purchased directly from Nissan, it came with a one-year warranty—and it’s still a part of our family.

We’ve been tempted many times to buy a Tesla. We avoided test-driving one until a few years ago, fearing we wouldn’t be able to resist—but, so far, we have. Our Nissan is holding its value and has enough space for the three of us. When grandparents visit, it isn’t difficult to rent an SUV.

5. Love the index. We’ve contributed 20% of our base pay to the Vanguard index fund over the past five years. That’s on top of the money we’ve invested when we sold my husband’s vested stock. Admittedly, we check our portfolio often—sometimes daily—but we’ve managed to control ourselves and not panic sell in response to market moves.

6. Put savings first. My husband and I find budgeting boring. But thanks to our relatively modest lifestyle, we don’t have to. We follow the “pay yourself first” method, investing automatically in all kinds of financial accounts, including a health savings account, an employee stock purchase plan, a 529 savings plan and a “future vacation” savings account. Every paycheck, we also pay off all outstanding credit card bills. We’re then free to use whatever’s left for discretionary “fun” spending.

Pratima Gulati is a human resource professional in Silicon Valley. She has an MBA and a keen interest in personal finance.

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R Quinn
R Quinn
1 year ago

Bravo‼️ I especially like #6 which I have been pushing for years and for which I have been criticized. Someone reading this may say, yeah, but they are educated and make a lot of money. That’s not the point of course, it’s all relative and prudent living and spending is possible for just about anyone. Now the challenge is holding on to the $1 million and keeping it growing when the stock market becomes less friendly. Good luck. Do you think you would have had those opportunities somewhere else in the world?

Thomas Taylor
Thomas Taylor
1 year ago
Reply to  R Quinn

I think that’s great as well. I would never begrudge someone who works in a highly lucrative job. More power to them! I’ve always paid myself first and I save about 26% of my gross salary each year. My wife and I are I’m comfortable and we have never let our lifestyle grow with promotions and salary increases over the years. But I would certainly like to apply that 26% to a larger base!

David Baese
David Baese
1 year ago
Reply to  Thomas Taylor

I always enjoy it when you’re vindicated.

Pratima Gulati
Pratima Gulati
1 year ago
Reply to  R Quinn

We being in the tech industry, Silicon Valley provides unmatched opportunities. Any where else in the world it would have taken us more time to reach where we are today. We feel incredibly lucky and fortunate.

Helpful Neighbor
Helpful Neighbor
1 year ago

FANTASTIC ! Great American success story !

Peter Blanchette
Peter Blanchette
1 year ago

Any life insurance?

Pratima Gulati
Pratima Gulati
1 year ago

We have a term plan provided by our employer. We are on an employment visa, so did not care about buying one outside of the employer.

John McHugh
John McHugh
1 year ago

Nice story, but for purposes of explaining how one accumulates a million in four years you could pretty much stop after, “Get a super-high pay silicon valley job.”

Maybe add, “And then don’t do anything stupid.”

Gozo Rabat
Gozo Rabat
1 year ago
Reply to  John McHugh

John McHugh: I live in the hi-tech Austin (Texas) area, where the prudent instruction “And then don’t do anything stupid” clearly would need fleshing out.

I know so many people around here—many couples with two “super-high pay” jobs—who waste phenomenal amounts of money and seem to have little to show for it. That’s why sites such as Humble Dollar, and articles like this one by Ms. Gulati, are so important.

Despite an overarching political ideology that expects individuals to learn, on their own, the kind of lessons that most Americans clearly don’t learn, a complex, modern society like our own would benefit from a greater mixture of understanding and opportunity.

Regards,
(($; -)}™
Gozo

SCao
SCao
1 year ago

Congrats on you and your family’s success so far. As a fellow immigrant (I came here from China when I just finished middle school), I am very glad to see you are building the American dream. For your savings, perhaps you may also think about a Roth IRA if not already has one.

Pratima Gulati
Pratima Gulati
1 year ago
Reply to  SCao

We do backdoor Roth IRA. I should have mentioned that in the article.

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