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If all goes to plan, Delyanne Barros will be retired and living a life of leisure on the Portuguese Riviera just seven years from now.
And she’s just 38 years old.
That’s remarkable for anybody, but especially for someone like her, who started life from a position of serious disadvantage.
Barros came to the United States as a child from Brazil, and spent much of her life in Miami as an undocumented immigrant. She was eventually able to go to law school, but when she graduated in 2008, she had $150,000 in student debt and no wealth to her name.
Now, 12 years later, she carries no debt and has built a net worth of over $300,000.
How is she doing it? It’s called FIRE, which stands for “Financial Independence, Retire Early.” FIRE adherents save and invest zealously—typically anywhere between 50% to 70% of their income—so they can retire early.
And now she wants to teach financial literacy — specifically, how to invest in financial markets — to people who typically do not invest: the Latinx community of which she is a part.
“In the Latinx community, talking about investing is so foreign. We just don’t do it,” Barros says. “Many think the stock market is like a scam or it’s something that only rich White people do, that it doesn’t apply to them.”
Over half of White households in the U.S. own some stock, compared with 31% of Black and 28% of Hispanic households, according to Pew Research Center data.
It’s part of the reason Barros launched a money-coaching business in February. She wants to expose people, specifically Latina women, early on to the importance of investing, money management, and building wealth.
90% of her clients are Latina women, she says. “Every time I get a new client the first thing they say is, ‘It’s just so nice to hear someone talk about money that looks and sounds like me.’”
How She Went From $150,000 in Debt to a Net Worth of $370,000
Barros went through a financial transformation of her own long before she began dishing out investing tips online. She had to teach herself the basics of personal finance, and made a few mistakes along the way.
Now, she’s not afraid to show her numbers. “I’m not going to be one of those people who’s taboo about money,” she says. Barros walked us through, step by step, how she went from $150,000 in student debt to a net worth of $370,000, a full-time salary of $200,000, and an online business that has so far made $90,000 in revenue.
After graduating law school at 25, Barros took a full-time job at an employment law firm in New York City. With a salary of $65,000 a year — a huge jump compared to her previous earnings, but relatively little in New York — she struggled to keep up with the cost of living and her student loans. Throughout her mid- and late 20s, she was paying the minimum on her student loans, thinking that was enough, and carrying credit card balances. She also didn’t start investing in her company’s 401(k) plan until she was 28.
“I was an employment attorney living in New York City, literally four subway stops away from Wall Street, and I didn’t understand how the stock market worked. I didn’t understand how investing worked,” Barros says. “If I wasn’t exposed to this information, I know other people are not”
Barros started making six figures five years ago.
“For seven years after law school, I made $65,0000 and slowly crept up to $95,000. Changing jobs resulted in a huge jump in my salary,” says Barros, who now works from home in San Diego, California as an employment law editor for an online publisher.
Then, in 2019, she discovered the FIRE movement after running across the Mr. Money Mustache blog and an online forum for “Bogleheads”–followers of the late Jack Bogle, the founder of Vanguard Funds and creator of the first index fund.
The blog preached spending little and investing the savings, while Bogle was known for an investing approach based on prudence and low fees over speculation.
Her attitude toward money dramatically shifted at that point, Barros says. “I didn’t really know much about my finances. All I knew is that I had my 401(k) at work. But when I discovered this whole other world out there, that you can invest in the stock market beyond your 401(k) and retire early, I was immediately drawn in,” Barros says.
She opened a brokerage account in October 2019. She had been hoarding $100,000 in cash savings to buy a home, but decided to nix that idea and instead put $50,000 toward her loans and the other half into the stock market in a brokerage account.
She came across a Vanguard study that found lump sum investments have higher returns than dollar cost averaging, so she pursued that strategy. She then made a plan to pay $4,000 a month towards her student loans and be done by the end of 2020.
But because she launched her online coaching business, which has generated almost $90,000 so far, she was able to pay off her loans even earlier, in August, while investing an additional $40,000 into her brokerage account.
“That brokerage account that I started just a year ago is now at $102,000; 90% of the funds in that account is money that I contributed. I expect it to compound considerably over the next seven years leading up to my early retirement date,” Barros says.
Barros says 60% of the growth in her 401(k) is from stock market returns, dividends, and employer contributions. Her current 401(k) balance is $230,000. She plans to retire at 45, having chosen Portugal for its relatively cheap cost of living.
Barros says she has always spent less than she earns — about 35-40% of her take home pay even before she discovered FIRE — and doesn’t credit her net worth to her growing online business. She says becoming an attorney is what lifted her out of poverty.
“I used to make $28,000 before law school working at a full time job while living in a roach-infested kitchenette. Jumping from that to $65,000 was a dream come true,” she recalls.
The FIRE mentality and lifestyle has been successful for many like Barros, but it’s not for everyone. Planning for something so far in advance means you don’t have control over every aspect, and it can be hard to execute. If unexpected events happen, or there are big shifts in the stock market, your savings and investments could lose value, sometimes rapidly and significantly. Additionally, critics argue that it primarily caters to high earners like Barros, who now makes more than $200,000 as an attorney. It can be difficult to devote a high percentage of your income to investing if you have more pressing financial necessities.
“Anyone can achieve FIRE if they want to, but it’s definitely not easy. Then again, working until you’re 65 and living off of Social Security isn’t easy either. So I made my choice and I’m really happy with it,” Barros says.
Closing The Wealth Gap
Barros believes investing can be one of the most powerful ways to close the wealth gap between White households and families of color in America.
Families of color are being left behind in terms of building wealth, even though they will soon make up a majority of the population. For example, the average wealth of White families was $919,000 in 2016, whereas the average wealth of Hispanic families was $192,000 while Black families were at $140,000, according to an analysis by the Urban Institute.
For many, investing is associated with White men in suits debating which stocks to sell or buy next. However, by talking about wealth inequality, sharing resources, and creating a community for BIPOC (Black, Indigenous, and People of Color) investors, Barros says the narrative around investing and building wealth can change.
“Latinos make up such a big part of our country, and every day we are becoming more confident in investing. We still have a very long way to go, but with the resources that are being put out there online and through small content creators, it’s a way for us to spread the message,” says Jully-Alma Taveras, a NextAdvisor contributor and creator of Investing Latina.
How to Start Investing For Your Future
Investing in the stock market to build wealth starts with education, Barros says.
“We can have a conversation and talk it through, but you’re the one who has to take all this information you’re absorbing out there and apply it to you,” Barros says.
Start with the basics: do your research and learn about investing, so you can maximize your tax savings,reduce your fees and understand the risks involved. Barros doesn’t recommend investing if you haven’t fully committed to educating yourself first. An easy place to start investing, she says, is in a 401(k) plan offered through an employer, or an individual retirement account (IRA). Index funds or target-date funds are a great start for most investors.
If investing isn’t an option right now for you, that’s okay, in Barros’ view. Take baby steps, like saving for your rainy day fund, creating a budget, and prioritizing paying off high-interest debt. Once you’re in a comfortable spot, you can focus on building your net worth. Investing is for the long term, so when you’re ready, set a goal and make a plan. And if you’re ever stuck, don’t hesitate to ask for professional advice.
“There’s no set number to any of this — it’s totally specific to you. And that’s the beauty of it. You don’t have to play this comparison game with anyone else,” Barros says. “How much you want to retire with in the bank and live off of year-to-year is totally your call.”