My Financial Story
Note: This summary encompasses my entire financial life to date so it is long. I am sharing this with you in the hope that you might see parallels between some of my experiences and yours. To read about my story in even more detail jump to My Story in Detail.
My Story — the USA Today Version:
For the first 18 years or so of my life I basically knocked around with little thought about money. My parents worked hard to make sure all of our needs were met (and exceeded to be honest). When high school ended I didn’t have much of a direction or focus for my life. That would come much later.
Now come the drifting years. I tried college for about a year or so and didn’t like the field I chose. An opportunity came to move out of state so I did that for a couple years. When that got old I moved back home and went to college again.
The second college experience was much better but I got restless and jumped at the first job opportunity that came my way. Two-time college dropout — nice! I’m sure my parents were proud!
Flush with money from my $300 a week salary I did what any responsible, intelligent person would do — I went out and bought a new car. Woot! A new car — I was stylin’! And such a good deal too — no money down and 6 years to pay off at who knows what interest rate? Yep — I was on my way!
Credit cards entered my life and things just got better. I mean — you could walk out of a store with something and never hand over cash or write a check! At the time it blew my mind — it was like getting stuff for free! Amazing!
Then the first credit card bill showed up… The bad news is that I owed more than I made in several weeks. The good news is that there were two numbers you could pay on the bill, and the minimum payment was a whole lot smaller than the balance so I paid the minimum.
There was some more moving around and different jobs and eventually I reached the point where I was working full time at a retail job making $18,000 a year and had $20,000 in total debt ($7,000 credit card, $13,000 car). And I was miserable. Life absolutely sucked. And the worst part is that it was all my own fault. Nobody to blame but myself. I didn’t see a future — there didn’t seem to be a way to break this cycle I was in. Bad times.
An opportunity came along for a new job that paid more but was also much more tenuous. In one of the hardest decisions of my life i decided to go for it — I left my steady retail job for something I wasn’t sure would even last more than 6 months. That decision was also one of the best decisions I have ever made.
Literally overnight my salary more than doubled. Plus I got mileage and some tax benefits that made it even better. I had my lucky break, my life-changing event. Surely I took full advantage of it?
Well… I’m sure the story would be a better example if I just said yes, but that isn’t what happened. For the first time in my adult life I had extra money left at the end of the month. And what better thing to do with extra money? Spend it of course! It was like Christmas except it happened every day!
For a while I went nuts. I bought a new car every year. Sometimes less than a year. I had electronics and collections and all sorts of cool stuff!
I was also still deeply in debt. Fortunately all of this idiotic spending I was doing didn’t ADD to my debt load, but it sure wasn’t shrinking either.
If this was a perfect story at this point I’d get all dramatic and say something like, “One day Brian realized the foolishness of his ways and he worked hard to get his financial life in order.” But it didn’t really happen like that. I think I had more of a slow realization over time that what I was doing wasn’t sustainable.
Don’t laugh, but one of the things that motivated me to get my financial house in order was simply that I hated making payments. I had all these payments every month — car, credit cards, etc. The way I looked at it those payments were eating into my fun money in a way — so I decided that if I could eliminate the payments I’d have more to spend each month.
Seems pretty obvious to just about anyone I’m sure, but to me it was the epiphany I needed. Whatever works, right? Warren Buffett I am not…
I plunged myself into the world of personal finance. I subscribed to every financial magazine available — I think I was up to 50+ subscriptions at one point (that includes some non-financial magazines though). At first it was all like reading a foreign language. It seemed so complicated. But I stuck with it and over the course of a couple years I learned everything I could about how to manage my money.
It turns out that buying a new car every year when you are deeply in debt (or even if you aren’t) isn’t the brightest idea — so I stopped doing that. In fact, as I am writing this I just realized that since that time I have only owned 2 cars over a period of more than 10 years. I made a budget and stuck to it. I paid extra on my credit cards. For about 18 months I was focused like a laser on eliminating my debt.
And I did! The credit card debt went first. I will never forget writing that last $700 check to the last card I had a balance on. The car took longer, but I was able to apply the cash flow I had freed up from the credit cards to pay it off over about 18 months or so. Paying off that car loan 3 years early was also something I will never, ever forget.
At this point I am debt-free! What a feeling! I had very little savings, almost no assets, but at least I was out from under that crushing debt load. Interestingly my life seemed better too — I was much happier and didn’t have to worry constantly about money.
I’m one of those goal-oriented people. Give me a goal and I’ll just about wreck myself trying to achieve it. For a few years my goal had been to eliminate debt, and now that goal had been achieved. What next?
Ever since my parents purchased some country land and built a house I dreamed about having that lifestyle. Even before that I had always wanted to live in the country for some reason — this goes back to when I was a teenager. So, what better goal? I wanted to achieve my dream — to own some land and a house and have a workshop and a garden.
The foundation of my plan was to always be out of debt. On top of that I needed some assets and a large down-payment for the house. I began investing. I saved — a lot. I was saving well over 50% of my pay for years and years, and all of that was being invested or put into savings. I wasn’t rich, but I had what I like to call a “cushion” that would keep me afloat no matter what happened in my life.
Eventually I had enough saved to buy a house. I was going to pay cash for it but I ended up spending more than double what I had anticipated so I put down more than 50% and took out a mortgage for the rest. Remember how much I hated payments? The mortgage was no exception so a few months later when I received a small windfall I used it to pay off the mortgage.
I continued to save huge amounts of my pay — sometimes up to 80% of my paycheck. It might seem unbelievable but you have to remember I had no house payment, no car payment and no debt payments at all. So instead of my money going out to pay those bills I just paid it to myself.
In 2006 a contract I was working on ended and I found myself out of work. It hit me than that I had enough saved up to realize my dream. Since I owned my house 100% I could use the proceeds from it to buy some land in the country to live on. And since I’d own the new place 100% my monthly expenses would be extremely low (currently about $500 a month) and I could use my savings and investments to live off of for years and years. So I did it.
That brings us to the present. I haven’t worked since 2006. I own a house on 5 acres in the country with a workshop and a garden — just like I have wanted since I was a teenager. My lifestyle isn’t lavish but it isn’t scanty either. I definitely lean more to the frugal side of living (which is sort of built-in when you pay off debt and save money).
In essence I have structured my financial life to allow me to choose to live like this. It didn’t happen overnight. I made more than my share of mistakes. But in the end I was able to accomplish my goal and I am literally living my lifelong dream!
This is a work in progress. I plan to expand on certain key aspects on my financial story so you can have an even better understanding of how my choices led me to where I am today. Some of the topics I am working on are listed below — click through and enjoy!
The first 18 years
College
College dropout
credit cards
first new car
digging the debt hole
my leap of faith new job
a car a year
I hate payments
digging out of debt
learning to be frugal
building up my cushion
the first house
realizing the dream
what does the future hold?
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