Over the past few years I’ve cultivated a lifestyle that helps me make smart financial choices that will allow me to live debt free and be able to afford the things I really want in life and in my future. But it wasn’t always that way…
In late summer of 2012, within the span of a month, I changed careers, bought a new car, and bought a house. I had student loan debt, very small emergency savings, and had only recently started making minimal retirement contributions. Now, less than three years later, my only debt is my mortgage, which I’m aggressively paying down. I consistently contribute 15% of my income towards retirement and I have more than six months of expenses in my emergency savings account.
How did I get here? By learning a lot of lessons the hard way. This is the story those lessons and of my personal finance journey.
When I was a kid, I was a little workaholic. From the age of 14 and through high school I put in as many hours as possible at my local McDonald’s. I loved it! My dad made me put half of each paycheck into savings and I reluctantly complied. A lot of my cash was blown at vending machines and the school snack bar. The habit begins…
When I graduated from high school, I went to boot camp for the military and the money in my bank account grew! Home from the military with real money in my pocket for the first time, I had a few spending sprees.
I needed a car, so my parents recommended I purchase a new car for my first car. And I did. The lesson came shortly after when I was promptly in three car accidents, three months in a row. My high school savings were immediately depleted.
A year out of high school, I embarked on a two-year deployment to Iraq. Other than my car payment and insurance (which was expensive after 3 car accidents), I had no expenses. I was making good money and it was tax-free! I also had the opportunity to start contributing to a retirement account. But I didn’t. I shopped online way too much, having all sorts of fancy things I didn’t need shipped to me in the desert.
I came home and the shopping sprees continued, often assisted by a bunch of newly-opened store credit cards. I didn’t work for six months after deployment and when I went back to work it was part-time. Also, around the time that I deployed to Iraq, I received a trust fund from when I was in a car accident as a kid. It was about $20,000. I did pay off my car, but other than that, my shopping sprees blew through my money yet again. Oh, and I bought another new car.
I should mention that when I graduated high school, my parents moved south and I stayed alone in Minnesota with no family to fall back on if money was tight. And it did get tight. I consider myself very lucky that nothing went terribly wrong, as I had no emergency savings and no credit card if I got into a bind. (Which is probably a good thing in some ways.)
I was working full-time for the Army after deployment and had steady income. I was in school and had to take out loans, but I promptly paid them off with my education benefits from the military. I was working aggressively at paying off my car, but I still had no emergency savings and wasn’t contributing to retirement at all. I was doing ok, but with my spending habits I was living paycheck to paycheck.
I had a new boss that was really good at managing money and tried to steer me in the right direction. She unsuccessfully tried to explain stocks and bonds to me and challenged me to build $20,000 in savings by the end of the year. I was stubborn, but she was successful at convincing me to finally start contributing a small amount to retirement.
Spring of 2011 came with the first talks of a government shutdown. It got real. Preparations began: we cancelled drill weekend, the Army quickly paid out half of our last paycheck, trying to get us something before our pay stopped. Fortunately the shutdown was averted at the last minute.
I had no emergency savings. No way to pay my rent without my next paycheck. Talk about a reality check!
Around this time, I got my first credit card. I was 25 and had gotten by without one so far, but I felt a little better having it for emergencies. I was always very diligent about paying it in full each month. I started to build some emergency savings. I became very interested in coupons and freebies and often shared them on Facebook, so a friend convinced me to start this blog.
A few months later I changed careers, bought another new car, and bought a house all within a month. I still was diligent about paying off my credit card each month and using my military education benefits to pay off my student loans. I was contributing to retirement and building emergency savings.
Then a funny thing started to happen: the more I got into this world of personal finance blogs, the more I started to get serious about my money. Suddenly I had goals! Pay that off, save this amount, add to retirement. I got excited about it! I had goals, lists, and step-by-step plans to reach these goals.
I paid off my car three years early. The student loans are long gone. I have more than six months of expenses in emergency savings. I’ve been consistently contributing to retirement. I’m working on making extra mortgage payments when I can. Personal finance has started to consume my interest; I love blogs, books, podcasts, and discussions about personal finance. As I’ve explored my 20s, I’ve figured out my values and I’ve started to look at money differently and even journeyed into minimalism.
I have some regret. I still kick myself for waiting until my last few years of the military to contribute to retirement when I had the opportunity from my first day as a solider. I’m frustrated that I blew my trust fund and deployment money. I wish I hadn’t purchased three new cars by the age of 25. (You can read more about that mistake here.)
But I can’t change the past. We all make decisions that we later look back on and wish we’d chosen differently, but it’s not too late to learn from them and turn things around.
My hope with sharing my life lessons is that you don’t stop believing in yourself, your goals, and the things you can accomplish when you set your mind to it. Just as many others have inspired me in my life, I hope to inspire others on a similar journey. Enjoy the blog!