I’ve always been interested in personal finance, but it never “clicked” for me until the end of 2011. Before Daughter Person was born, we didn’t budget, we didn’t do more than the minimum for saving in our 401(k). As long as the cash flow was OK – I thought we were OK. We always had money in the bank, never made a late payment, never even had to time our bills to our paychecks, never been declined/denied for credit, and always had available credit on our credit cards. So we thought we were doing good. Obviously, I (at least) had my head in the sand. This is our story. It’s not intended to be an excuse for our poor decisions, but to give some background.
We left off where we were trying to live with $200/mth extra – and I was panicking just a bit. I had found You Need a Budget, and once I figured out the methodology and realized that we had $200/mth left after paying for our “necessities” and obligations, the panic set in. I showed Dad the numbers, and while I think he thought I was crazy, he went along with me. We cut back on a lot of our eating out, wine, and buying random things and got to a point where we were comfortable. We could pay our debts, eat good food, still have a bottle of homemade wine once in a while, and maybe even make some progress on paying off those debts.
Around this time, our county library started lending books on the Kindle. The first book I checked out was Dave Ramsey’s Total Money Makeover. And while there are a few ideas of his I disagree with, he’s certainly good at getting people motivated. So I was fired up to get started with his Baby Steps (we’re still on baby step #2 in case it wasn’t obvious). I got Dad mostly on board, and I think the reason he’s on board is that we allocate a certain amount per month to “fun money”. We each get the same amount every month, and we can do with it whatever we want – spend it all, or save it up for something. At this point, Dad’s still not completely on-board, but he’s humoring me – and I know he likes to see the balances go down.
The next book I check out is The Millionaire Next Door. I start to think that hey, this might be a real opportunity that we could reach $1mil net worth, Dad’s still rolling his eyes at me at this point. But I start checking out more books about living frugally, and reading blogs online, and find Mr Money Mustache. I start reading his blog, and others on early retirement, and think – hey! we can do this! I finally got Dad on board earlier this year when I sent him several of MMM’s articles and he’s thinking, “wouldn’t it be great if I didn’t have to work??” So, we’re both in this together, and I’m allowed to try any hare-brained scheme I want, but if Dad (or Daughter Person) is not OK with it, we go back to status quo.
We’re slowly changing the way we do things, and even considering more drastic changes like living with one car and selling our house (although those are only in the discussion stages at the moment)…
We got ourselves into the mess we’re in, and now we’ve got to dig ourselves out before we can really start on our journey to financial independence, but paying off debt gets us back to zero, then we can move pretty fast with both our incomes.