Monday, January 23, 2012

Missing Money Monday-Part I

Both my husband and I had humble financial beginnings. Very, very humble. Like the WIC program and used Christmas presents humble. Our college tuition, wedding and every car and house we’ve ever owned were paid for 99.9% by the two of us. I’d love to tell you the story about how our meager upbringings gave us the skills to be frugal and make a buck stretch, but our story doesn’t go like that.

When I entered college, I didn’t know squat about finances. I worked typical low paying jobs in high school to be able to keep up with fashion trends but had zero idea about what I was signing when I took on thousands of dollars of student loans or signed up for that first credit card (I just wanted the free t-shirt!). Four years later I graduated with arguably one of the most prestigious Economics degrees in the world. And I was in debt up to my eyeballs.

My husband and I put a down payment on our first house by taking a cash advance on our credit card. I thought I was an absolute financial wizard when I came up with that “solution”.

At our worst, we had over $20,000 in credit card debt and couldn’t get additional credit. We were making the minimum payments, but nothing more. Luckily, booming economic conditions at that time bailed us out. Our income increased over the next few years (unexpected year-end bonuses came) and the real estate market boomed. We realized it was time to stop buying and start crushing the debt. Over two years we paid off the credit card and never looked back. Ironically, we left a potentially devastating financial situation with an amazing credit score and enough equity in our home to buy a larger home. It was either dumb luck or part of a divine plan.

I am thankful for being raised broke. It gave my parents the chance to teach me what really matters to children is generosity of time and unconditional love. I’m thankful for going deep into debt. It taught me that even really smart people can make really dumb financial decisions.

But I have a confession. Despite living below our means, we aren’t tithing 10%, we don’t have a cent saved for our kids’ college and based on a fancy retirement calculator my financial advisor gave me, I’m scheduled to retire in 2145. Much like socks in a dryer, I think there is a monster that is eating my paycheck.

It's time to do something about it. It's time to get real. It's time to make a household budget. To be continued next Monday.....

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