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Hi everyone. I’m Jeff – one of the new staff writers here at My Personal Finance Journey. I write about finances and saving money while living green over at my site, Sustainable Life Blog. This is my first post here, so I figured I’d let you all all know about my personal finance journey.
The Beginning – 1st Year of College
My journey starts off around the same time that most peoples’ does – when I went to college and was put in charge of my own finances for the first time. I didn’t know much about finances (or rather, nothing my parents taught me stuck because I was a teenager who knew everything), and I didn’t have access to that much cash or credit. I wasn’t really given enough rope to hang myself with (that would come later). I paid tuition with my savings, worked in the cafeteria c-store, and went to class. I didn’t do very many things that required money, as most of my needs were taken care of with my student ID. Things persisted this way for most of my first year of school. I didn’t spend too much money, but I didn’t earn much either, so I went home during the summer and worked to save up money for future semesters.
Taking a Wrong Turn
The second year was really where I started to veer off track. There was now rent to pay, utilities, and food. Of course, I knew the lights didn’t come on for free, but I was not good at estimating how much my share would be. Instead of being cautious, I went out a lot to eat with friends, and overspent a bit, but was able to let it slide because of the prevailing college mindset of “You’ll have a good job that will pay for all of that after you graduate”. This really was the motto for the next few years, as I let my finances spiral out of control. Every time I looked at them, I knew I was in the hole but didn’t know where to start to dig myself out, so I just kept digging, hoping something would magically change. I used my credit card for everyday things as well as “emergencies” (which, looking back, was simply my failure to plan), and the debt racked up. The money that I had saved for tuition gave out junior year. I was a victim for not starting to save soon enough as well as tuition increases (prices doubled when I was in school), so I took out a student loan for the last year.
The worst time for my finances was my senior year and right before grad school, as I was almost maxed out on my cards and did not have a job lined up. With the move to my new city to start grad school, I looked at it as a fresh start, and thought that the first thing I’d tackle was getting my finances in order. This was mid 2007 and I fell into the world of PF blogging, starting with heavyweights like Get Rich Slowly and The Simple Dollar. I could not believe what I was learning by reflecting on my own habits and mistakes. After I got a job with the university that year (which paid for all semesters but the first one, which I had to take out a student loan for), I was able to pay off one of my credit cards, but left a balance on the other one and kept some in savings because “everyone had credit card debt.” How dumb was that? I kept money in savings earning 4% while paying 10% interest – I still kick myself for doing that.
Getting Back on Track
In grad school, my mindset changed, and I started to look towards the future knowing that eventually I’d need to get a job, most likely have to move for a job, and started saving for it. By November of 2008, I had almost $3k in savings – which was more than I’d ever had in my life! The economy was tanking and there was uncertainty everywhere, and one night during Thanksgiving break I almost pushed my whole 3k into Ford stock – which was trading at 96 cents at the time. I asked my dad what he thought and he said, “Don’t risk anything you can’t afford to lose.” I listened to him because I knew that I’d need the money in 5 months to move. Unfortunately, I should have ignored him, as I could have had my savings increase by 4x in 5 months, and a whole lot more now. But I learned an important lesson from the situation about money. Risking it all and losing it would have meant that I would have had to go home with my tail between my legs and live with my parents, when I’d rather move in with my then girlfriend (now wife) and work at a job I was lining up. I had everything lined up perfectly.
After grad school, I had 2 solid years of living like a student and integrating good financial habits behind me. I was excited to get into the real world and earn a real income so I could pay down the debt that I had accumulated during my time as an undergrad. Unfortunately, the downturn took its grip, and my position was eliminated before I even got started; my dreams of stable finances were going out the window before I could even reel them in. I went back to my grad school job for a while as a contractor, but it was a 50 mile drive each way. Gas was eating away at my debt repayment money, but I was still making progress.
Eventually, I got a new job with benefits, but kept the old one. The only catch was this job was also 50 miles 1 way drive from where I lived – and not in the same town as my old job. I decided to go to nights at my old job and work full time at the new job. I was making money, driving a ton, and didn’t have much free time to go out and spend money, so I was able to make some great headway on my debts. I paid off 3 credit cards (with balances ranging from 1-4k), 1 small student loan from grad school (~3k), and my student loan from senior year of undergrad with the help of my parents (~9k). I kept this up for about two years, but it was beginning to make me tired and I missed hanging out with my girlfriend outside of the house.
I was applying for new jobs at the time so I wouldn’t have to drive anymore. After 25+ applications with various companies in my town, I finally landed a job. I was making more money, and finally felt ‘financially secure’ as I backed away from my debt cliff. I was also able to cut out driving from my daily routine, which has saved me tons of money as well. I started saving and backed off of debt repayment for a while, and proposed to my girlfriend a few months later.
My journey is not just mine anymore as my wife and I merge our finances as a couple and have bought a house. We’ve spent the last few months updating the house (it is 94 years old), and are looking forward to the years to come, as our personal finance journey continues and evolves.
How about you all? What do you consider to the most significant ‘turning point’ in your personal finance journey?
Share your experiences by commenting below!
***Photo courtesy of http://www.flickr.com/photos/katielips/15985952/sizes/o/in/photostream/