Because of personal finance blogs we’ve read and personal finance bloggers we’ve connected with, we paid off our debt and we’re making progress on the journey to financial independence/early retirement. I can’t emphasize enough how much I appreciate the personal finance community.
Throughout the month of December, I’m sharing with you personal finance stories from bloggers themselves who I hope will inspire and encourage you to keep making progress on along your own journey. Please follow these bloggers on social media to stay in touch!
From Revanche at A Gai Shan Life…
In 2012, I admitted to being terrible at prognosticating and I was right. Luckily, I knew what I wanted and I was right about that too: a job that paid well, it didn’t matter when I showed up, or how many hours I worked as long as the job was done well. In short, as long as I had to work, I wanted to be a highly valued employee who was also in charge of steering my ship.
By 2014, I was living that dream. But let’s back up because in that same post, I shared that it took me 9 years to go from a negative (many many thousands) net worth to $100,000 in assets. That all came about because of one specific goal: to stop living paycheck to paycheck.
My journey started almost 20 years ago. Between age 17 and 18, the following had happened:
- After 7 years of 18-hour days, 365 days a year, building their businesses, a manager embezzled so much cash my parents had to sell at a loss, and then I discovered they were deeply in debt.
- My grandmother was diagnosed with Alzheimers and moved in with us for end of life care.
- My mom was diagnosed with chronic and later terminal illnesses.
- My narcissistic and selfish sibling, always irresponsible, started on his lifelong dependence on debt and wheedling others to do for him what he wouldn’t do for himself.
- My increasingly debilitating bouts of pain were worse and more frequent. Not one of the revolving door of Medicaid doctors had a clue what was wrong. The doctors either told me that it was in my head since they couldn’t see anything obviously wrong on the X-rays or that there was nothing they could do for me.
Basically, my world was falling down just as I started college. My ambitious plans as a 15 year old were: get a medical degree and buy a house for my parents before 30.
My ambitious plans as a 17 year old became: get health insurance and get my parents back on their feet, then build my career. My naïve estimate that I’d spend about five years on this journey was way off the mark but the whole journey has been a heck of a ride.
It was such a weird zigzagging road I’d landed on that I turned to personal finance blogging to learn everything I could about money and started this blog to have a place I could talk about money, constantly. I could never have predicted that this little hobby would have lasted as long as it did, either.
Back on the farm, five years turned into six, then seven, then eight. It was four years of juggling full time work and full time college, working more overtime, gritting my teeth through the still-mysterious chronic pain using my elbows to move things when my fingers, hands, and wrists were too swollen to flex any joints. Then I graduated and worked another five years, double time, heading full steam for the top of the corporate ladder because I needed the freedom (and money) of being higher up.
I knew that even if my parents’ debt wasn’t holding me back, my health would. I couldn’t go a day without employer-sponsored health insurance because my pain episodes were unpredictable, lasted weeks at a time, and I’d never be eligible for coverage on my own. As long as I was a peon, I had to account for every hour that I wasn’t at my desk. If I had a routine dentist appointment, then that time had to be made up. If I had a flare up and was unable to work for a week, that’s a week of vacation I couldn’t take because I couldn’t afford to be labeled “unreliable.”
Without a doubt, if I didn’t have the six figures of debt of my parents,’ I would have worked hard but I wouldn’t have nearly killed myself for the bigger paychecks. For better or for worse, my traditional Asian upbringing meant that as long as I was breathing, I was responsible for keeping my parents fed and housed, and for fulfilling their obligations. Given they’d risked their lives to come to America to give us a better shot at life, it didn’t seem too much to take on. With that knowledge, there wasn’t any question if I’d take care of my parents, the question was only HOW. Things have changed drastically since then but this is really a story about how I got from there to here.
This was my three pronged approach, the last prong is most important.
1. Maximize every penny earned and earn every possible penny.
I didn’t pay cash for a single bill that I could use a credit card for to earn rewards (and never paid interest except for a few stupid mistakes). I used those rewards to cover a little fun spending on a book or two per quarter.
I took on two tutoring jobs in addition to my usual job. I forced myself to stay in school full time to get the cheapest class per unit price without taking extra classes that would drop my GPA or cut into my overtime hours. I got less than 4 hours of sleep a night between work, school, work, homework, work, and studying. Do Not Recommend.
2. Minimize spending.
I kept myself on a strict $75 monthly allowance for several years, never eating out, usually eating one meal a day (dinner, leftovers from the night before) unless I managed to grab a $2 lunch. Costco hot dog lunches would have been a feast in those days! We only cooked at home, and I worked every overtime hour there was.
There was a trend of graduating in five years at the university I attended. There were several reasons: overcrowded classes, poor registration planning, having to retake classes, or even changing majors too many times. I couldn’t afford that! It was too expensive to take a 5th year. I thought long and hard after my first year about my best chances of graduating on time by evaluating the possible majors that would give me opportunities, the most realistic ones considering my health, and even stacked classes in the same time slot with special permission from the course instructors to make absolutely sure my requirements were fulfilled in four years.
3. Strategy and long term thinking.
I could have spent all that overtime on debt repayment. I could have spent it on fast food and ways to relax on those 16 hour school and work days. Either route would have been bad.
The way I saw it, I could keep blindly paying down debt but finding myself further and deeper in the hole at the end of that journey as missteps and emergencies derailed me, or I could split my focus: pay off the debt AND build up my savings. I hated the idea of being broke by the time I graduated.
To avoid that, I spent 80-95% of my money on debt repayment and living expenses. I reserved a minimum of 5% for savings only. Not for fun, not for spending on surprise bills, just saving. The day I turned 21 I became eligible for my 401(k), opening that account was my birthday present. I still have the money from that first plan!
The little 5% bits and bobs I tucked away, out of sight, slowly added up.
Then I set an additional specific and small goal: salt away another 1-5% every month to create a monthly expenses cushion. The point was to get ahead of the paycheck to paycheck cycle, so that I could pay all of next month’s bills with cash in hand. If a paycheck was delayed, or I was between jobs, I didn’t want to be two weeks away from financial disaster.
It was a simple, but effective, plan.
This isn’t to say that I didn’t make mistakes along the way. I definitely shouldn’t have taken on cosigning the truck loan for my sibling no matter how encouraging his job prospects were (I paid for that mistake dearly). It was as stupid as trusting that my parents loved me and would never become dependent on or resentful of my help (wrong on at least two counts, with one parent). I was hugely sensitive to coming from some level of poverty, and had to learn how to get out of that scarcity and undeserving mindset.
There were lots of bumps along this road.
I’m not sharing this to say “If I can do it, anyone can!” I would like to believe it, but that’s too simplistic. While it’s true that almost anyone could probably also learn a helpful new skill, that doesn’t mean that my road is your road is the other person’s road.
I am saying that, given the inclination and some resources, we can create the space for ourselves to make the improbable happen. If you’re just starting out, remember that beginnings are almost always rougher, and more painful, and that you really can’t predict how things will turn out later, but it’s well worth the effort.
At this end of my journey, so far, I’m incredibly grateful for the opportunities I’ve been given, the opportunities I made the most of, having the motivation and (limited) physical ability to do both. Most of all, I’m grateful that we didn’t just create some measure of financial stability. Despite the pain and the struggles, the hard year after year, we’ve shifted. We’ve found balance. I can ask for no greater gifts than the ones we’ve built for ourselves.