So, I'm not quite sure when it happened. The whole thing is still a little bit hazy, but I know there was a before time and then an after time. The exact point where the skies opened up and I saw the possibility of not working for the rest of my life is somewhere between, but remains a mystery.
The Dark Ages
I remember going to look at a used BMW one day back in 2013. I'd been working as a high-paid consultant for a couple of years without much to show for it in terms of status symbols. Sure, I'd just bought a house a few years before, but the glow had since vanished from that shiny thing, so it was on to the next! Plus, the car I was driving was starting to do some very funny things that the repair shop kept charging me not to fix.
The price on the car was lower than it should have been for a 5-series, so I felt like I should go for it. On the other hand, I had a very specific number in mind so I told the sales guy and he dismissed it saying he had other interested parties. Not wanting to get emotionally suckered by a car salesman, I gave the car salesman my details and walked off the lot.
The next day, I got a call from him and he begrudgingly said he'd agree to my terms. So I went in, paid around $45k in cash (after buying a warranty, final fees and all that good stuff), and drove off the lot in my new toy.
For the record, I still love that car, despite how much it has depreciated.
That was the way things went. Saving a bunch, only to spend it on something new. Sure, we had a small cushion in savings on the side, but it was nothing compared to what I have today
. It was just meant to avoid over-drafts on months where our high income was met and nearly wiped out by our high expenses. Did over-drafts happen occasionally? Yes, once or twice a year.
And yes, we never missed payments on our debts and never let our credit card debt ride. But the only investments we had were my high-fee IRA that had no on paying attention to it for years
and what was left over from my wife pulling money out of investments to come up with our down payment. In other words -- not much.
Certainly not enough to carry us into our twilight years.
And there were times when I'd get into a kick on the topic of personal finance. I've mentioned this before, but I used to buy personal finance books. I'd basically read a few chapters, set it down and then forget about it for another year. Rinse, and repeat.
Yeah, not terribly effective. All it did was add another annual expense -- the very book that was meant to help me get my finances in order. I'm not sure, but there's irony in there somewhere I think.
So to sum up where I was during the dark ages, I had a high-paying job, my wife and I bought whatever we felt like buying, we saved a little, invested virtually nothing and were both 30-ish with not much to show for it.
The Turning Point
As I type it out now, that was probably the initial catalyst and driving factor in turning things around. Just thinking about having nothing to show for all the hard work and long hours I was putting in. I was sleeping in hotels four nights a week. I was spending part of my vacations on my computer glued to the phone.
I remember one vacation where I literally did not leave the hotel room the entire two days we were there. I didn't swim with my kids in the pool. I didn't eat dinner with my wife. I just ordered room service while staring at a screen. And being a consultant, that's just part of the life. It's going to happen to you once in a while and that's perfectly fine. My family was understanding. At least, as understanding as they could be. But it's when that kind of life became the norm that I saw things a different way.
That was when the seed was planted. It wasn't until I started working at the next high paying consultant job where I got to work full time from home -- the one I have now -- that I actually started doing anything.
And maybe that's it. Yeah. That's the actual turning point. Though I probably did more actual work than I'd ever done since I lacked a commute, I was also able to focus on anything that needed focusing on. In retrospect, that's kind of a no-brainer.
When I started working from home, I remember my wife and I sat down and decided we needed a financial planner, and she'd heard something about LearnVest
, so we tried that for a while. In the short time leading up to actually establishing an account with them, I had started to participate in r/personalfinance on Reddit
. From what I'd learned in the very short time I'd been active there, I basically needed to establish three things before I could start investing (my actual goal through all of this).
First, it was an emergency fund
(E-fund), with three to six months of expenses in there; I chose six! Second, I needed to fill my Roth IRA to the maximum every year. Then, and only then, could I start taxable investing.
This isn't something I came up with, of course. It's the general advice for many people who frequent those forums, but it was the best advice I'd read in a long time. Better, in fact, than all the cumulative information I'd learned from all the books on personal finance I'd paid money for. And the advice preached in r/personalfinance is free -- the best price there is.
So I started on that journey around a year ago. Actually a little more than a year ago according to the first e-mails I received from LearnVest. It was around March. So that puts a number on it. I've officially been "enlightened" for over a year now. I did actually pay for LearnVest though, which was sort of a sunk cost because they essentially set me up with the same plan I'd already established, only with more concrete goals (i.e. actually setting up an IRA account and destroying my old one). As it turns out, that was just the bit of fire I needed to get things going. And the fire I'm talking about was paying for LearnVest.
So I accomplished those goals, weened myself off of LearnVest and started focusing solely on Mint
to track my financial life. Well, that and a whole bunch of spreadsheets.
Since then, I've come a long way. As of this month, I will have completed my six-month E-fund (watch out for an upcoming post!). I've significantly reduced my expenses
and continue to find ways to do so. I've contributed a lot (compared to how much I've contributed in the past 30 years of my life, that is) to my IRA and will continue to do that as well.
I've also picked up a lot of advice along the way from the community I've come to be a part of. There are some amazing people in the circles of personal finance, including those from Reddit, Bogleheads Forums and the general awesome people who take the time to comment every day on my blog and answer my myriad stupid questions.
This blog has been alive for a month now, and it's gone by so fast. I hope to keep writing like this for a long time coming. I've still got so much left to learn. My financial enlightenment, as I put it in this post, is clearly just the beginning.
It's more of an awakening from years of mindlessly doing what society is comfortable with me doing into a life of mindfully investing my time and money for a better future.