So I’ve never really gotten into why I started blogging or how I got into personal finance. I spent most of my 20s just living paycheck to paycheck. My DH and I weren’t into debt, so we never overspent on our credit card. We bought a house early with our savings, and I started a Roth IRA. But we weren’t able to aggressively save into a 401k or IRA because we didn’t qualify for it because of a visa for my DH and a lack of 401k for me. Plus we didn’t really make a lot at the time, thus we really lived paycheck to paycheck.
During this time we were very budget and dollar conscious. We didn’t spend a dollar without planning for it. We cooked and planned menus. I worked a second job because my DH wasn’t allowed on his visa. We lived through 4 layoffs during this time as well.
Then my DH got a job in the middle of 2005 after finishing his degree. But he was laid off after 8 weeks of working. Yep we moved cross country for the job and he lost it in 8 weeks. Moral of the story? There is no such thing as job security. But that’s another post.
We had savings and severance so we were well able to survive for the next 6 months and then some. My DH found a job and started at the end of 2005/early 2006. So we really began to earn the money we make now in 2006. Until then we had very little retirement savings and our emergency fund was decimated from the layoff and we didn’t max out the 401k like we planned, though we had saved some.
We immediately began to save money into a 401k and Roth IRAs. We maxed out our 2006 contributions and have done so ever since. We also contributed the maximum to a 2005 Roth IRAs as well. I read a lot of financial books and investing articles online.
But we were still just trudging along. Somewhere around March 2006, I realized we were wasting money. Really wasting money. We were saving a lot, but we were throwing away over $1000/month on food and eating out and stuff. We were blowing money left and right. We spent $1o00 on snowboarding in February 2006. None of this went on a credit card, it was all paid for in cash (well on our credit card, but paid in full the next month), and we were building back up our EF.
But I had a wake-up call because my DH was applying to MBA programs and we had a large tuition bill looming. I wrote about it last month, basically we had to start paying $1300/month in tuition. Yes we took out subsidized Stafford loans of $8500/year but we still had to cover approximately $20k in tuition out of pocket. I became frightened. I knew we couldn’t afford to continue our spending habits or else we’d be in debt.
I sat down with my DH and explained that it appeared we needed to cut back a lot or else we’d need to take out loans for the MBA. He said let’s do it. And so we began our journey to live large one step at a time.
More tomorrow on what happened next…
9 responses so far ↓
1 Fabulously Broke // Feb 9, 2009 at 10:53 am
Ahh.. I’ve always wondered.
2 fengshui // Feb 9, 2009 at 12:04 pm
I don’t think that there is anything wrong with snowboarding and blowing $1k in a month on snowboarding trips if you plan for it! Snowboarding is fun, and you’re only young once, so you HAVE to enjoy life! You can’t hole yourselves up couting every penny and planning every move you make or life is pointless. Yes, blowing $1k on eating out, etc is a lot, and yes, that warrants cutting back, but seriously, your 20’s go by so fast and you won’t ever get them back…… I’m still a little confused, although I know that you’re not obligated to tell us everything. You say that you guys didn’t make much $ during this time, that the big income came after 2006, after you’re already in your current home, but how does one pull together a $150k downpayment in a matter of a few years with a small income, and then to qualify for a loan as large as yours, $575k, you must have to have a substantial income to qualify for that? I mean, I had to have a income of $75k just to qualify for my mortgage, and I only borrowed $176k, but with piti, my car payment, and my student loans, that is the income I needed to have a low enough income debt ratio. Just wondering…..
3 LAL // Feb 9, 2009 at 12:13 pm
Gotta keep reading to find out. LOL. The loan Fengshui is $460k, not $575k.
We had no other debt than the mortgage at $460k. Zero. That was it.
4 Kristy @ Master Your Card // Feb 10, 2009 at 1:17 am
Well, your financial journey started off better than mine! But, I agree with fengshui about the snowboarding trip. If you planned it, then it shouldn’t be a big deal…really, even if you didn’t, it doesn’t sound like it was that bad. You do have a life to live and need to experience things as much as possible. If you had no other debt, I fail to see why that registered as a waste of money. I’d be more concerned with the $1k you spent on food every month.
Alas, I shall wait for the next post to find out more…I hate cliffhangers! LOL.
5 LAL // Feb 10, 2009 at 10:08 am
Snowboarding buying boots and gear. Then we spent easily another $500 on getting tickets to mountains. It was a ridiculous amount of money we were “wasting” a month.
Honestly it was just a lot of spending.
6 fengshui // Feb 10, 2009 at 1:22 pm
Snowboarding is sooo much fun! I’m more impulsive than you and would have put the gear on a cc and off I go! Woo hoo! Sorry for all of the prying, I’m just flustered as usual with my inability to ever be able to save more than $10k…. (not couting retirement because I can’t touch that)….
7 LivingAlmostLarge // Feb 10, 2009 at 5:03 pm
You’ll have to wait 2 weeks, I’m going to do a early adulthood story series.
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