I decided to stray from the financial success series for a moment to answer the most common question I receive – what prompted your interest in personal finance and have you always managed your money well?
What can I say – I’m a nerd. From an early age, I loved all things math and money. Even now, I think spreadsheets are fun. As a result of my interest (and maturity for my age), my parents opened up their finances to me (which was a big binder with sheets showing all the income, bills, etc.) and started teaching me. They didn’t hold anything back and openly and honestly answered any and all questions I had. I know they never did that with my brothers to the extent that they did with me. Perhaps because they didn’t show an interest or maybe couldn’t be trusted with all that information.
Once I reached 8 or 9, they would actually let me pay all the bills (they’d just sign the checks) and balance their checkbooks. I had a passbook savings account where I had to put part of my allowance and any gifts I received. So the stage was set as a child. That’s not to say I didn’t ever stray though.
My freshman year of college, I had an excess of scholarship money plus spending money from my parents. Needless to say, I was living pretty high on the hog. (Just as an example, I spent spring break in Jamaica that year.) Then I lost my scholarship (too much living it up and not enough studying it up). So when my parents had to pay that high private school tuition on their own, the spending money dwindled. I’d already had a taste of the “good life” and wasn’t ready to give it up so I got a credit card. I would run it up each school year (always paying the minimums though) and pay it off with the money from my summer job. Rinse lather repeat all the way through grad school. The summer after grad school I paid off my credit cards again (for what I thought was the final time) then moved to California.
The cost of living was ridiculous there (especially compared to my hometown in Alabama). The rent for my one bedroom apartment in a far suburb of San Francisco was more than my parents’ mortgage. Of course I needed furniture for my new apartment, my car insurance tripled and I was partying every weekend (gotta make friends you know). So practically from the start, I was living check to check and running up my credit cards. I got laid off from my job after eleven months. This was in October. I remember that I only had enough money to make November bills and NOT December rent and didn’t even have enough money to get myself home if need be. That was the worst feeling in the world. I was blessed to be able to find a job in time to make December rent and I vowed that I would NEVER live like that again. I had never really stressed about my finances before but that was the wakeup call that the way I was living wasn’t (financially) right. I shared with my dad (before then, my parents had little insight as to my finances) and he told me about the Motley Fool (www.fool.com) and started teaching me even more. I started changing my spendthrift ways (I used to shop EVERYDAY during lunch – gotta love working near Union Square) and starting seriously tithing (vs when I felt I could afford it). After that, things only got better. I started living WITHIN my means (which wasn’t always easy) and started writing down my goals. I didn’t accomplish all of them in the time frame that I wanted but when I look back at my old journals, I have accomplished and exceeded every single (financial) goal I set for myself. That’s not to say I didn’t face any other hardships (for example, getting laid off again after four months) but once the stage was set, I was able to weather the future storms.
So what’s YOUR personal finance story?