Perhaps this should’ve been the first blog post I posted here on the Abacus Solutions website; admitting mistakes and screwups is hard, though, right? I’m a firm believer, however, in learning from mistakes, and even better, using my mistakes as a tool to prevent others from making those same mistakes. So here goes.
As I’ve said before (in my Smart Women Finish Rich book review post), personal finance has been an interest of mine since I started working full-time, and my cousin gave me said book as I started on my journey into full-fledged adulthood. And for the next six or seven years, I plodded along on a broad path outlined in that book; I started contributing to my 401(k) at work to max out the employer match, I started contributing to a Roth IRA on the side. I built up a nice savings account, which I was able to use to put down a healthy 20% down payment on my first home. Things got a little tight after the home purchase for a few months, but I was one of the fortunate ones that bought during the First Time Homebuyer Credit years, and when that refund came in, life was pretty sweet.
Then, in early 2011, I decided to sign up for Dave Ramsey’s Financial Peace University, which was being held at my then church. My sister had gone through it a few years earlier, and spoke very highly of the program. As I got into the sessions (back then the course was 13 weeks, as opposed to the 9 week program it is today!), I thought, ok, this is fairly simple…I’ve already got over $1,000 in a baby emergency fund, and the only debt I have is on my house. This is gonna take no time at all! I did hit a speed bump that spring, as my AC decided to die in March, and paying for that took a healthy chunk out of what I had been building up into a fully funded 3-6 months emergency fund. But that’s what an emergency fund is for, right? Instead of being a crisis, it was merely a speed bump. I graduated from the class, still in baby step 3, but living the Dave Ramsey lifestyle.
Then, in early 2012, it was like I forgot everything I had learned the prior year. I started having trouble with the brakes on my 2005 Jetta, and some of the best mechanics I work with couldn’t figure out why they kept giving me trouble. Now, I loved my Jetta – it was a beautiful sky blue color (see above), my first major purchase once I started working full-time, and because I had been living at home with my parents at the time, I paid it off in six months – and hadn’t had a car payment since. And one of the things I loved most about it? It was a DIESEL. 40+ miles to the gallon on the highway!
I really wanted another diesel car, but the new Jettas at that time were kind of plain-looking. So what other car manufacturer makes diesel cars? BMW. Yes, I started looking at pre-owned BMWs. I figured I’d get a good trade-in value on my Jetta, and since it was pre-owned, I’d be getting a deal. And ultimately, I did…BUT, I went back to having a car payment for the first time in seven years. And I hated it. I resolved to pay it off much quicker than the 60 months I financed it for.
Then, that summer, another thing happened…I got a puppy. DON’T WORRY, I didn’t finance Buster!! But when I brought him home, I realized that I really wanted to move closer to work and the rest of my family. I was only about a half hour away from both, but it was a struggle to house train Buster when I couldn’t go home and let him out at lunch. Sorta weak reason, I know. Regardless, I had lived in my house for three years, which was the requirement for the homebuyer credit, so I decided to list it and start looking north.
I actually found my current home before the first one sold, so there was a period of about four months in late 2012 that I was floating two mortgage payments. It was tight, but doable. The new house was built in the 1950s, and there were a few renovations I wanted to make prior to moving in, including the master bathroom, putting in bamboo floors in the living room, and new appliances in the kitchen. And how do you suppose I paid for the majority of these renovations? Yup, credit cards. No interest for 18 months! I’ll have it paid off wayyyy before then. And the renovations that didn’t go on cards, I absolutely drained my savings.
So anyways, long story short, I was a stressed out mess for the better part of the next two years. You know what they say when you buy a house and aren’t set up financially for it, right? That Murphy moves into the spare bedroom and brings his three brothers, Broke, Desperate and Stupid?? In November 2012 I was notified by my homeowner’s insurance company that the electric panel I had in my house was a fire hazard, and I had 30 days to replace it before they cancelled my account. $800, out the window. Then, in June 2013, I had one of the worst experiences in my life not once, but twice, four weeks apart…my home was broken into. Honestly I didn’t really have much of value that they took, the jewelry was mostly sentimental, and the electronics were (mostly) old. But the feeling of being violated like that…I wouldn’t wish it on anyone. Plus, the second time they broke in, they smashed in my glass sliding door in the back of my house. I literally had a gaping hole in the back of my house over the 4th of July weekend. Fortunately, I had accordion shutters over the door, so I was able to secure it, and a good friend came the next week to install a set of impact doors I purchased – again, on a credit card – at Home Depot. The monthly payments were adding up.
I continued to struggle, feeling like I was living paycheck to paycheck, for the next year and a half. Sure, I had some good times, but that stress in the back of my head was always there. Finally, with my year-end bonus in December 2014, I started to turn the corner. I also took in a roommate in February 2015, and that rental income gave me even more margin in my budget. Ironically, I decided to coordinate my first Financial Peace group for my current church starting in February, and I realized what an idiot I had been, to graduate from FPU and make almost every mistake warned about in the class!!!
I paid off my car in August 2015 (fortunately the credit cards had been paid off in December), started the process of rebuilding my emergency fund, and continued to work the baby steps in my life. I can truly say that the past three years have been so much less stressful than the previous three, and for good reason – I’m no longer overextending myself financially. If I don’t have cash to pay for it, I don’t buy it. I save up and pay cash for vacations, and it’s the best feeling in the world.
I say all of this to let you know that I’m not perfect. I’ve made plenty of mistakes in the past, but I’ve learned from them. And you can, too. There’s no shame in asking for help if you’re in a situation that seems hopeless to you! I’ve been through it myself, and I can say with certainty, there is hope, and you can get through to the other side. Let me show you how. Your future self will be so grateful that you made the investment in your own personal financial peace.