When it comes to spending and savings, I always considered myself fiscally conservative. I was wrong.
In grade school I learned to leverage small sums of money to make more. My dad helped me start a company with $300 at 11 years old. This same company paid my way through college. In fact, I’ve leveraged debt to invest in businesses, homes, and commercial real estate without ever losing money on a significant investment.
After several substantial pay increases, we still felt like we were living month to month. We couldn’t seem to find margin in our budget. At the same time, like you, we watched as stock prices and real estate values plummeted. At that point I realized 3 things…
1. We have been fortunate
Yes, I’ve learned that I have been more fortunate than fiscally conservative. We happened to buy and sell real estate at the right time and retained several properties that have consistently produced income. Many in my generation benefited greatly from flexible lending practices and skyrocketing property values.
My wife, Sarah, and I completed graduate degrees at ideal times in the life cycle of our growing family – with no debt. Leaving college or graduate school without the burden of significant debt is a thing of the past.
Times have changed – maybe forever.
2. I was foolish
I mistakenly believed our successes were the byproduct of entrepreneurial genius. While I’ve always had huge vision, unrelenting passion for my work, and a strong work ethic, I now understand these characteristics and behaviors are not enough. Timing, relationships, support, and opportunity all greatly influence our achievements.
We have foolishly paid hundreds of thousands of dollars in interest to financial institutions – despite not having a car payment since 2007. Spontaneous decisions have cost ten of thousands more with very little to show for them. Like many, this was our way of life – make more, spend more.
Not any more.
3. There is a better way
A few years ago, my wife and I made a decision to cut out all debt, credit, and unplanned spending. And to move toward saving – for our children, for more freedom later in life, and to give more in the future.
This one decision dramatically impacted our thinking about money, our spending, and our saving.
Three things that made the difference:
1. We decided together. I’m better with money than Sarah. In fact, a few years ago she didn’t care to know anything about our finances as long as her debit card worked. Today, she is the researcher and handles many financial decisions for the family. We make a great team.
2. We went all in. We decided to make a lifestyle change – no matter what. This change of lifestyle led us to sell 2 vehicles we didn’t need and lots of furniture we weren’t using. The proceeds from the sale of these items and changes in our spending habits enabled us to save more than $52,000 in 4 months.
I should mention that Sarah was not earning income at the time.
When you make choices outside cultural norms, friends and family members may think you’re nuts. To be fair, me driving a 1994 Lincoln Town Car for a couple of years was somewhat amusing. (It was immaculate though!)
They mean well – they’re genuinely concerned for our well-being. Some think we lost our minds. And that’s ok. It was important that we not allow questions and criticism to derail our vision and long-term objectives.
3. We stuck with it long enough to get momentum. It would be difficult for either of us to tell you where all of the savings were derived. It became fun to learn new techniques for saving more and spending less. And it was not unusual for us to make a decision to not spend money as we’ve become more accustomed to saving more.
Dave Ramsey, best-selling author of EntreLeadership, challenges readers to live like no one else, so later you can live like no one else.
I do understand – we were in a fortunate position. If our circumstances had been different, maybe our results would be different.
We made daily choices to delay gratification. And each decision yielded more momentum.
Question: Have you gone through a similar life-change? How has delayed gratification benefited you? Share your tips in the comments — We’re probably going to need them!
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Thanks for sharing your financial journey Mike. We follow The financial peace plan and over the last year it has changed our financial life and a by product has been a closer relationship. We our working on our future together. In one year we have but up a 6 month emergency fund, paid all debt, upped our savings through 401k, SEP, Roth IRA from 15% to 35% of our income. No more credit cards, all cash for purchases. I never thought that by following simple principles like you and your wife have what a HUGE difference it has made. I would add that we have automated all of our bills and giving which also has made things simple, easy and painless. There is a quote we live by “what gets measured, gets managed” yes it does!! It can be done at any income level. Thanks for the great article, it works!!
That’s amazing Ruth. Good work!
I love the authenticity of your posts. And this one is really timely! Thanks for sharing.
Thank you Philip – I appreciate your encouragement.
Bravo, Michael! Writing about your journey encourages others.
Thanks Jeremy!
Thanks David. Great tips in your linked article!
Great job!! I know when we dealt with layoffs we had to make hard choices and huge lifestyle changes, but the payoff was so worth it. We are building up a 401(k) again with Brandon’s company. They match 6% so we save 6%, so that is great!! Plus, we are credit card free except for one line of credit of only 500.00 that is attached to our checking account, it’s the way we are able to have a “visa check card” connected to our bank. Pray that you continue to be blessed as you continue to develop your stewardship!!! We are hoping to start savings again for an emergency fund and go from there.
Awesome Elisha! If you haven’t had the opportunity yet, I highly recommend Financial Peace University. Tons of practical info.
I was brought up with the principal “If you can’t pay cash for it, don’t but it.” This was long before Dave Ramsey but seems to echo his message.
So I have had the good sense to delay purchases until cash was in hand. The best part of this is by the time cash is in hand, I rarely want the item anymore. Delayed gratification has benefited me by helping me realize if I really need an item.
My wife is frugal like you – when shopping she’ll pick out an item and walk around the store for 30 minutes then talk herself out of it. In the past, I was more impulsive – I bought the item and was headed home before realizing the impact on our budget.
We were forced to make these decisions several years ago after a job loss. It has helped us stay on track now that things are going much better. We follow Dave’s plan, don’t use any credit cards and have paid off more than half our debt in a few years. Thanks for the great reminders!
I love that you’ve stayed on track for years! Great work Tammy!
I’m not married yet, nor do I have to make any major financial decisions like these at this point in my life- but the example you and your wife are setting is very similar to the one my parent’s have given me! And the only thing I can really say is, you should be proud of yourselves. It’s tough to make these decisions, but it will be worth it.
Thanks Katie. You have a great opportunity to make good decisions today – they’ll give you a head start on the rest of us!
Well said, David.