The other day I read a great article by Mark from Bare Budget Guy that really struck a chord with me. In the article, Mark discusses 4 epic decisions that fundamentally altered the course of his life and finances. You can check out his post right here to read more about Mark’s epic decisions, and maybe it will get you thinking about some of the decisions you’ve made in your own life and how they have affected you.
I was so impressed with Mark’s post that I decided to write a similarly epic one myself. So here are the major decisions and events that have had a profound impact on my finances and helped shape me into the person I am today.
My Dad’s Stroke/Almost Losing Our House
My father worked for the telephone company for many years but when I was a senior in high school he took an early retirement package rather than risk getting laid off. He went through the money pretty quickly and after a small business failure he was forced to work a number of part-time jobs to support the family (my mom, my sister, and myself all worked part-time too).
While I was in college my dad had a major stroke. He was hospitalized for a bit and he was never the same. Unable to work, he had to rely on Social Security and my mom’s meager wages. My sister and I helped out as much as we could but we weren’t making much ourselves so money was always tight.
But my dad’s stroke had an even bigger impact as it exposed how financially fragile my family really was. My mom was old-school and took almost no interest in any financial matters, she just trusted my dad to handle everything. I was still young and care-free so I didn’t know any better, but apparently we were living way beyond our means for a long time.
My dad didn’t want to worry everyone so he hid the seriousness of our financial situation until it was nearly too late. While he was in the hospital we found bank letters and foreclosure notices informing us that we would soon be kicked out on the street if we didn’t make up for missed payments. My sister and I had to pitch in and help cover the bills, single-handedly wiping out my life savings in the process.
My family managed to recover (though from that point on money was always tight) but I’ll never forget how it felt to find that letter and realize our financial lives were in such dire straits.
How It Affected Me
For starters, it taught me the importance of an emergency fund. Having some money stashed aside to cover the unexpected gives you piece of mind and protects you from being wiped out by an unplanned expense.
I also learned the importance of staying on top of your finances and not just burying your head in the sand. I’m grown up with my own family now. We haven’t always made the best decisions and we’ve found ourselves in debt, but I think we’ve learned from our mistakes and we’re working together as a team to reach our goals.
I Got Married and Started a Family
I was a month shy of 26 when I tied the knot and some people might think that is too young. “Establish yourself more and secure your own finances first”, is something they might say.
But what can I say, I was lucky to find the love of my life at a young age and I wasn’t about to let her get away.
My wife and I are pretty compatible so there’s not much financial drama, though it is sometimes hard to come to an agreement when our one of our goals or opinions doesn’t match. When you’re single your decisions are your own, but when you’re married you have to learn how to compromise.
This is especially true once you start having kids. We’ve got three little ones in our clan and it never ceases to amaze me how much they cost. According to the US Department of Agriculture, it costs about $245,000 to raise one child to the age of 18. That is a truly staggering number and it doesn’t end there as many parents continue to help their children with college tuition, home down payments, wedding expenses, and other bills long after they turn 18.
How It Affected Me
When you get married and start a family, your priorities change profoundly. Suddenly things that were incredibly important to you no longer matter. You start going out to eat at Applebees or Cheeburger Cheeburger instead of fancy restaurants. Instead of island getaways, your vacation plans revolve around Disney World and Hershey Park. You’d rather stay home and watch cartoons with your kids than go bar-hopping with your buddies.
Your spending habits change dramatically and you have to give up some of the things you love to make your family happy. But you won’t even mind doing it because you love them so much.
We Bought Our First House
The year was 2003 and we had been married and renting for a year and a half. With the real estate market in New Jersey booming we were feeling a lot of pressure to buy a house soon or risk getting priced out of the market forever.
The more time passed the more houses were shooting past our price limit and we were getting pretty frustrated. We bid the asking price on one house but were outbid by $35,000. Our bid was accepted on another but we backed out after the home inspection turned up some troublesome issues.
We really wanted to be within a half hour drive of both our parents and for awhile it looked like that would never happen, but then we found a cute little house that we could juuuuuuuust afford if we pulled out all the stops.
We bought the house and then quickly realized that being a homeowner was more expensive than we thought. We knew it was a fixer-upper but we didn’t realize it would be such a money pit. We replaced the driveway, the water heater, some basement piping, and the roof in just a few short years.
Plus our home insurance premiums and property taxes were getting jacked up every year, so the real cost of owning the home was skyrocketing year after year. Oh, did I mention the real estate bubble popping? Yea, there was that too.
Luckily, the local market recovered enough for us to turn a small profit and find a better house with a more affordable payment and get back on our feet. We still have plenty of bills, and I just replaced the water heater here too, but we’re in a much better situation now.
How It Affected Me
I learned that you shouldn’t make decisions based on solely on your emotions. We had our hearts set on owning our own home and we were scared to death of missing out on an opportunity to do so. We let our emotions make the decision for us and it ended up being a big mistake.
Things turned out alright in the end but looking back it definitely wasn’t a smart decision.
My Wife Became a Stay at Home Mom
Shortly after we moved into our new home we found out we were expecting our first child. We were ecstatic!
The original plan was that my wife would go back to work and her mom would look after the baby during the day so we wouldn’t have to pay for child care. But nine months later my mother-in-law’s health had significantly deteriorated and we realized she just couldn’t possibly take care of a newborn.
So we started pricing out day care and the prices we were quoted scared the hell out of us. When we crunched the numbers we realized that after day care expenses my wife would only be bringing home a few hundred bucks per month.
We both grew up with moms who stayed home to raise the family and all things being equal we wanted to do the same for our kids. So after much discussion we decided my wife would quit her job and stay home to raise the kids full-time. She has done some part-time work in direct selling, babysitting, and even real estate, but for the most part her main job description is Mom.
How It Affected Me
Ok, so there are some obvious downsides to becoming a single income family. Money is a lot tighter and you can’t always afford to do things that a two income family can. Sometimes it’s hard watching friends splurge or treat themselves to something that is out of our budget.
There’s also a lack of appreciation that comes with being a stay at home parent. Some people don’t think of raising kids as a job when the reality is it’s soooo much harder. And while my wife has days where she feels amazing and rewarded, there are also plenty of times when she feels under-appreciated and taken for granted.
On the other hand, it gives me great peace of mind to know my kids are being raised by their loving mother while I’m off at work. No one loves them as much as we do and I don’t have to worry about seeing our nanny on an episode of 60 Minutes.
It’s also good for my wife because she gets to spend so much time with them. Despite the challenges and occasional second-guesses, she does value the time she spends with them and the close relationships that has helped forge.
The Net Effect
“We are the sum total of our experiences. Those experiences – be they positive or negative – make us the person we are, at any given point in our lives. And, like a flowing river, those same experiences, and those yet to come, continue to influence and reshape the person we are, and the person we become. None of us are the same as we were yesterday, nor will be tomorrow.” – BJ Neblett
The four major life events I’ve shared with you today, both the good and the bad, have helped define who I am and who I will be. Some, like buying our first home and starting a family, were choices I made. Others, such as my dad’s stroke, were things no one would ever choose to have happen…but you have to deal with the consequences all the same.
Looking back at the major events that have helped shape you are is a valuable exercise. It gives you perspective and helps you recognize where and why you made mistakes along the way. Hopefully, that knowledge will help you learn from your mistakes and make better choices in the future.
Don’t forget, life is fluid. The person you are today will not be the same person you are ten years from now. Never stop learning and improving yourself so you can reach ever and ever closer to your goals.
What about you? What choices have you made that fundamentally altered your life either for good or bad? How did they affect you? What did you learn from them?