About a year ago, our finances were a mess. We were living paycheck to paycheck. Barely making ends meet. Not paying one bill one month, so we could pay in full the bill we didn't pay the month before. My wife was 9 months pregnant, and I screwed up something with the power bill and our electricity was cut off. I didn't have the money to pay off two months worth of electricity and the late charges and reconnect fee. So I call my dad. He floats us the money to get the power back on. You'd think I would have learned my lesson, but no, things got worse.
Shortly after that, I fell into a bit of depression. I was tired of being the responsible one in the relationship. I wanted to have a little fun. I rediscovered my high school addiction to Magic: The Gathering. Needless to say, things go worse. Money we got from my family for Christmas, funded my minor spending spree on both online and physical MTG cards. It floated us for a while, barely. When I look back over my progress, our low point was February of this year. Our Net Worth was -$13,578.60.
Then my department offered to make my job permanent. I had been a temp for two and a half years. It finally allowed me to have health insurance. I jumped at the chance. Then I started doing the math. Once health and dental would start coming out of my paycheck, there was no chance in hell of us paying all our bills. I decided to buckle down and get a second job. Well, about this same time, I had gotten our W-2s so we could file for taxes. Imagine my surprize when I discovered that I could pay off both my credit card and sears card along with a dental and a health bill I still owed on. This got me excited.
I decided it was time for me to know my weakness. And at this point, money was my weakness. Since things were starting to look up, I decided that this was an opportunity given to me. I was going to run with it. I started going online and finding out everything I could on personal finance. Absorbing information like a sponge, I just kept learning.
I started an excel spreadsheet, to track my net worth on the 1st and 15th of every month. I figured that seeing progress would keep me motivated. Then I about mid-March, I realized that I needed to start keeping track of all of the inflows and outflows of cash. To look for holes where money was being spent but shouldn't, and to keep track of my checking account, so I wouldn't be overdrawn. I realized that debt was my biggest weakness. So if I could get out from under the loan I took out to get my MCSE, we'd be in good shape.
No investment I could make so far this year could beat paying off our debt. For every dollar on the loan was costing us a little over $0.09. There's almost nowhere, where you can get a guarenteed 9% return. Unfortunately, we've had a few setbacks. My student loans from college went active. And our car died so we had to buy another one. But despite all that, I've kept trucking, aiming us towards totally debt free. At the start of this month, our net worth was -$4,101.09. That over $9,000 off of our low point. We've cut tons of unneccessary expenses out of our budget. Because after achieving freedom from debt, I have other plans.
First comes an emergency fund. (I have a small one started, but my first priority after getting out of debt is to get it fully funded.) This will have approx 6 months worth of income, in case of an emergency. (Job loss, unexpected health expenses).
Then we start stashing everything we can towards a down payment on a house.
And while I'm doing these, I drop my second job down to just weekends. I'm getting a degree!
Anyway, that's just short term. What about the long term? Why stash so much away when your earning potential could so much more in the future?
Here's the plan. I start back at school. I get my associates in accounting at the local community college. Bingo, day job upgrade. Then I move to a four year school in the state system, most of my associates stuff will transfer. Batchelors in Accounting and CPA. Bingo, job upgrade number two. Then, the part I'm looking forward to most, my MBA, setting me up for corporate climbing. But to be honest with you, those are still all steps along the way to my ultimate goal.
Early retirement. If I can just keep stashing away money, and letting compound interest do it's magic, I'm looking at a retirement age of 40 - 45. Retire, spend time with my kids. And be a full time student for the rest of my life...
That's just it, I had it backwords. I had school and college for free the first time I went, the state and my folks would have taken care of everything. And I didn't appreciate it in the least. Now that I have tasted the world, I want back in to academia. I want degrees in physics, and psych, and religion, and comp sci and about a half a dozen other things. Knowledge is what I crave. I want to fill my days with debate and intellectual discourse.
So now you know, the next time you see me babling about money, remember, it's not the money I care about for money's sake. The reason I am so concerned about it is one of the greatest enablers in this world. I plan on understanding it and using it to get where I wanna go...