In the last article, I shared some professional lessons learned and now I want to focus on personal and financial lessons learned. For most, finances are a general extension of your personal life, but for those with businesses, it is not. Either way, I wanted to bring extra attention to it.
Personal finances is the number one under-taught course in school. In my opinion, it should be required for all high school graduates. I will be teaching it to my children (all home schooled) before they graduate.
When you get married, most fights will boil down to raising children, finances, sex and in-laws. My wife and I haven’t argued over finances since our third year of marriage.
A Quick Story
So the last time my wife and I fought over money, we had just received a credit card bill with a late payment. My wife paid the bills at the time and I confronted her about it (not in a nice way either, sorry). I knew that we had the money and she just forgot to send it in on time.
We agreed that she would pay the bills as they came in. Perfect.
A few months went by and I came home from work to my wife who was crying uncontrollably. Through gasps for air, she told me that she couldn’t pay the mortgage.
I was stunned! We were living far below our means and making very good money. We were DINKs afterall (Dual Income, No Kids). When she calmed down, we quickly found out what happened.
The mortgage bill arrived and was paid within two days. The mortgage company received the payment and sent the bill for the following month. This happened about 10 days after the payment was received. This went on for two months.
As you can see, we were nearly 4 months ahead on our mortgage!
Take a personal finance class
I can’t emphasize this enough. I had a 24 hour drive to make the first time I went to college. We made this trip as a family and my parents handed me a short book on personal finances to read on the trip. I’m a slow reader, but I finished this on the drive. It was thrilling to me and has had a profound impact on my life.
As I graduated from college, I was already in a financially good place. My student loans were reasonable, about $21,000, and I had less than $500 in credit card debt. I owe a lot of this success to my parents giving me that book.
For those of you who have not taken a personal finance class, I highly recommend it. I can’t say enough about Dave Ramsey’s Financial Peace University. It is a wonderful course that is reasonably priced.
Live Far Below Your Means
No, I’m not telling you to live in tiny house, but your dwelling should fit your budget.
My wife and I are not extravagant people. Part of this is natural and part of it has been learned. We are on a cash budget and when there is no money in the envelope, we don’t buy. Over the years, this has caused us to prioritize our spending and say “no” to many unessential things. The result: less stuff and more money.
The hidden benefit is that this gives you financial freedom! We aren’t living paycheck to paycheck and we have around 5 months of living expenses saved, a healthy retirement plan and college savings for the kids.
When we finally decided it was time for me to leave my job and start my own business, we could only do so knowing that we wouldn’t be taking on any debt and we had months worth of living expenses.
That is what I call financial freedom!
Yes, you need a budget. And it will be a blessing if you stick with it! Trust me here. When my wife and I were first married, we both had full time jobs and no kids (DINKs). We had money coming in and we spent it, most of the time on good things like paying off half the mortgage in 4.5 years. We also built a large deck and remodeled the master bedroom and bathroom.
Anyway, with kiddo #2 on the way and moving to a new state, we were down to one income. Ouch! My wife suggested that we try this cash budget thing some guy named Dave Ramsey endorsed.
I was skeptical, but didn’t want to go into any debt again. We tried it and I remember that first month, I got $120 to spend on myself and another $120 to spend on the house. I remembered thinking that there was no way that this was going to work.
However, having a cash limit made me prioritize purchases and I found out that I rarely ran out of money and usually had a few dollars to carry over into the next month.
All in all, it has been a very freeing experience. I have all that I need and most of what I want within the budget. The things that I want may take a while to save for. The anticipation either makes me want it more or realize that I can live without it.
A budget can also be your best ally against doing things that you don’t want to do. You can always claim that, “it isn’t in the budget”.
So get your budget together and take that first step to financial control.
We also choose to drive used cars. I used to joke that we don’t buy a car until it is fully depreciated. All jokes aside, I have not had a car payment since 2006 and don’t plan to start anytime soon.
Right now (2020), we have a 2007 Chrysler Town and Country and 2000 Saturn SL. The Saturn so far is my all time favorite car. I inherited it from my In-Laws for relatively free and have put less than $2500 into it.
For those of you who like the reliability of a new car, I totally understand. However, even buying a car that is 2 – 5 years old will still offer that reliability you desire but save you a lot in depreciation.
For those of you who are handy, there is a YouTube video for just about any issue on your vehicle. Just last month, I was worried that my minivan was about to go. I watched some videos and was able to fix all the problems by myself for less than $200. Now, I have no doubts that my car will last awhile longer.
Be Your Own Bank
Remember how I just mentioned that I have not had a car payment in 14 years? I can do that because I am my own bank. The best thing about being your own bank is that it charges no interest with very little paperwork.
I can do this because I set aside money every month from my paycheck specifically for things that I will need to buy.
Cars are a great example. We put aside $300 – $400 a month for car repairs and replacement. Many of you have car payments that are over this amount so as soon as you pay it off, keep paying yourself the payment. Once the car dies, go buy another car with the cash you saved. If you save $300 a month and drive your car for an extra 3 years, you will have nearly $11,000 to purchase a car with.
Another benefit of being your own bank is you can get deals. Ask for a cash discount. Many places will give it to you because they avoid the cost of the credit card transaction. Let me give you two examples.
I once went to a used car lot. I mentioned that I would be paying cash and the lady told me to take $1000 off the cost of any car. I walked out with a $6500 car for $5500! Awesome. I know that I couldn’t negotiate that.
Another time, I needed my transmission rebuilt. The cost was around $2000. When the repair was done, I brought cash and asked for the cash discount with the cash in hand. The owner told me there wasn’t one so I put the cash away and pulled out my credit card.
Realizing that he was about to loose some profit, he quickly offered me $150 off.
Have Diversified Income with a Side gig or Passive Income
Rich people generally have five or more sources of income. Many of these don’t require any on going effort. This is called passive income.
Most people only have one source of income, their job. This is not good. If your industry has a hard time or suddenly collapsed, you might be left penniless.
I know that most engineers got into engineering because they wanted a secure and stable career. Take it one step further and diversify your income streams.
A side gig is where many people will go to earn a quick buck. Uber or delivering pizza are great examples of this. However, that is not where I want to direct you. The side gig requires your time and that is a precious commodity. A side gig while working full time will be exhausting.
Passive income is where you want to focus. Musicians are notorious for this. Think of big bands life AC/DC or U2. They wrote songs years ago spending hours perfecting and recording it. Once published, they get money every time the song is played on the radio or streamed. That is passive income that will go on long after the band breaks up.
For passive income, you will want to think of a product to sell. This may be a physical product or an informational product. In his book, the 4-Hour Work Week, Timothy Ferris describes how he outsourced all parts of his body building supplement business so that he works one morning a week and still receives a profit check.
This is the information age so selling information can be very profitable. You can use your knowledge in any area to create passive income. This website is Exhibit A. Websites like Income School can help you turn your expertise into dough by writing about it.
This is a tough one. In the fall of 2010, the Lord laid upon my heart that everything I knew was wrong. Well not everything, 2 + 2 still equals 4 and gravity still accelerates an object a 32.2 ft/sec^2.
But the things that I had learned about God, money, parenting, family, nutrition and what I should expect out of life were wrong. At the very least, it all needed to be reexamined.
This led me down a path of new discoveries and revelations that have been very rewarding. I tried to inquire why I thought or did certain things a certain way. Many things that I had believed, changed dramatically. Some things didn’t change because I could explain why I did them a that way.
The most noticeable change was how I received input from others. I now believed that the way I saw things may not be correct and I was willing to listen and be proved wrong.
Never Stop Learning
Never stop learning goes along with always having goals, mentioned in the previous article. This doesn’t have to be related your field of study. Lately, I’ve been wanting to paint a car so I’ve been studying how to do that.
With the advent of the internet and YouTube you can pretty much learn the basics of just about anything. Take advantage of these resources but don’t stop there. Do them yourself.
Right before I left my job, I took the opportunity to go on a photography retreat. This was three days of seminars and photography outings. Here, a bunch of photographers came together to brush up on their photography skills. Everyone learned something new; even the instructors! It was a wonderful opportunity to meet with people that were unsure of their abilities like me. (It was a good thing; I was shooting my first wedding two weeks later and this helped.)
A good way to never stop learning is to read.
When I was 26, I considered myself ‘functionally illiterate’. I could still read, but I had not read a book since college and did not care to. Reading books for school left me with a horrible taste in my mouth.
You see, I’m a slow reader. Even to this day, I can only read 20 to 30 pages at one sitting. In school, there were often times when I was assigned 50 or more pages to read per day. That is not a pace I can keep up with.
My functional illiteracy was discovered one day at work when I was reading one paragraph of a customer specification. After reading it the first time, I had no idea what it said. So I read it again. And again. And two more times.
Then yes, I finally understood what this paragraph was communicating but not until the fifth reading. Sadly, it wasn’t very technical or complex. I had just fallen into bad habits.
Since then, I made a goal to read 5 books that year and they needed to be around 200 pages. I’m now up to 8 books a year with several other monthly publications a year. (Remember, I read slow.)
It is a well documented fact that successful people read! A lot!
Almost all ‘financially successful’ people read at least 30 minutes a day. Most will finish at least a book a month. Bill Gates reads roughly 50 books a year and Warren Buffet reads 5 to 6 hours per day.
Of all the books you read, I recommend, Getting Things Done by David Allen. In our world that is ever changing, it is difficult to feel in control of everything that is going on. This book will give you the tools to do that.
Take Care of Yourself (Be Safe)
When I was younger, there was no fear of getting older or my mortality. At 41, I’m not afraid to die, but I do feel my body wearing out. There are certain things that I just don’t want to do anymore.
When it snowed this year, I stayed inside. I’ve had enough of being cold and wet. I watched the kids play outside through the window. While sitting next to the fire. It was great.
I also don’t like to climb ladders more than 10 feet. It’s not that I’m scared of falling, it’s that I now have a family to support and an injury from a fall would jeopardize that.
Have a Life Outside of Work
We live in a world where employers think that they have access to you whenever. There must be boundaries.
You may love what you do. But if you do anything too much, you will get burned out and eventually loathe it. A friend of mine shared with me that his wife was in labor for 17 hours. He quickly followed that up with, “I can’t imagine doing something I liked for 17 hours.”
And that is true. I can’t imagine doing one thing for more that 6 hours now, even if I like it.
Hobbies are a great escape from work. Most allow you to learn new skills and push yourself. Other hobbies are just relaxing and allow you to reflect on the day. Some hobbies are great because they give you a sense of accomplishment.
Nevertheless, hobbies are essential to your mental and emotional well being. Don’t neglect them by spending too much time at work.
Family is Equally as Important as Work
I only have only one calendar. Whether it is for work events or personal events, it goes on the same calendar. Why? Because both events weigh the same.
For men, our identity is rolled up in what we do. We elevate work to a high level. We do this in part because we feel that we are providing for our family, and we are. But they need you to be present as well.
In 2012, I traveled more than at any other part of my career. While it was exciting for me, it was a burden to my wife. She was 100% responsible for child care with little reprieve. Fortunately, this season of travel only lasted a short time, but it taught me that I needed to be fully present at home with them as well.
Spend One Night Away with Your Spouse at Least Once a Quarter
Sometime in 2011, my wife and I went on a date. Our first date in over 4 years since we starting having kids. We agreed to not talk about kids on the date. For the first 15 minutes, we seemingly had nothing to talk about.
That was a problem.
I can see how many married couples drift away from each other and realize it after the kids grow up and move out.
I did not want to follow in those foot steps that I could clearly see that I was on. We immediately changed our budget to include dates that would cover dinner, an event and babysitting each month.
I later talked with a retired friend and he recommended an overnight outing at least once a quarter. I liked the idea and we implemented it immediately. This is a good idea because there is a lot of rejuvenation can happen in 24 hours. We typically like to leave in the early afternoon and return after lunch the next day.
We found that this could be implemented quite easily and usually with little cost. When we planned vacations to visit family, we would ask them to watch the kids for one night. (Sometimes 2 to 5 nights). This generally saved us a ton of money in child care.
Also, we have a wonderful neighbor who will watch our kids. As a result, one of our most frequented hotels is in the same town!
Don’t Move Halfway Across the Country While Your Wife is 7 Months Pregnant!
This should be pretty self explanatory, but I’ll shed some details.
The fall of 2008 was a giant leap of faith in our lives. My wife was pregnant, the economy was headed into recession and I was looking for new employment. I was offered two great jobs, one in Chattanooga, TN and one in Durham, NC. After accepting the job in Durham, we then looked for a house.
The company was gracious and allowed us a trip to do some house hunting as well as providing professional moving services. Because of the pregnancy, we wanted to move right into a house instead of finding an apartment and scoping out the town.
We ended up finding two houses we liked and could not make a decision. Before we left to go back to Texas, we knew that we needed to place one house under contract. My wife was so emotional and stressed out over the whole situation because of pregnancy related hormones.
The morning of our flight, we walked into the realtor’s office ready to make a contract, but still undecided. The realtor eager to make the sale spouted off some specifications on each house. One detail was the property taxes.
One house was in the county and one in the city. The county house was roughly $1100 a year less in property tax. That’s nearly $100 a month. We bought the county house and still love it!
After settling into work, we had our healthy baby girl, Amber.
You Won’t Have as Much Time and Money as you Think
I remember when my wife was first starting out in her nursing career saying, “there’s so much money out there, I just want to get my hands on some.” She wasn’t being greedy, just stating a fact and she was thrilled with the opportunity to make a substantial income for the first time.
The sad truth is as your income grows, so do your expenses. Unless of course you purposely live on less than what you make. (Hint, hint: that should be you.)
Also as life progresses, demands for your time increase. You will split your time between work, spouse, kids, kids activities, church etc. Time is really only the true commodity you have.
Time can get you money. Most people will trade their time for money at a job. (This is where passive income comes in handy in getting back your time.) Money can somewhat be treated as a commodity, but in reality it is based on time.
For most of my career, I have had more money than time. As a result, we have almost paid off our house (down to the last $10,000) in 11 years. This year however, I have had more time than money. It is an interesting change of pace. But it has led to some really cool opportunities.
I have been able to have lunch out with my kids during the week, go on hikes, and play Lego with my son.
I also have plans to paint, as my son says, “the bumble bee” car. Yes, one of my dreams has been to paint a car. So I am going to paint my 2000 Saturn from maroon to yellow with black racing stripes. (Coolest Saturn Ever!) Why yellow? I heard it was the hardest color to paint a car. I wonder if I will start getting speeding tickets with a yellow car….
At the end of the day, you need to budget your time and money because you have a finite supply of both.
Don’t Forget Your Dreams
For a number of years, I sadly stopped dreaming. I had checked off all the personal and career goals I wanted to and starting coasting through life. I like roller coasters, but this wasn’t exciting. It was as if the lift hill was only 40 ft tall and the drop decent was only 5° as it slowly rolled back to the station.
At age 39, I was happily married with 3 kids, a great paying job and a successful name for myself as well as many other things. On paper, my life was great. My wife and I were struggling with feeling unfulfilled and one day she asked me if our best days where behind us. Ouch! But I felt the same way.
It was at this point that we sought some wisdom from others and came up with a plan for me to leave my job and start my own company. Looking back, it was terrifying and thrilling at the same time. I’m super glad that I did it.
Almost two years after that, I have pursued and accomplished several new dreams. So write your dreams down or make a bucket list.
Life Purposely – Get Started Today
As previously mentioned, you only have a finite amount of time and money. Life has a natural way of making your dreams vanish if you are not living purposely.
Don’t be like me, if you don’t have any dreams or goals, make some. Spend a weekend writing down things that you want to do or accomplish in your life. Download a bucket list from the interweb and let that be a guide to inspire your dreams. Be sure that your list is stuff that you actually want to do. Don’t live someone else’s dream.
The hardest and easiest part is to pick one of those items and do something to make it happen. For me, I started watching videos on how to paint a car in your garage. Take that first step and get your life in motion!