Don't tell me where your priorities are.

Show me where you spend your money and I'll tell you what they are.

-James W. Frick

Plan YOUR work! Work YOUR Plan!

Saturday, January 1, 2011

My Story – Part I

I am going to be honest; the last year has been rough financially (as well as mentally). My GF was seriously sick, we had to buy another vehicle (more on that later), and we made a lot of BAD financial decisions. We are basically starting over financially, in a deep hole.

I haven’t written for awhile because I have been struggling with the notion that financially I have made quite a few mistakes and felt like I had NO business giving financial advice to others. I knew all the right things to do and didn’t do them. Recently, I realized now is the perfect time to write a financial blog. I am going through the same financial things everyone else is. So I am going to tell my story, share my successes and failures, and pass along any helpful financial advice I come across during my own journey towards financial independence.

So, how did my GF and I get into this mess?

Like I said my GF has been pretty sick the past year (we chronicled our journey here) but really this is an excuse that we have been using. The whole time she was off work she was still receiving a pay check. During her illness insurance paid for the surgery and radiation (which was good because the radiation treatments were more than $70,000 in total, I believe), so we weren’t out much money there. Our problem was simply spending beyond our means. We took a vacation – much deserved but not responsible considering our situation, ate out a lot (she lost her sense of taste so a lot of money was spent trying to find food she could eat. This could have been handled much better but I figured she was suffering enough without living on protein shakes only), lots of new clothes, and the new vehicle. I felt a lot of pressure and guilt, I couldn’t say no to her because of what she was going through. Saying no is a huge issues for me personally and financially and is something through this journey that I MUST work on to be successful.

Not staying true to my financial beliefs ended in financial disaster. I’m a pleaser and this gets me into trouble a lot, I give whatever I have to those who need it and in many cases to people who simply want it. This never works out well for me because as the old saying goes “give a man a fish and he eats for a day, teach him to fish and he eats for a lifetime”, or something like that. I have realized my biggest problem is saying no and in order to reach my own financial independence I HAVE to say no to others if what they want stands in the way of my journey.

I, also, allow myself get caught up in the excitement of the purchase since I grew up not having or getting much and spend a lot of time trying to make up for what I didn’t have. These are very bad traits to have when buying something as life changing a vehicle. I say life changing because before this purchase I didn’t have a vehicle, no I had no car payments nor insurance payments to be responsible for. We needed a new vehicle and spent a lot of time trying to figure out what type of vehicle we wanted – a great thing to do. But then we went out to look at the vehicles in person and fell in love with a 2003 Range Rover. Crazy! This is where we got real stupid…we ended up buying a vehicle that we were totally unprepared for, but really wanted. The insurance, gas, and maintenance are way more than we bargained for. Basically we didn’t think the purchase through enough because we got caught up in the vehicle and the sales men talked a real good game. We both loved our vehicle despite it all for whatever demented reason.

One major financial issue we faced was our different philosophies. She’s a spender, I’m a saver. I never realized how much money can affect a relationship until now. It has been a HUGE struggle at times to get on the same page, but I think we are finally there. It took a lot of tough conversations (read arguments) and setting goals for the future, together for us to get where we are actually facing our bad decisions and to be ready to move forward in a positive direction. Those tough conversations lead to developing a plan:

1. We developed a budget. We budgeted for monthly expenses (rent, cable, phone, gas, student loans, etc.) for debt repayment, savings (house, vacations, wedding), and for fun money (we signed up for online coupons through Groupon and Living Social to help our fun money go even further and try to find cheap and free things to do).

2. We have separated our money to help better learn to manage finances. Before separating our finances, we had a joint account where all the money went and all the bills were paid from. We both had separate accounts that rarely had money because of our poor spending habits. A lot of arguments revolved around the lack of individual money but once we sat down and really looked at the spending we never had individual money because we spent it before it even got there. In the beginning of our relationship I was given total control of the finances; I hated it and she regretted it. Now, my pay check goes to my account and hers to her account. We sit down and calculate how much needs to go to joint bills and that amount goes to the joint account. I am responsible for paying certain joint bills, she for others. Personal bills we are each responsible for our own. This allows her to learn to manager her money and for me to learn to give up control. So far, it seems to be working.

3. We have downgraded our cable and internet (cut the home phone), downgraded our cell phone plans, we are downsizing and decluttering our lives and trying to cook more.

4. We developed a plan to get out of debt and to save for the future. It won’t be easy but if we work together and keep our eye on the things that REALLY matter to us, we will be completely financially independent in a matter of years. (Years seem so long, but let’s face it getting out of debt takes time.)

We keep each other on track and motivated when things get tough and I will do the same for my Life’s Freefall readers. Don’t be scarred to admit you aren’t financially where you want to be or to admit you have made mistakes along the way. We all do it. Start changing your behaviors and we will all be financially independent in no time!

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