It’s no secret that personal finances is a topic I’m passionate about. I’ve never really shared on my blog why it’s so important to me, but I’m changing that today. I’m admittedly nervous and embarrassed to share some very personal thoughts and experiences related to my family’s finances. This is a very painful story to share, but I hope that it helps someone out there.
I grew up poor; we received free school lunches and food stamps. When money was especially tight, we ate Taco Bell on Sunday for their 69 cent tacos. Thankfully, I had received a full-ride to college (mostly due to financial aid/need and some academic scholarships) so that was a relief (I was the first person in my family to attend and graduate college!) I worked at the university dining hall for spending cash, mostly to save for a car.
Then, a particular family member asked me– an 18 year old college freshman– for a loan. (I’m purposely trying to be vague to protect her identity.) She was going through a tough time and, and due to some circumstances, realized she had more expenses than income. I loaned her $1,000 and expected to get it back “soon.”
Weeks turned into months which turned into years, and I was never paid back. In fact, I kept “loaning” her more. I was incredibly depressed and upset over this situation, that both of our lives were spiraling downwards due to her financial mistakes and my enabling of her mistakes. By the time all was said and done, I had “loaned” her close to $23,000 that I myself didn’t have— I borrowed this money from a personal loan, credit cards, student loans, and giving her the money I had saved for a car (which required me to get a car loan from a “buy here, pay here” lot.)
I knew I didn’t want to live like this forever. I closed the “National Bank of Bailey” and stuck firm to my word, knowing I would never be repaid. I worked a second job in addition to my full-time job and debt snowballed like crazy, paying off $17,000 of debt before my wedding– leaving just $6,000 of student loan debt. Thankfully, I was blessed to marry a man who shares the same views on personal finances that I do– he had grown up the same way that I did! Although we took out a small $10,000 loan to pay for our wedding (since our families could not afford to help), we quickly paid off a good chunk of it. All that remains is less than $2,000 from our wedding and my $6,000 student loans. We’re well on the track to having those paid off within the next year.
Today, my husband and I are a real-life “rags to riches” story. Okay, so maybe riches is an exaggeration, but for two people who grew up dirt-poor, we’re considered “financially healthy.”
-We spend less than our income
-We pay all of our bills on time and in full
-We have about 2 months of income in our savings account
-We are investing 10% into retirement
-We have appropriate health/life/automobile/renter’s insurance
-We have good credit scores
-We plan ahead for expenses
-We’re paying off debt with “gazelle intensity” as Dave Ramsey says.
Soon, we will be debt free, have our fully funded emergency fund (6-9 months of income) and will invest even more into retirement. Financial health, to me, is not “being rich”– it is having security in my finances: knowing that if “the worst” were to happen, my family would be okay and not worrying about how to pay the bills or put food on the table.
What does financial health mean to you?