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Tuesday, September 8, 2009

What We Did that Made the Biggest Difference to our Finances

There's a rumbling through the media as we are--approximately--at the one-year anniversary of the financial meltdown. No, I'm not planning to listen to re-broadcasts of the news from last year. No, I'm not going to read the various post-mortems.

All I can say is OMMMMMMMMMM.

Doesn't every single self-help thing out there--whether for finances, relationships, addiction, whatever--exhort focusing on the things you can control?

So my anniversary will be marked by a list of the things we did that made the biggest difference to our financial lives.

1. We didn't avail ourselves of student loans in grad school. We lived like poor students.
2. When we finally got jobs, we didn't get a car right away. Mr. FS was sold a used car by a colleague for $200.00! We used it for several years. Then, my parents passed on an old Volvo, which we also used for several years. We didn't have 2 cars for some time.
3. We bought a house that was a bit too expensive for us. Interest rates were high at the time (10%!). So, perhaps counter-intuitively, we began paying extra on the mortgage, because we couldn't stand it.
4. Breastfeeding and cloth diapers. The latter, surprisingly, had a spiritual dimension.
5. Public schools.
6. Sheer luck. Both children were National Merit finalists and we sought out colleges that wanted these kids. Children DID participate in this choice.


What were your financial choices that had large impacts?


FB @ said...

OMMMMMMM indeed!

You've made all the right choices and I only wish I had known what I do now when I was in high school *sigh* :)

The good news is that my laziness in getting a driver's license helped, because by then, I knew to buy a second hand car for cheap, paid for in cash so that I wouldn't pay a dime to a car lease payment, EVER.

Duchesse said...

1. Got master's degree, which at the time led to an immediate good job.
2. Did not own car till had children, drive each at least 14 years; family has one car, four bikes.
3. One credit card paid in full every month.
4. Mortgage paid within 6 yrs; parents gave some cash gifts which we used toward this.
5. No cottage, boat; alternate modest vacations with bigger trips.
6. Incorporated our small business which in our country gives big tax advantage.
7. Read Frugal's blog to stay focused, inspired and amused.

sallymandy said...

This is a great question, Frugal.

When I got my first "real" job out of graduate school, a trusted older friend advised me not to throw caution to the wind and start spending even though I'd gotten a big raise from being a student.

He advised me to make my money decisions as carefully as I had when I was scraping by. Outstanding advice.

The other key has been not having credit cards--or if I do carry one, pay it off every month. Echoing Duchesse.

Shelley said...

1. Bought my university education with earned cash, semester by semester.
2. Got master's degree which led to good paying job.
3. Used credit cards cautiously to establish credit rating, then put them away.
4. Got 15 year mortgage and paid it off as soon as I could (10 years).

Duchesse said...

Wow- sallymandy's friend gave her such good advice. It's easy to be dazzled by your first paycheques.

Another major factor for me was having parents who taught me to buy the best home furnishings you could afford and keep it rather than continually redecorating.

Funny about Money said...

Interesting! I wuz just contemplating a post more or less along the same lines.

It's interesting that you and Mr. FS evidently had a bent for frugality and common sense from the outset. So many PF bloggers seem to be drawn to writing about the subject because of profligacy in their younger years.

How did the two of you come to understand, as young people, that you needed to manage money intelligently and to defer purchases until you could truly afford them (and not borrow to "afford" them)? Was it only because you were in starving student mode? Or was there something in your background that showed you the way?

Frugal Scholar said...

@FB--Mr FS and I didn't get jobs till ages 30 and 32. We knew at the time that we had lost our 20s. You are in much better shape than we were.

@Duchesse--We made similar choices. Interesting, because we seem to be very different in many ways....Glad to provide amusement. Thanks.

@sallymandy--You were lucky to have such a great mentor!

@Shelley--Note how many here paid off mortgage early--going against common financial wisdom.

Frugal Scholar said...

@Duchesse--Excellent point about the furniture. i still have all my good choices as well as my bad ones. Moral--do it right the first time.

@Funny--I'd love to read your thoughts on this. I think I had frugal tendencies, which became pathological in the terror of the bad job market. And my boyfriend, now husband, went along...he's got the tendencies too.