You’re about to hear the bad and the ugly, because up until now you’ve mostly only heard the good.
You see, I’ve been blogging for four and a half years now and have rarely shared with you the financial catastrophes that have fallen on our household. You’ve witnessed us paying off our $25,000 in debt, and followed along as our annual savings from take-home pay increased year to year from 29.8%, to 38%, and then 40%. Recently I was able to share with you how we are taking on some lifestyle design by me quitting my day job to write and blog full-time. These were tremendous and purposeful acts on our part that make us feel unbelievably blessed.
However, I’ve noticed something: the comments and emails coming through from many of you make me think that you are feeling like you could not possibly reap the same results as us.
I feel as though it is partly my fault that you’ve come to this conclusion, as I am an optimist at heart. I don’t like to discuss all of the sub-par and sucky financial situations we’ve had to conquer over the years. Sure, I’ve given glimpses here and there, but not really enough to drive home the point that we have met these financial goals despite what befalls the normal person. I would rather stomp my foot once or twice about it, deal with the situation, and then move on to the part where we count our blessings.
But by doing so—by being myself—I now realize that it does not paint the entire picture. And because you have not had a glimpse into our financial catastrophes, you think that you could never achieve what we have.
I’m here to prove you wrong.
This is not a woe-is-me article, and I am not writing this for sympathy. Rather I am writing this to share with you all of the crappy things that have happened to us so that you can see we are normal, just like you, and that you, too, can achieve what we have.
I wrote about my unemployment “vacation” of 2008, but failed to mention that this was the second time I had been laid off in three years. In 2006, just one year after I began my new job as an International Sales and Marketing Specialist in a start-up company, I found myself laid-off. The president of the company wrote a letter detailing that it was through no fault of my own and that I came highly recommended, but that, coupled with a two-week severance, barely took the sting off. Three months later, after the hunt to find movers was over, I found myself moving to Florida and taking on my second job in market research and marketing. Another two years later and Paul got a phone call while visiting me in Florida telling him that he was being laid off. Because of the extra time on his hands he extended his trip. Coincidentally, within one week I came home with my own box and eyes brimming with tears. We decided to lift our spirits a bit and take advantage of the fact that we were both unemployed and in Florida at the same time by booking an overnight trip to Disneyworld (using hotel points from my previous job).
Positive Flip: You are experiencing the fruits of my optimism right now. Instead of languishing on the couch (well, besides the week after getting back from Disney World), I created Frugal Confessions. While still not sure of where I would source income, I spent $150 to have a head shot taken because I had a great idea coupled with a whole lot of faith. Did I mention that Paul and I being laid off within two weeks of one another was perfect timing? It meant that we could take our relationship to the next level by moving to the same city for the first time. And the rest, is history.
The “I’d-Like-to-get-Our-Home-Inspector-on-the-Phone” Home Repairs
After getting engaged in 2009 we decided that we wanted to purchase a home together. At the same time, we also worked on paying off our $25,000 in debts and paid cash for our wedding/honeymoon. Needless to say, it was a busy financial time for us. We knew our home was the one for us as soon as we laid eyes on it, and have continued loving it ever since. However, we’ve learned that you should take heed when people say you will spend 1-3% of the home’s cost each year in repairs and maintenance. And if you have a semi-older home like ours (1975), then bank on even more. Since 2009 we have had to replace the downstairs Central A/C and heater (originally a staggering $7,800, but we had a $1,000 credit from the sellers, a $1,500 tax credit, and $1,100 from our home warranty policy purchased by the previous owners to help offset the cost), foundation repair due to the terrible drought we suffered in 2012 ($3,500), plumbing repairs in the amount of $1,200 due to shoddy plumbing work, chimney cap installation ($450), and dishwasher/washer/dryer replacement after breakdown of each appliance ($1,300). Whew.
And there is more work to come: currently our master shower has been unusable due to having no shower pan and the tile peeling up, one of the burners on our stovetop started sparking, the upstairs Central A/C and heating is not working right, and we just found out that our water heater installation was not done to code. Actually, that’s not even the entire list.
Positive Flip: Purchasing the home during the $8,000 first-time homebuyer tax credit really helped with each of our goals at the time. We put $1,000 of this in our emergency fund (thank goodness, as you’ll see why below), and $7,000 towards debt repayments. We also were able to take advantage of a $1,500 tax credit for energy efficient central A/C units. Did I mention that we absolutely love our home?
They Don’t Call them Beaters for Nothin’
I love beater cars that we can pay cash for, and will most likely drive one for the rest of my life. Most of the time this has worked out beautifully. But it does have its downsides. At some point in the life of each of my beater cars I have been faced with a repair that would cost more than what it is worth (or sometimes more than I actually paid for it). This very thing happened just one month after we plopped down most of our savings towards our first home. My beloved Chevy cavalier, at 222,835+ miles, needed a $1500 repair. I only ever paid $1300 cash for it six years earlier, and had hardly any work done to it over its life. Overall we had a great track record of beater cars, but the next car we chose proved to test that. We purchased a 1999 Nissan for $3500…and one and a half years later it was deemed un-drivable without approximately $3,500 in repairs.
Positive Flip: After our last beater car ended rather abruptly, we learned to have a third-party mechanic check out any used car purchase in the future. To give ourselves plenty of time to look for a new beater car, we commuted together to work for two months. It was nice to sneak in some extra quality time (and nap time)! To replace that car we purchased a 2003 Chevy Cavalier after paying a mechanic $100 to inspect it. Thus far, it’s been great. Also, we were able to donate our Nissan to Purple Heart for a $1250 tax deduction. Since I do something super-nerdy like track car expenses over the years and divide this by the number of months each car lasts, I know that we’ve saved lots of money by going the beater car route. Now I understand the need to continue setting aside money each month into a car fund should our beater decide to die.
Let our lessons learned help you to set aside more savings, even as the sh*t hits the fan:
- Set a Target for Savings: After reading all of this you may think that we’ve stopped trying to target a specific amount of savings each year. It’s not true. Though we have a healthy respect for how life can pull the rug out from under us at the most inopportune times, we still set a target savings and find that it helps us to keep working and progressing forward instead of becoming distraught.
- Maintain an Emergency Fund: I cannot emphasize enough the importance of having an emergency fund, or rather, an “oh sh*t” fund. Without one, we would have been asking others for help or charging up our credit cards after many of these surprises popped up.
- Save When Times are Good: While it is important to live your life to its fullest, you really need to save as much money as possible during the good times. This will buffer your accounts and help when the bad times come.
Throughout all of these situations that snuck up on us, we were still able to sock away that 29.8%, 38%, and 40% each year into long-term savings (meaning savings we did not tap to pay for any of these items). You may brush this off as us having an obscenely large income. While I would not like to share our salary, I can tell you that we do not have a large income. Aside from that, this argument doesn’t work as most people in America spend right up to the penny, and sometimes more, than their income no matter if they make $20,000 a year or $100,000+. This was purposeful saving and frugality on our part, despite the many fireballs life has thrown our way.
What are some of the financial headaches you’ve dealt with over the last several years? How did this impact your savings goals/debt repayment goals for the year?