Before Maya was born, I started reading a lot about personal finance. Three years before that, I read a lot about debt. In the three plus years after Maya, I’ve developed a complicated relationship with personal finance, debt, investment, and financial literacy in general. For the most part, the basics of personal finance are simple: spend less than you earn, cut unnecessary expenses, save whatever you can, pick an appropriate investment strategy and stick with it. In fact, there are dozens of free websites where all that information is available. Most of that information doesn’t change very often and so a decent public library would have some of the better books on their shelves and after reading a couple you can get the idea. Some areas are points of conflict, like unnecessary expenses. Too often, we think someone else’s spending is foolish and should be cut, even if we have equally silly spending. We usually accept our own rationalizations while dismissing others. This isn’t anything new and basically everyone acknowledges this is trap most of us falls into.
Like many people in my generation (and the ones after me), I entered my work years with educational and credit card debt. For nearly 15 years, I struggled with that debt. The year after I met Becky, I developed a plan to get out of it. By then, my pay had grown to a tipping point where I could, if I so desired, could measurably pay down debt by cutting or at least temporarily suspending some expenses as well as suspend saving. Of course, I had passed 35 at that point, had started a serious relationship, and was seriously looking at settling down. In other words, I was in a place in my life to be ready to target my debt. I developed a three-year plan based upon my potential earnings and my expenditures. My plan required giving up a few things that really were luxuries, to get imaginative about how to keep some of the things I enjoyed doing and meant the most to me, as well as planning for if something unexpected happened, like my computer dying—which it did right after I implemented my plan. In the end, I did dig out right in time for Maya to be born. In fact, my last student loan payment was about a week prior to my last student loan payment, ending the plan.
So what does this have to do with reading personal finance? The truth is my plan was built without reading most of the big names out there—your Suzy Orman’s or Dave Ramsey’s or David Bach’s or Robert Kiyosaki’s. What I did was calculate how much I owed, how much the interest would build over the next few years, and what would be the best way to pay down that debt that had the high possible rate of success, even if that way wasn’t mathematically the best. In fact, my plan wasn’t mathematically optimized. I knew I needed some early and easy goals to get me started. I had to plant a sufficient carrot at the end (Becky and actually building a retirement account was the goal) and a few easy hurdles to build confidence. I made a spreadsheet that I was required to input each payment in as I made it, giving me a scorecard to look at. All this was designed to help me focus and work. But the story doesn’t end there, because while I could say I got myself out of debt, the reality is that I had help and some blessings or luck (depending on how you look at it) along the way.
Becky didn’t like my debt, but she was committed to the plan and supportive of it. My parents were supportive. My In-laws were also supportive, and contributed to the cause (that is another story about wedding budgets). I started working at my job in the early 2000’s, had gotten promoted, and now had passed a threshold where my income could attack my debt more aggressively. In fact, the first few years I was in Boston, I didn’t have the income to attack my debt, only survive and pay minimal amounts towards it. I lived with roommates. I ate a lot of cheap crap. I lived in fear of utility and rent inflation, of unexpected lease-breaking roommates. But here’s where the blessings/luck came in: my landlord didn’t raise rent in the apartment I lived in for seven years and let us slide for a couple of months when we were left roommate short and were looking; I kept my job through the Great Recession; our wedding came in at about 50% of our budget; and again, Becky. So while I had to make own plan, tweak my own budget, and discipline myself to the plan and stick with it, I had a fair amount of factors moving in my favor. And that’s the point. Five years earlier, some of these factors didn’t exist or worked against me—no Becky, my job didn’t pay enough, and I was sufficiently unhappy with a number of things that I thought about moving. Opportunity isn’t a stationary thing. Often it appears and disappears and seeing it when it happens is the majority of the battle.
When I did start reading personal finance books, I liked a lot of what I was reading. But I was in the final stretch of the plan. I had no credit card debt at that point and I was beginning to push small amounts of money into my retirement account. But the reality I perceived was that what worked for me might not work for someone else. The universal rule of “one-size-fits-all-fits-no-one-well” definitely applied. Finding what works for you, that will generate the best success rate for you, and that you, quite frankly, can palate is the most important thing in debt management, dieting, or exercise. Most personal finance plans are easily summed up in a few paragraphs, and most of that can be gleaned off the Internet. I did a lot of my gleaning at the public library. But finding the right mix amid the overload of information, both good and bad, is where the messiness comes in.
Truth be told, my struggle with debt was a good thing. I learned a lot about not just personal finance, but about banking, economics, the function and place of debt/leverage, and investment theory. I learned about what I can do and what I shouldn’t do. It was a real education for me. Sure, like a lot of people, there were moments of shaking my fist at faceless, nameless people and corporations. Sure, there are a lot of things that are unfair. Definitely we need strong and intelligent rules in place and it feels like there are too many things conspiring against the “everyman.” I believe that for every personal finance hack or fraud, there is also someone else out there toiling against them.
Long and short of my story, I was lucky at the right time and had the support of people around me when I needed it. Beyond that, there were websites and books that I read that I got a lot out of. The Simple Dollar and Bankrate.com were two very valuable resources. I like the blogs of J.D. Roth. I enjoyed reading books by Vanguard founder, John Bogle, and more recently, I enjoyed Pound Foolish by Helaine Olen. Ms. Olen’s book appealed to me in the same way Me, Chi, and Bruce Lee appealed to me. In both books, they show you a lot of the BS that hides beneath the surface. Also, I found Jim Cramer’s book Mad Money far more helpful than his TV show. I don’t have cable anymore, which is a good thing. PBS has far better for programming about finance and cooking than a lot of the stuff I used to see when I did have cable, and yes, we do support our local PBS station.
So what’s the point of this long-winded blog entry? Personal finance is a real mine field, and if you see someone struggling, genuinely trying to get out, and still having a hard time, the truth is there are probably more factors at work than just what you can see. You don’t have to give and may not want to give them money or advice, but give them a break. Encouragement and support sometimes (and only sometimes) can help as much as cash. At least I found it to be so.