This guest post from L. Marie Joseph, the Money Monk, is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes. Marie is the author of the new book, First Generation White Collar.
My story is like most others: Girl graduates from college, Girl goes on interview, Girl gets job, Girl uses her paycheck to indulge herself. If I couldn’t afford something, I’d just charge it. Before long, I was carrying student loans, credit-card debt, and a personal loan.
Eventually, I met my husband-to-be, and decided I needed to be a grown-up. We went from “which restaurant are we eating at tonight?” to “we need to improve our credit report so we can qualify for a mortgage”.
Maybe it’s because he’s from the Caribbean, but my husband’s appetite for credit isn’t like mine. I was astonished when we pulled his credit report: It was one page long! His report had four creditors. Mine was six pages long. I had jumped into credit three months after my 18th birthday — and I didn’t start saving until I was 29, and that was only because we were talking about buying a house.
I had a lot of work to do to clean up my credit. My husband did not. In fact, although my husband made less money than I did, his cash flow was far greater. Why? Because he had no debt. I made more money, but I also paid out a ton in interest. This experience made me realize that it’s not how much you make that matters, but how much you keep. I felt embarrassed because although I was making $50,000 a year, I had no savings. My husband made less, had savings, and was helping me to pay off my debts.
I knew I needed to change.
I started reading books about personal finance, and started reading personal finance blogs. About a year later, I started my own blog. Personal finance became my passion.
- I started saving 10% of my income after reading The Automatic Millionaire by David Bach.
- I also started setting aside 10% of my income to my 401(k). I had mediocre results. No bad, but not the best.
- I started watching Suze Orman and realized that more people my age had more money in their 401(k) than I did. Hmph! I needed to bump up my percentages.
I started saving 15% toward my 401(k). I felt better. I felt like a real adult. I also started seeing above-average results. The money was compounding and growing faster. My ego was also growing.
Today, my husband and I save 30% of our income
- We allocate 15% to retirement savings.
- We put 5% into an emergency fund.
- We set aside another 10% for giving or future purchases (depending on our goals at the moment).
It took time to get to this level of saving. In fact, it took us about four years to be able to save 30% of our income. And it took sacrifices. But I have no regrets. If one of us were laid off, we’d be okay. We have a nice savings account. We can survive.
I now believe that savings is the most crucial part of personal finance. It can be a life jacket when we’re drowning in financial crises or economic recessions. Savings gives us freedom. For example, I’m able to take my daughter to see her grandmother in New Orleans, or to send for my mother whenever she needs to get away. Without savings, I couldn’t do these things. Savings buys you options.
Whenever I find myself shopping or starting to splurge, I repeat this African proverb to myself: “Save your money, and one day it will save you.”
I’m glad I made the decision to save. I’m the first in my family to do so, and I didn’t have people around to show me how to do it. That’s why I wrote my book, First Generation White Collar: for people who are the first in their family to graduate from college, for people who need a new direction in managing their new-found income. Maybe they too can find the freedom that comes from saving.
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Great job Moneymonk! I know we’re told not to compare ourselves with others, but sometimes, as in your case, those comparisons can be highly motivating to get us to pick up our pace a bit.
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Thanks for the post L. Marie! I would love to get a copy of your book, since my experience is very similar.
My wife and I recently graduated from college and realized that we need to become adults as well. It’s time to pay off our debts and live without worry. We’re still in the process, but we plan on paying off all our debts by April 2011. I can taste it!
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Great job. My wife and I are just starting to turn the corner on dealing with debt, but are going to get a lot more aggressive in 2011- we are determined to buy a house when our lease expires in July 2012.
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Great post!
My parents rarely saved money. Luckily, as I became an adult I learned to become a saver. My sister… not so lucky.
It’s always so tough to go one way when your family or friends are going another way.
I liked the African proverb “Save your money, and one day it will save you.” I’ve never heard that before.
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Congratulations on doing such a great job! I appreciate the subject as that is the same position I found myself in. First to go to college and white collar. I took a little longer to come to the realization that I was working too hard and making too much money to be broke! I was 40. Now 11 years later, after doing much reading and hard work on the subject, I am debt free (including the house) and have a nice savings cushion and well on my way to a decent retirement. Most valuable is the peace of mind in the tough business environment to know if my job is eliminated, I can survive quite well and will have options available.
It’s a unique situation to learn these lessons when there are no role models in your family. It also allows you to help others in your family with their emergencies. I have been able to stand as the emergency fund for my elderly parents.
I have been a big Suze Orman fan and now I also really appreciate Dave Ramsey. I just wish I had know about Dave Ramsey earlier when I was following most of his plan before I knew about him. It would have been a lot of encouragement.
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Does your book have more information on the challenges of being First Generation White collar? Or is it focused on basic financial literacy?
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I was able to pull some useful mantras from the bold print. Thanks for sharing
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Great job turning it around and started saving. It’s great to save 15%, but even better if you max out 401k. You still have something to work toward. (I’m assuming you are not maxing out because when people max out they don’t say 15%.)
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Can anyone tell me some of the numbers from Suze Orman about how much is in the average person’s retirement account at various ages? I’ve been saving a good percentage of my income, but my income has been pretty low (I got a PhD right after college and have been saving from my graduate student stipend). I’d like to know if my savings are on track.
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The Preface of my book talks about the challenges First Generation White Collars face. The book is mainly about Debt, Savings, Investing and Couples & Money.
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“Saving is the most important part of personal finance.”
Do the closing parenthesis go before the period or after?
Anyway, I have read tons of stuff on personal finance and I don’t know if I’ve ever read the above statement. I mean it. Sometimes just a few simple words put together puts a big smile on my face. Thanks. I love those “aha” moments.
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Well done Money Monk. You’ve at least learned from your mistakes along the way and are well on the road to financial independence. Speaking from experience as well, I know how difficult it is to start saving, but once one starts, it tends to snowball.
Keep it up
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This was a great post! I love the African proverb; I can add that one to the list of others I love. I (and my fiance) can relate to your story. Now that we both have good jobs, we have an aggressive savings and debt pay-down plan, while still saving for a nice but modest wedding. Best wishes to you, and everyone else paying off debt and saving for the future!
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The title is about being a white-collar child from a blue-collar family, which would be interesting and something new. Unfortunately the article is about “debt bad, savings good”, which is fine and all, but I’ve heard it a million times by now, and it has pretty much zero relation to its title.
“It’s great to save 15%, but even better if you max out 401k.”
Only if you make less than $110,000/year.
J.D. – what is the difference between a “guest post” and a “reader story”? I always sort of figured that in general a “guest post” was written by another professional or serious amateur writer, whereas a “reader story” was written by someone who isn’t primarily a blogger/author by trade.
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Great life story…..Mine is story that matches your husband, with me and my wife having a credit history that had 0 pages in it.
Today, we do not even care if we have a 500 credit rating or 800, since we do not need it (except for lowing our insurance rates).
We use 10-15 credit cards that we rotate (except for 1-2) to get net-benefits, have 4-5 bank accounts for rotating CDs/MMkts, and have enough to retire. But, we did it all with sacrifices, and a frugal life-style.
We do not live frugally, but use things to end of life and are teaching our kids that ‘end of life’ of product as designed by the engineer is far beyond what todays’ generation anticipates and uses.
Your book seems to be extremely interesting, and we teach what you have written (above) to our close friends who have kids.
Too many in the US are in the borrow generation, and will take years to come out of it, assuming they try. We now buy buildings with our savings and rent it to people who are getting moved out of their homes due to the upside-down mortgage situation. We give them a break, but more importantly ‘personally’ teach them a lesson on savings (as our tenants).
GRS, please keep these kinds of ‘learning messages’ coming since it is with such education that you are going to change one family at a time, and US is going to get back the Semi-Super-Power status, instead of handing it to India or China in 10-30 years (at the rate we are going).
Kenny
ps: We are the Super-Power, but losing our status, so lets educate anyone and everyone around us, and as we did like the Joneses, we can do it again, towards a frugal society like Eastern Europe and Asia.
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@Tyler K (#14)
You’re right about how I differentiate guest posts from reader stories. Things get fuzzy, though, when a guest is both a reader and a blogger. They get further fuzzied when I accidentally archive all of my reader stories.
That’s one of the reasons I’ve asked for more submissions. I recognize that the reader stories I’ve been publishing are more like guest posts!
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Hi Moneymonk. Our stories are so similar. I started developing a passion for personal finance this year after trying to get out of debt. I would also like to suggest NetworthIq.com. It helps you keep track of your net worth and you can watch it grow over time. You can also compare your networth anonymously.
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I think a lot of people coming out of college fall into the same trip you did. You figure you worked hard for four years, you finally have some money coming in, and now you deserve that new wardrobe, car, etc! People figure they have a steady income, so it should be no problem to pay it all off, but it doesn’t always work that way (as you know), especially if you have student loan debt.
So glad things turned around for you- great story!
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This article is so important on many levels. First you did a great job sharing your money troubles. But more than that, you provided real solutions for future financial success. Saving is the cornerstone of financial success. And next, investing those savings for growth will keep you moving forward.
Thanks for sharing, you will certainly be an inspiration to others.
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I’m a “first to graduate college” myself, and learning how to save was something I had to figure out on my own as well. What’s different for me is that my (8th grade educated) mother would preach savings and my (high school and some college) dad would argue that they didn’t have money to save.
(Decades later I learned that my mother had saved money on the sly, stashing cash in her underwear drawer.)
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Sounds like my story except the folks were savers and I felt like I had to have everything NOW. Thankfully, I finally woke up in my late 20′s and now at 31 I have no debt and the savings account is growing nicely. The greatest advice I could give those just coming out of college is that you don’t have to have everything now. Our parents worked hard for 20 or 30 years to get where they are so why should we expect to already be at that point?
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I agree with Tyler, the title of this post is a completely different story than what the post actually is. A post about being the first in your family to go to college and get a white collar job is very interesting. There’s a lot of hurdles there that I expected to see addressed here.
Paying off your mortgage, retirement planning, aggressive saving. Those are all things a first-generation college graduate and white collar employee would probably struggle with, because their parents hadn’t had the same choices and didn’t teach the child about it.
Another is the (misplaced) guilt that comes with being a highly successful child in a blue collar family. Is it your responsibility to bail out your family when they’re in financial trouble? Or to help them meet the same standard of living that you can? What if they’re not just unlucky, but irresponsible?
These are all interesting topics, which the title told me would be in this post. The actual post has nothing to do with whether the author is first generation white collar. (And, without having read it but only from Moneymonk’s comment, it seems like a book doesn’t have anything to do with this title either.)
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This was a delightful read, but I’m afraid I agree with the sentiments expressed by Tyler (Poster #14) and Samantha (Poster #21). The title was very intriguing and yet the body of the post while cleverly worded presented redundant information. I would to have loved to see a post that delved into how to address family members / friends who feel entitled to expect lavish gifts, routine bail outs, and for the “successful white collar” relative/friend to should a disproportionate portion of the burden of expenses like funeral expenses, birthday parties, etc. Maybe Money Monk can revisit this topic if she’s so inclined.
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Hi!
I really enjoyed your simple and insightful story. I too am a first generation college graduate but I wouldn’t necessary say I was white collar, as I am a peace corps volunteer. I agree with you when you say that
‘It’s not how much you make that matters, but how much you keep.”
I have worked as a volunteer for the past 4 years (americorps & peace corps) and despite earning what others would consider a minimal living stipend, I find myself with a larger net worth then many other twenty-something year olds.
I live a very rich and abundant life though I think that is because I have learned to entertain myself with reading, writing, walking/running and holding deep conversations with fellow human beings, which are all free and ever so full-filling.
Much appreciation,
judy
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I have a hard time with the implication that blue-collar folks don’t know how to handle money (or know how to raise their kids to be good with money). In my experience, it is usually the white-collar folks, and their offspring, who have the hardest time.
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I was on networthiq a few years back and later stopped updating b/c of other obligations with work and my business.
Comments #14, #21 and #22
This is a guest post of how I turned around my financial situation
GRS just gave a short bio of my background. I’m an author and blogger. This guest post is more personal than the book.
I’m an ordinary person that decided to stop living paycheck to paycheck. The book is self published. I just wanted to educate others on the steps that I took to get ahead with money. I’m no Suze Orman who is a Certified Financial Planner and have over 20 working in the financial industry.
I just wanted to share my story from one reader to another
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Save yor money,an one day it will save you,I will never forget that,thx,Great post.
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I enjoyed your story and sent on the “Save your money and one day it will save you.”
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Marie, I understand what #14 and #21 are saying. However, I think there is a huge market for your book in the Black community. Since I live in Atlanta, I know many, many blacks who are the first generation to go to college or are waiting for a first generation to college.
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@26
Much like the disconnect between the post title and the post contents, this reply has absolutely nothing to do with my comment.
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Tyler and Samantha, much of the disconnect between title and content is my fault. I, too, noticed the disconnect, but I failed to do anything about it. Normally, I edit titles just like I edit posts. (In fact, I often just make up my own titles for staff and guest writer posts!) I didn’t do that here. I don’t have any reason for not changing it except that it slipped my mind. I had originally asked MoneyMonk to write about her saving experience last summer. That’s what the post is about, obviously, but I just spaced the whole title thing. I apologize.
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Good story. Esp when everyone is out spending like crazy. People are so rude. Leaving things all over store shelves upside down and backwards, etc.
I wish more people posted their pure thanks for this article. Why does everyone have to be critical or leave no comment?!
I guess it’s the same type of thing where someone eating out hates their waiter and says nothing to them but trashes them to their friends. LOL
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@Amanda (#31): Bad things happen to your food when you tell the waiter you’re less than impressed with the service.
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I’m going to read your book! I already have an iPad so please understand my intentions are to not question your iPad giving but I was under the impression that sweepstakes that require “purchase necessary” are illegal?
I got tired of looking through the FTC rule books but I found this article: http://mikeschinkel.com/blog/nopurchaserequireditsthelaw/
Please understand I think it is a good promotion and I will end up with the book because I have become obsessed with finance books and I enjoy reading your blog as well! However, I did wonder if anyone had clarification on the sweepstakes laws. I am sure that you have a lawyer working with you or your publisher does so I am sorry for hijacking this comment!
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Yes, my lawyer is working with me. Thanks for the heads up and also thanks for purchasing the book
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I thought this post was great. It’s so good to read stories of people in similar situations. One half of my family is very blue collar, and saves no money. The other half is very white collar, and has wealth from saving money. I grew up watching both sides of the family spend money like it was nothing, never realizing that one half was also saving a significant portion of their incomes.
I got out of college and started spending like a maniac. Fortunately, I woke up at the age of 27, when I returned to grad school and realized that credit card debt is an endless cycle, and I was paying for clothes that had long since gone to Goodwill.
I would be interested to read how you handle your financial differences with your family. I often find myself in the position of being expected to pay for things for other family members, or travelling to see them because they can’t afford to travel to me. I’m just now learning to put my foot down and say “sorry, it’s not in the budget.” My fiancee and I have a financial plan and goal, and it can be tough to say no to family.
Maybe another guest post on how readers handle this?
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I enjoyed reading your story – I hope you feel a lot of satisfaction in getting your financial house in order.
The proverb about saving money so that it will save you could be the headline for my life. I lost my job at the beginning of the great recession, but having a healthy savings account meant that we did not panic, and it also gave me the flexibility to be choosy as I searched for a new job.
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@35
Tiffany– I think you should write one!
I come from a long line of white collar middle class, but I married into a blue collar family (but DH has an Ivy league PhD). It has been very eye-opening the very different things that both sides of the family take for granted, and it would help my understanding to see more posts from the perspective of these challenges.
In fact, one of our recent blog posts, as a white-collar well-off relation, is wondering about how much help we should be giving. Should we be helping the next generation with college? I think we’re going to be doing it, but the comments we’ve gotten so far have been pretty squarely against, suggesting that blue collar kids don’t have the same right to figure out what to do with their lives while in college (though some argue that middle class kids shouldn’t either… but we think the primary purpose of college is not job training– another cultural difference). They shouldn’t get an education until they know, otherwise they’re just wasting our money. I don’t like how that feels. What do you think? http://nicoleandmaggie.wordpress.com/2010/12/08/are-we-doing-the-right-thing/
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I love that proverb
“Save your money, and one day it will save you.” I’m going to remember that. great advice in your article its’ nice to hear your story and to hear about your success Great job! I hope to one day get to where you are at the moment I’m more at the point you started at, but I’m working on it!
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The comments have turned into quite a debate about blue-collar vs white-collar money morals. I agree somewhat with The Other Brian’s (#25) assertion that the color of your (or your father’s) collar doesn’t neccessarily predict money habits. There are well-paying blue-collar jobs and not so well-paying blue-collar jobs.
My friend’s father is a prison guard who makes 70k per year, owns the house out-right, and paid for his son’s education at a $30,000/year college.
In my family, my father is a truck driver that makes $35-40k, and has never seen a bank balance with a comma. While my parents have no debt, they also have no money.
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I never thought about being a first generation college graduate but am interested in learning more about your take on it. Good story!
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Absolutely great story, and a good example of a good supportive relationship where both people work towards a common goal and get their financial heads screwed on straight!
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This is a good post, but I read the first couple of pages of the book on Amazon, and I think you need an editor. I’ve read some poorly written books that were extremely helpful but it’s still a big turn-off as a first impression.
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