Reader Story: Finding Financial Balance

Hi George,
I appreciate your story. My husband and I are just a few weeks away from being out of consumer debt,and can then start socking more away, paying down our mortgage early, etc. We are getting a late start, as we are 38 and 43.
I’ve got a nosy question. When you list your biweekly income figures, what does that include/exclude? Are certain things pulled out of that figure – health insurance premiums, retirement funds, taxes, etc. in Canada? Do you then deduct your children’s education fund, your retirement funds, etc. from that number? Which of your investment/savings funds are included or not when you bring home the $4,500? I hope this makes sense and no worries if you don’t fee comfortable answering.
Kudos to you, J.D. and the others on this site who are trying to do the best with the money they make, however much it is. I think what makes most people happy is the ability to make choices, and the less debt you have, the less “dumb stuff” you do, the more freedom of choice you have. To work less, stay home, travel, work harder, go back to school, etc. Thanks for sharing your story.

To quote Dave Ramsey, “Live like no one else so you can live like no one else [later]“. Stop complaining and keep steady. By the way you describe your problem – you and your wife do not have any problems! I am impressed that you are able to have such financial discipline to be at your state but do not think of it as sacrifice. Discipline is what most Americans lack nowadays due to the onslaught of daily temptations and ‘Jonesing’; you and your wife have been much more disciplined than most of your peers. You and your wife have set a goal in mind: home paid off by 35. Stick to it and write back when you have paid off your home next year – it is a personal finance blog after all!

I like your story because I think it’s the perfect example of the transition phase from a debtor to a true saver with a positive net worth. And what to do now.

My wife and I started doing a balance sheet just so we could have a number. When you have debt balances you’re watching go down and disappear, it’s pretty easy to see that and feel like you’re making progress. By adding up our assets, we can track our savings grow.

For our savings, I’m pretty hard core stocks only for savings. I do dividend buy – and – hold, I know there’s some die hard index investors. Pick one strategy and go with it. Peter Lynch has his Beating the Street book which I think is a great reason why you should just go 100% stocks (Though his is strategy is more growth investing).

Whatever you do, if it’s not an index (Which itself is in 100-5000 stocks/bonds), I’d shoot for 20 chunks of whatever at a minimum. I lost 20% on BP last year, they had great financials, but stuff happens. I could have easily continued to hold it because the companies business/financials are still good (I know people on the Gulf may not like the company) but Vodafone was too great a value at the time so I had to buy that.

My point with that is, stuff will happen in Bonds or Stocks, Houses, or the Price of Gold, so too much in a single place is very risky. And prices can move very quickly in modern times. So having 5% of your savings in one thing that goes down 20% is still only 1% of your total.

But the balance sheet, every 2 weeks – 3 months gives you a good check up. I haven’t found the sweet spot for how often myself, but it gives my wife and I something to track now that our debts are taken care of. It also brings everything together so our 401K, Roths, home improvements on the house, are all tracked in one place. I decided to buy a car last year, that certainly showed in the balance sheet as well. Another one of my friends who is self-employed, he does his daily.

Congratulations on making your system work for your family! I think it is great to have stories like this on GRS. I am in a very similar situation and have just recently transitioned to spending additional funds on the present because I am sure that my financial future is on track to being very secure and very comfortable.

As for your question about what to do with your money now, this is something that I think about a great deal these days. One concept that I keep coming back to is the lasting value of a vacation home. I have watched so many older relatives in my family transition from one house to another to keep up with the present status of their lives, meanwhile paying realtor fees and moving fees and other costly expenses each time. The general path goes from a starter house in their twenties, a larger house as the family expands with kids and Stuff, a smaller house as they move into retirement and cannot maintain upkeeep, and finally, a nursing home or a relative’s house for their final years. Each move is expensive, and often the final move places a great deal of responsibility on the family’s children to clean out and sell the house after a parent moves to his or her final abode.

Investing in a vacation house brings many benefits. First, of course, is the enjoyment your family derives from using it in the present. Whether it is a slope-side condo, a cabin by the lake, or a house by the beach, you receive instant returns by using the house for fun and by building lasting memories there with your children and eventually their children. Another way it can bring returns is by renting it to other vacationers. While you may not be able to recoup the full mortgage value by renting the property, if you purchase a property in a popular enough destination, you will have this as an option to increase your income at least a bit.

Finally, a vacation home is not something that you sell as you transition to another life stage. It is something that you maintain in the family for years, decades, generations. You leave your children an enormous gift (a paid-off vacation home!) as well as years of beautiful memories of family, fun, and wise financial choices.

The biggest challenge in pursuing this investment is deciding the location of this vacation home… Good luck!

I really enjoy hearing these real life stories. It helps keep me on track, to see that making that extra mortgage payment is worth it but not forgetting to enjoy the present.

Not sure I get the point of this article. You didn’t have enough money to spend and through raises over the past 4 years now you are more comfortable in your finances. Was this article to brag about your increased income? Not much can be learned from this article. Not alot of helpful advice other than work hard and hope your employer recognizes this hard work with increased pay.

Having some fun is a tough one for me too, especially since the financial situation is usually pretty murky. I’ve been trying to lighten up and go out more and allow myself to spend on things I want, but I still lean toward pinching pennies. Hopefully my income will grow too, so I can add more fun stuff without affecting my financial goals.