This guest post from Karin 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 with all levels of financial maturity and income.
My family was weird.
When you're young, it's hard to know how a normal family should look and behave. I do know that from very early on, I sensed that something was awry. Although my father had a respectable and reasonably well-paid job and my mother (a housewife) seemed like a frugal household manager, we were always broke. Things that other kids didn't think twice about — like school shoes, stationery, excursions, new clothes, dental treatment, and extra-curricular activities — were all out of reach for my family.
As a nerdy and bookish child I was already a target for bullies; going through school wearing ill-fitting hand-me-downs and being left behind when others went on excursions meant I might as well have had ‘beat me up' written on my forehead!
It was easier to pretend my parents were strict and didn't allow outings or fashionable clothes, than to admit we were too poor to afford them.
An Unhealthy Relationship with Money
Why were we poor?
There was a lot of secrecy in our household (I don't think my mother ever knew how much my father earned), but it gradually dawned on me that my dad was a compulsive gambler. For his entire adult life, he gambled most of his income, and both parents used consumer credit — mountains of consumer credit — to survive day-to-day life. They had no savings, nothing put aside for a rainy day. Occasionally there would be a gambling ‘windfall', and they would use the money to purchase unnecessary items (like ostentatious items of furniture, or sports gear they soon tired of) rather than paying down debt or buying sorely needed school shoes.
Neither of my parents had completed high school, and they saw no value in educating my sister and me beyond the minimum. This didn't bother my sister as she wasn't very academic, but it mattered to me. Despite having no educated role models — I was far too shy to confide in my teachers, for example — I somehow knew that education would be my ticket out of poverty. Unfortunately, my parents had no intention of allowing me to complete high school or supporting me for a moment longer than they had to, so in 1984 (at the age of 16) I left school to take up a full time office job.
My marks at school had been excellent, and I managed to sign up for part-time correspondence studies at a university. Looking back, I must have been incredibly motivated and driven, as the full-time work and part-time studies meant there was very little time left over for leisure — or to enjoy being a teenager.
My parents' unhealthy relationship with money flowed down to me. When I started working I had no work clothes, and no money to pay for my university course or textbooks. Rather than helping out, my parents signed me up for a credit account. In no time, I was in debt to the limit, and when I turned 18 and became eligible for a Visa card I really went to town.
For the next few years I was constantly, deeply in debt. I would pay the minimum amount required by each month's statement, and must have paid exorbitant amounts of interest over that time. My parents required me to pay board, and I moved out of home as soon as I could. Life felt more sane out of their orbit.
At the age of 22, I bought a one way ticket to a much larger city, thousands of miles from where I grew up. Best decision ever. It was incredibly challenging to build a new life, and yet it was exactly what I needed. I arrived with almost no money, and accepted the first job I could find. Not ideal, but beggars can't be choosers!
The first year was really hard. I lived from payday to payday, and again leaned too heavily on consumer credit. Several special things happened in my second year there though.
- Firstly, after seven years of full-time work and part-time study, I completed my bachelors degree. That may not seem like a big deal to most people, but given my family background it was a huge achievement for me.
- Secondly, I resolved to get out of debt. I cut up my credit card, slowly but surely paid it off, and taught myself to save up for things I wanted. My first purchase was a $400 CD player — it took months to save for, but I was so proud to have persevered.
- Thirdly, that was the year I met my partner. He comes from a totally different world to me, one where education is encouraged, achievements celebrated, and budgets adhered to. Meeting him gave me added impetus to live an examined life, to make conscious decisions with an eye to the future rather than just concentrating on the here and now. (We've never married, but are still happy together more than twenty years later.)
The rest, as they say, is history. After about five years together we bought a tiny apartment (with a 20% deposit) which we paid off in less than four years by living very, very frugally. (No vacations, no restaurants, no new clothes.) Ten years ago we moved to a smaller city and sold the apartment, which left us with enough money to buy a modest but nice house with no debt.
I'm currently completing my fourth postgraduate qualification — I'm a perpetual student, and not afraid to admit it — and we have a good life: jobs we enjoy, worthwhile volunteer roles, and good friends. Frugal habits die hard, and I've never gone back to my spendthrift ways. We've struck a happy balance, where we live frugally and modestly for about 90% of the year, and take luxurious vacations for the other 10%!
An Exception to the Rule
I wanted to share my story as I suspect it's quite unusual. A lot of poverty is inter-generational, and it is also odd for someone from such an uneducated family to obtain a university degree, let alone several.
Gambling is a secret shame for many, and could have ruined my life too if I had allowed it. The rest of my family still live in our crime-ridden home town. They're still uneducated, still living hand to mouth, still mired in debt. On the surface they appear more affluent than my partner and me, with big houses, multiple cars, and the latest household gadgets. But I've made a choice. I could have those things if I wanted to (and could probably afford to pay cash for them) but prefer not to. There's something wonderfully liberating about knowing when you have enough.