The Notebook

Jim, a reader of our Facebook page, shared some of his personal finance journey in Facebook comments a while back, and readers commented that they'd like to hear his story. We reached out and asked him if he would elaborate so we could share his story with the Get Rich Slowly website readers. This is part 1.

Some reader 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.

First, let me be clear, I never went hungry in the extreme “poverty” sense. But I did have a few mustard-and-sugar sandwiches in my life because that is what we could afford between paychecks. My parents had always given my sister and me “just enough.” If we wanted more, we needed to save our meager allowance because they were living paycheck to paycheck and couldn't afford more. To this day, I believe it's what helped me get to where I am today. I realized at an early age that it was all on me. I knew going in I was never entitled and that has been very helpful in this journey.

There were two lessons I vividly remember growing up concerning money. First, around 8 years old, I remember saving weeks and weeks for a large Lego set because Dad told me, even at that age, if I wanted something, I'd better save for it. He may even have had a deal with me that he would pay half and, knowing him, he would count it as one of my birthday presents because that is how he is. Anyway, it seemed like I must have saved $50-plus for this set of Legos back in the '70s. Well, I clearly remember playing with it years later and thinking, “Boy, I worked hard to save that and for what?” The joy was gone, apparently. This was a very important lesson that I carried into my adult life (thankfully).

Second, I will never forget sitting at the bank drive-thru with my latest paycheck in hand when I was 16. It was a measly $76 for two weeks' work (part time at a bowling alley). Even then, my parents made me use this money to pay my bills and reminded me to “use it wisely because that is all there is.” I remember waiting in line, looking at those numbers. I thought, “How am I going to live off of this in two years?” It was then that I truly realized that life is going to be difficult because it's all on me. After all, my dad constantly would remind me “you better have a plan when you are 18.”

Over the next few years, I would need car payments, insurance/fuel and upkeep, a new transmission, a new windshield, college tuition. (My parents would help pay but kept a running tally of the debt I owed. I never had a student loan.) Some of the emergency purchases were my fault, like when I was driving a little too fast and hit the curb, destroying my wheel and tire. I was definitely a little foolish, immature and slow to learn about how to live responsibly. It seemed like every few weeks, something would break or I would do something stupid and would need to dip further into debt.

Now I was 20 and about $7,000 in debt and making a little over $3 an hour in the late '80s. My life was spiraling out of control, it seemed. I was in college, but I had no idea what I was going for, where I wanted to be when I finished. I just knew this was the next step after high school. Deep down it was a frustrating pattern and I wasn't smart enough to get out of it on my own.

Financial counseling at 20?

Sometime during this confusion, I saw a pamphlet about free financial counseling. I don't know what it was that caught my attention, but I believe things happen for a reason. The counselor changed my life and I know that, because of him, I have changed a few people's lives too. Hopefully, out of this story it could change yours.

Honestly, I don't remember most of what he said. But the one thing I do remember has stuck with me for the last 23 years. He said the secret to changing your life financially is to track every penny for two months and live within your means, which I diligently did.

I vividly remember the small notebook that I kept on top of my dresser so that each day I would be reminded of my task at hand. Each day, I marked each and every single expense down to the penny. (That was the secret — “to the penny.”) So I wrote it down.

  • Day 1: .25 for a soda; 1.67, hamburger and soda; 4.50 for bowling; 6.99, CD.
  • Day 2: .25 for a soda, 2.23 for a meal, 7.50 for gas, etc.

Then I added it all up. I was shocked how much I spent on eating out and sodas and realized a lot about myself.

That was the goal of the exercise — shock value. I quickly realized everything you spend goes into an abyss. If you take an ATM withdrawal for $40, how many times do you say “Where did all that money go?” and then head back and withdraw again or, worse yet, go to the nearest bank (out of network) and pay the $2 fee? Oh, by the way, don't forget to write that fee on the piece of paper. This was the beginning of what some would call my “cheapness.” It seems now, no matter the size of purchase, I am thinking about that notebook (not that that's a bad thing). It was the beginning of a behavior change, which is absolutely necessary if you're going to change your life. I always questioned myself: “Will this purchase or decision get me to my goal?”

After a while, I would take my notebook and forecast my expenses — one month out, two months out, six months out. It was actually fun. It was like I was my own comptroller controlling the company's finances. I would write it all down in the notebook: income/expenses, strategic goals, and the positions I wanted to be promoted to within the company. I'd think to myself, “If I spend only X on food this month, I could put the difference against the credit card and this pay raise (all of it) would go to paying off this old car loan.” I wouldn't reward myself just because I had been sacrificing and I “deserved” it. I hadn't reached my goal yet. Any found money or new money would go directly against debt. As you can imagine, there were lots of numbers, plusses and minuses, percent signs for interest rates, and mental notes in that notebook.

Beyond finances

Because it was on paper and I was consciously thinking about it, I soon found I became more focused, and my bosses at work noticed it too. After starting out in the warehouse, they gave me a few raises and promoted me around the company. I found a lot of inspiration as well, and I felt more responsible, and people saw me as more mature. Soon I believed that I was starting to get on the right path. It was hard to ignore the naysayers. A few called me “brown-noser.” Even more would call me “cheap” and look down on me or mock me. Still, I stuck to my new goals that were in my notebook. In my mind, I knew where I wanted to be someday.

It became a game to me. As I paid off each obligation, I put that money toward the next most expensive debt — and so on and so on. I never rewarded myself for paying off another debt; I just felt more and more relief from the burden of debt. The reward was the success of achieving a small goal. And it was all being tracked in that notebook. I could look at my notebook and see my hard work in action.

Setting goals

The other part of the game — a challenge I gave myself — was to reach a milestone each month. At the end of each month, I had a set balance, for example, $100 for my checking account. Whatever my balance was above that amount, I would allocate half of the difference to savings and the other half to the debt at hand. Putting monies in a savings account was my reward because, at the time, 9 percent was the going rate for a regular savings account. (It's hard to believe compared with today's rates of .04 percent, if you are lucky.) Also, convincing people back then that my way was the path to success, when interest rates on savings accounts were 4 or 5 or 9 percent, was a whole lot easier than it would be today.

I also educated myself on the difference between interest paid monthly, quarterly or annually because it makes a big difference when you are trying to make your money work for you. I would advise you to do this as well. I would scour the difference between bank accounts and CD rates to ensure the bank was providing me the most to help me in this journey. Today, I am not sure the effort would pay off as well, but the effort would be worth it to prove the commitment to the end goal: financial independence

Night after night, I would sit down with my notebook and I would do the math and forecast my monthly interest payment in my savings account so that I knew I would have $236 at the end of the month, way before I received my monthly statement. And you better believe, I would never pay a penalty fee to the bank. I would watch my money like a hawk.

Granted, it was hard and boring. I bought nothing except the basic necessities. I remember opting for water instead of the much-loved soda. Definitely no more music, and new clothes were non-existent. No more regretting a purchase like I did my Lego set when I was 8. I dropped out of college because I didn't know where I was going with it anyways. I questioned all purchases and asked myself how I would feel three days from now — would I still be happy with this purchase? I still bowled, but instead of practicing 10 games, I cut it to two. I cut out bowling leagues, which was hard, but I found I loved saving money more because I had a vision. It was not easy and I sacrificed. Some would consider it boring and definitely being cheap. But somehow I knew what I was headed for…no guarantees, but I believed.

For three years, I diligently tracked where all money went. It was no longer difficult and became part of my life. I have read that if you want to break a habit, it will take three weeks typically. I definitely broke the habit of foolish spending. I stopped buying “stupid” stuff and slowly started building my net worth.

Finally, it happened. I paid off my Dad (lowest interest rate) last and I felt relieved. “I have a clean slate,” I remember thinking. “I can go anywhere from here.”

After I was out of debt,I didn't stop saving. I remember buying a 19-inch TV (in cash) after my first month of being debt free, because I “deserved” it. Sarcasm intended. But I remember promising myself I will never pay a penalty fee, interest payment on a credit card (I pay in full each month) or have a negative net worth again.

I stuck with the notebook concept even after being debt free. The difference this time was that all of the money I had allocated toward debt was being put to savings. And that's when it became fun. I still lived like I was in debt, but it didn't hurt. It was natural. My sole savings account turned into two, then that morphed into a high-yielding CD. And slowly, my hundreds of dollars turned into thousands. I stuck to my game plan and was diligent about it.

Bragging led me to mutual funds

A couple of years later, I fortunately met a guy who introduced me to mutual funds. And that is when my life changed again. I was on the golf course with him and started  bragging about my saving accounts and CDs, and he basically said I was wasting my time and that I should get into mutual funds. I said I didn't know anything about them, and told him I don't have time to invest in stocks. He rebutted, “You don't need to know about stocks; the manager does it for you, and it is like a bank you can't drive to.” That caught my interest because I knew about banks.

So I went to the library (this was before the Internet) and picked up some easy-to-read books about mutual funds that discussed what they were and how to pick them, and the rest was history. After reading a few books and realizing they all basically said the same thing, I took out the most recent Kiplinger's Personal Finance magazines. I was determined to look at the top-rated funds over the last three, five and 10 years. I learned if you pick the performer for one year, you are only chasing past performance because most of the profit has already been realized! In other words, only the existing shareholders are extremely happy enjoying that great return. What would happen if I had gotten in at the top? Not much room for growth. So I figured I'd be safer looking long term because that is what I investing for — not three years from now, but 30.

I remember clearly seeing two funds repeated in both categories (five- and 10-year). They weren't No. 1, but second and fourth,  so not bad.  I was OK with that.  I also liked the fact that I could open an account with only $25 a month with a monthly allotment from one my accounts.  So I called and they mailed me their prospectus, which was required before signing up. It was as easy as that.

If I was to teach somebody today what I learned over the years, I would say that you would want to choose a fund whose management fees are relatively low (below 1.3 percent), stay away from funds that take 12b-1 (advertising) fees and load funds, and ensure that the manager was at the helm during the period of nice, positive returns.  For example, if you are looking at a fund that made 17 percent on average for five years, make sure the manager hasn't been there for only six months to a year because he or she would be riding their predecessor's coattails.

Another thing to consider that made me feel better about my investment choices: look at the percent performance return when times were “bad.” Looking at 2000 and 2008 would be great examples. It's great to get 20 percent annually, but it stinks when you lose 27 percent. But when comparing funds, if one lost 9 percent and another lost 3 percent during the same period, I would lean toward the 3 percent if everything else was the same.

With this new opportunity presented to me, the timing was perfect: I started in the mid '90s during the recession. I didn't realize it at the time, but I had been given a gift.

Were mutual funds really that good?

I remember looking at my fund “value” week after week and it was either going down or just flat line.  It was so bad, I remember talking to my mentor and venting to him, “I don't know why I am even in mutual funds. I am just wasting money.” I was used to my savings accounts and CDs and each month they were worth more because of the interest paid on the accounts. I definitely experienced the joy of compounding interest.  But we were in a mild recession in the mid '90.  I didn't know any better. I wasn't experienced.  My mentor stared at me and smiled, “You disappoint me.  I thought you were better than that, at least smarter. What about your goal?” he joked.  I never quite got it until one day (and I will never ever forget that moment) shortly after our discussion, I was looking at my value and remember being shocked.  I went from being close to $1,000 in the red (down) to positive $400.  I didn't expect that. It only took a couple of days for the turnaround.  For whatever reason, I never expected it to be so volatile.  But it was then when I believed in the dollar-cost-averaging method.   I was purchasing all of these shares ($25 at the time didn't buy much, but it meant a lot to someone who only made $1,200 a month) at a discounted price.  It started to make sense and I began to look for other funds into which I could diversify.  Now I was dollar-cost-averaging into three or four funds with no effort on my part. It was all happening electronically, so it was very easy.

I continued to live within my means. I no longer relied on the notebook, started to buy clothes, go out to eat, and started to bowl again, all while paying my bills in full.  Now my money was making money and I could pay off my credit card in full. Any car loan, I would pay off early as part of my game from old. When I got a furniture loan, I took advantage of the zero percent for 12 months, but made absolutely sure not to be  late making the lump-sum payment because they backdate all of the previous interest.

Bragging led me to help my dad

When the tech bubble was building,  I finally felt financially independent as my money was making money and I earned more in a day than I made in a month at my job.  And now I could share what I'd learned.  I actually helped my dad get into the “preparing for retirement” reality. We were at a restaurant, and he was bragging about all of his CDs. He was in his mid-50s at the time, and I told him how I had made $12,000 that day. He was a little shocked — similar to the reaction I had with my friend on the golf course. The tables were turned. We got together soon after and talked about mutual funds. He became more devoted to saving/investing than I ever was. It was one of the few things we could bond over at the time. (Now we have that and my 7-year-old son's incredible golf talent with my dad on the bag during junior tournaments.) We would bounce ideas off each other and call each other when the market made big moves up or down. We'd compare losses and gains and relate to each other. I am grateful for this opportunity. The way stocks sky-rocketed during that three-year period, I started to think I could retire at 40.  I envisioned an endless money train, fast-tracking me to wealth.  I didn't know any better of what was to come. There was frenzy in the air, and it was all smoke and mirrors.

I remember clearly talking with my dad in May 2000 and telling him, “I have a gut feeling that this was the end of the tech bubble. I should take some profit.” But we both said, “It is due one more jump up” like it had in the past.  It never happened.  I was complacent with my money and hard work and sacrifice.  The bubble burst and I lost all the value. But remember, you only “lose” when you sell. I was young, still not married, with no kids, no worries. I had a good job in IT then.  But it stunk to think about the “value that was.” To this day, I still think, “What if I had taken that profit when I had the chance and reinvest it all over again, how much more I would have had today.” But thankfully, I stuck with dollar-cost-averaging the same funds I had invested before the tech boom and stuck to the plan. I monitored the value as it went up and down during the “lost decade” when you gained 2 percent over 10 years.

Every December, I would see the capital gains and the dividends being re-invested in my accounts. I was accumulating many shares by sticking to the game plan. I reinvested the capital gains and dividends over the years and it was all on autopilot. It was easy. Then 2008 hit and I got hammered with a 70 percent loss, as did most normal Americans who had invested in the stock market. Very few saw it coming this time. I remember talking to my dad in November 2008 after the umpteenth triple-digit loss and way too many 400+ point losses in the market, and he said he had to sell because he was losing everything.  But he was 64, so I didn't blame him. It was at that moment when I considered it seriously as well.

I pulled out a notebook and weighed the options, just as I had done 15 years prior. I weighed the pros and cons of selling. Scared, I almost pulled out at the near low, but I had remembered the voice of my mentor, “You disappoint me. Stick to your goal.” I remembered that moment when in a flash the value had re-appeared and I was in the positive. Thankfully, I didn't pull out and I stayed with dollar-cost-averaging and actually threw $4,000 — most of my cash on hand — more into the “fire.”

Then it happened.  It was March 2009 when that “a-ha” moment occurred and I got back to even. Because of the large number of shares I had accumulated through the good times and bad, the small increase in prices exponentially sped up my personal recovery.  Without changing a beat from what I did in 1995, from that scary moment in 2008 until today, my shares have quadrupled and then some.

Reflecting on the journey and planning for the future

I can tell you, the journey seemed easier when I had only just a few bucks to my name and it was easy to go after one debt at a time. The process was simple. It was even easier that I wasn't married, had no kids, relatively healthy and had met the right people at the relative right time. But I used these resources, used the library for free books, a subscription to Kiplinger, Quicken (which has replaced my notebook and it has all of my expenses tracing back to 1994) and the Internet to track my finances, the Money Club on CNBC (no longer on TV) and the desire to retire early to guide me during my pursuit. After being burned twice in 2000 and 2008, I truly felt “Fool me once, shame on you. Fool me twice, shame on me” with these bubbles. I promised myself that I would have more foresight as to why these things happened and take more responsibility as who controls external factors of my life.

Today, I have educated myself about the Federal Reserve (and consequently have become very concerned about our future) and what makes bubbles and how perception is controlled in America. I discovered you really have to uncover a lot of layers to maintain your wealth once you have accumulated it. I am more cautious then ever. I get so frustrated when I hear the media talk about that the recovery is here and America is on its way back up and there is a lack of inflation. As someone who has tracked pennies for his entire adult life, I know food is more expensive, medical is more expensive, rent is more expensive, cars are more expensive — but there is no inflation? That is because the government adjusts the formula not to count these “essential” elements (food and energy). It doesn't seem right.

So I have learned that you have to dig a little deeper and go beyond what is preached in books and seminars. It is so true: The game is rigged for the rich, and the recovery has only worked for those in the stock market. I am living proof. I haven't had a raise in six years and fear I could lose my job every day because the business is suffering since it depends on American citizens to be generous. But if our customers don't have discretionary income, they would rather spend money on food, medical, rent and maybe a car. But if you look at the market and the media, things are roses and rainbows. So it is a challenge to sit here and be confident that everything we see and hear will hold true in my future and my child's.  I fear I am in the middle. I am not rich, and I am not poor. I am not protected and have a lot to lose after all of my hard work and sacrifice.

I have made a modest income over 20 years (averaging about $33K annually). Still, with discipline, a little education and sacrifice, it can be done. At first I struggled to find money for the next bill. Now I am almost prepared for a comfortable retirement. More important, I have helped others in the last 20 years with getting out of debt and shown them that it could be done. I felt poor back then and had a mountain of debt at my feet. It felt incredible to hurdle that mountain. It feels even better knowing where I am now compared with where I was.

More about...Budgeting

Become A Money Boss And Join 15,000 Others

Subscribe to the GRS Insider (FREE) and we’ll give you a copy of the Money Boss Manifesto (also FREE)

Yes! Sign up and get your free gift
Become A Money Boss And Join 15,000 Others
guest
62 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Jia
Jia
6 years ago

What a great story. I feel very inspired to sort out my own finances using a journal!

Petra
Petra
6 years ago

Well done so far, and I’m curious what will happen next 🙂

I also wonder how much money your parents ultimately had. They sound like they were either very very poor, or they were very smart (maybe a bit cheap) with money and came out ahead…

Marcus
Marcus
6 years ago
Reply to  Petra

I am wondering too whether the parents were poor or just smart with their money. People in poverty trap typically don’t tell their kids to save up for toys, since they often don’t know the concept of saving and delayed gratification themselves. I was always told by my parents that there isn’t enough money for [… fill in the blanks…]. No, you don’t get the newest toy or gadget, if you want the designer clothes here is the money for the no-thrills brand and you go work in a student job to make up the difference, no you don’t go… Read more »

Jim
Jim
6 years ago
Reply to  Petra

My dad was an E-4/E-5 in the Army in the 70’s and based on what he said, he raised a family of 4 on very little money, a few times they were sweating how they would pay for food (hence the mustard and sugar sandwiches for lunch at school). With him PCS’ing every few years, my mom worked where she could here and there.

Again, not poor, but every penny was accounted for then and dad told me he had stretched a few paychecks a few times in his life to pay the bills and keep the lights on.

Anne
Anne
6 years ago

Me, too. How did things change, if they did, with marriage and children?

Jim
Jim
6 years ago
Reply to  Anne

I can honestly say because I had established my finances by the time I was 30, I was introduced to a wonderful woman who made twice as much as me at the time, its now even more. Who knows what would have happened if I was in debt or a free loader, but she knew I was responsible. Got married at 32. Son at 37. So yes, I was much better off waiting until things were established. As I mention in part II, many people do not have that luxury and that is their choice. We keep our finances separate… Read more »

Beth
Beth
6 years ago

Ahhh… I want to see part 2 already! I’m curious to hear what happens next.

I’ve been thinking of starting a spending tracker spreadsheet again. I used to do it when I was a student, but I worry I’m getting complacent now that I don’t need to worry about counting every penny.

Hm. Maybe I’ll challenge myself to do that in April. Anyone else with me? 😉

Sharon
Sharon
6 years ago

I love this story and can’t wait to see the second part!

My favorite part was the question you ask yourself, “Will this purchase or decision get me to my goal?”

I wrote that down because it is so powerful!

Thanks!

Jim
Jim
6 years ago
Reply to  Sharon

Yes, those words got me through the hardships of sacrifice. At times I would question why, why am I doing this? But when I got past the now and thought about where I was headed, it boiled down to “Will the money I am spending today on this jacket (or whatever purchase) be better used to pay down debt, because I liked when the banks paid me, not the other way around!” and when you weren’t making much money in the first place, any little money makes a difference. In part 2, it will explain why the hard choices pay… Read more »

cherie
cherie
6 years ago

looking forward to the next installment

johnbebad
johnbebad
6 years ago

i used to do this mentally. Its not that difficult once you eliminate discretionary spending completely and then work things back in slowly based on your savings goal minus new spending amounts. I think its much easier to work from a balance money formula instead now. Once I got it to the point we were saving 30% plus of income, I spend a little more. In retrospect, the purchasing decisions for fun and things that you play with are hard to quantify. I think you need to pick a couple things you want or want to do and spend on… Read more »

Dee
Dee
6 years ago
Reply to  johnbebad

I give my kids a decent allowance and expect them to pay for pretty much all of their expenses from it. They even buy their own shampoo, soap, bath towels (if they ruin the ones I bought for them when they were toddlers). I’m a single mom who works fulltime, so I really expect them to contribute. They prepare meals, do their own laundry, etc. They each keep a list on the fridge where they note what they need for the next time we go shopping. This weekend we are going clothes shopping for summer. They have been planning for… Read more »

Olivia
Olivia
6 years ago

Just challenged my family– 2 college students and husband -to join me in tracking our spending for April.

Martha Gonzales
Martha Gonzales
6 years ago

I completely agree with Linda that everyone of us need a ‘shock value’ to get hold of our finances. Just like you said,we don’t know how much we spend unnecessarily till we jot them down. Though the counselor had literally changed your life, I’ll say the major lesson you learned is during your childhood, especially from your parents as they always urged you to understand the ‘real value’ of saving. This experience sharing is really worth reading and in fact sharing. I’ll definitely share this info through my social media accounts. Thanks Linda as well as GRS for this important… Read more »

Diane C
Diane C
6 years ago

Uh, I think this is Jim’s story, not Linda’s…

Jim
Jim
6 years ago
Reply to  Diane C

🙂 Yes that is correct.

Sir. Pog
Sir. Pog
6 years ago

Thank you for sharing this! It’s a great story and you’ve done a great job getting things in order and digging yourself out. I’m looking forward to part II

Ginger
Ginger
6 years ago

This is an awesome testimony !! Please share more. I too was raised by parents like yours. However, this went out the door once I got married to someone who didn’t believe in saving. Fast forward 30 years, I am now separated and beginning anew. I too live by a notebook. It is wonderful. You know where you stand everyday of the month and you feel freedom.

Dee
Dee
6 years ago
Reply to  Ginger

Ditto what you said, only my marriage lasted ten years. I’ve been divorced six years and it is HEAVEN to know exactly where I stand financially. No bill collectors, no “surprises” in the joint account, no huge debts I don’t know about….

All the financial knowledge and thrifty habits in the world won’t help if you’re married to a dishonest, manipulative idiot.

Megan
Megan
6 years ago
Reply to  Ginger

This seems to underscore the importance of marrying someone who shares your values – financial values being a very important one.

Peter Brülls
Peter Brülls
6 years ago

I’m a little puzzled. Unlike the former commentators, I don’t see what valuable lessons the author learned in his childhood or later by meticulous bookkeeping. He realized years after being a kid that he doesn’t enjoy playing anymore with the Legos he saved for when he was 8? And later on this changes to immediate dissatisfaction, as if this was a good thing for an eight year old. And while I certainly sympathize with keeping track, I fail to see the point of it. Being debt-free? Well, sure, but even that is a means, not an end. That’s the vibe… Read more »

PawPrint
PawPrint
6 years ago

I believe this is the first part of Jim’s story that involves him getting to financial independence at an early age, but I could be wrong.

Beth
Beth
6 years ago

This is just part one. I think the point about keeping track is to develop a better understanding of where your money goes. I don’t think it’s about self-denial, rather it’s eliminating the waste from your budget. Did giving up soda really impact Jim’s quality of life? I doubt it – but it sounds like he put that money to better use. I live well below my means and have a healthy savings rate, but I think I’m going to try tracking my money more closely so I can eliminate waste. If I could free up an extra $50 per… Read more »

Jim
Jim
6 years ago
Reply to  Beth

Beth, you hit the nail on the head. The tracking allowed me to take positive control of my future. I was in debt and every little penny had a direct effect to how soon I would be free of the burden. The legos were well used and I did enjoy them immensely, but something struck me a few years later (10 or 11?) that I spent a lot of money for what? It didn’t change me at the time as a kid, except it taught me that things will not be given to me and don’t expect anything. I needed… Read more »

Toni
Toni
6 years ago

“And while I certainly sympathize with keeping track, I fail to see the point of it.”

Really? You don’t understand the point of tracking every penny you spend? It’s about learning where EVERY SINGLE PENNY of your money goes. The money you throw into a vending machine isn’t something you pay much attention to until you realize it’s adding up to $20 a month, etc.

Steve | Live Smart Not Hard
Steve | Live Smart Not Hard
6 years ago

Linda great step by step. Thanks for posting this!

PR
PR
6 years ago

Thanks for sharing. My wife (then girlfriend) and I had very low paying government jobs in college and we started using Mint.com as our notebook equivalent. Made a huge difference to track our spending, paying off our debts, and make plans for the future. 1 grad school later, we have paid off all of our non-student loans (about $60,000), socked away over $150k in retirement and are getting started on saving for investments (still over $150k in student loans bing paid off as well). We are making about 3-4x what we had been previously, with only one income (the other… Read more »

WP coupon
WP coupon
6 years ago

Great Article. it’s Really Nice Post. Thank you very much for Sharing with us.

Kristin Wong
Kristin Wong
6 years ago

Wow. I wanna read Part Two already. Great reader story, Jim. Tracking every penny for two months sounds like a great option for people who want to get their money in order but don’t know how to start. I imagine doing this puts you in the right frame of mind–control and focused–and makes you want to keep on keeping track. Anyway, can’t wait to read more!

Julie
Julie
6 years ago

Enjoyed the article. My story is very similar. I particularly appreciate two points you make: 1) You didn’t feel that you deserved a reward for making progress. I consistently encounter people who explain extravagant purchases with the excuse of “they work hard so therefore they deserve it.” I wonder how that would sound to a single mom in a 3rd world country who works just as “hard” to avoid starvation. 2) Your employers noticed your hard work and it paid off. I worked hard as well, was moved around throughout my company, and am now the CFO. I have told… Read more »

Mary Ann
Mary Ann
6 years ago

This is a great story. Loved the simplicity and easy to follow information. I am so ready to read part two!!

Bob
Bob
6 years ago

I loved the story. My one bit of advice is to go for the bowling league and other passions you have in life. Sure it is great to save money but that money doesn’t mean zip once your dead. Your memories and experiences are much more valuable at the end of the day.

Jim
Jim
6 years ago
Reply to  Bob

Bob. Thanks true words and means so much. While writing the story, thinking back to those memories, I admit I was hyper focused on reaching my mini goals each month. And somehow I think that is necessary to free yourself from the burden of Interest paid to others. Now, I am much more relaxed with finances. I still keep mental notes on how much I spend, spending $60 for gas still catches my internal scrutiny mechanism, but it is OK. I’ll buy clothes off-season. And I enjoy playing golf with my 8 yr old son all the time. I still… Read more »

Curtis
Curtis
6 years ago

Very Cool Story.

I’m currently a college student and I have a running tally with my parents for similar reasons as you did. I recently earned a diploma in finance and until I read this article I hadn’t heard of anyone having a running tally with their parents where they had to pay it off. I’m excited to read part 2.

Sean Friend
Sean Friend
6 years ago

Jim,

This story was beautiful. Thank you for sharing it. I understand the position you were coming from and really appreciate the share.

Thank you!

Megan
Megan
6 years ago

Can’t wait for part 2! Have a feeling he became very successful. I am feeling kind of guilty for recently buying a lot of new clothes because I recently made some extra money. I should have saved it!!

Jodi
Jodi
6 years ago

I cannot wait to read part two!

tekla
tekla
6 years ago

amazing!!i need to try it!

Betsy
Betsy
6 years ago

This is fantastic! Thanks for sharing– it’s so inspiring! My husband and I are working at paying off debt and often feel overwhelmed, but this is a great reminder that it’s all worth it!

Tim
Tim
6 years ago

Great story and a wonderful contribution!

However, I have a correction. The inflation measure used for everything significant (e.g. Social Security benefits) does include food and energy. You just want to use the “all items” CPI-U:
http://www.bls.gov/cpi/cpiqa.htm

LeRainDrop
LeRainDrop
6 years ago

Jim, I really enjoyed reading both parts of your story. Your progress and learning over the years are evident and inspiring. In the last couple years, after paying off my student loans, I have made it a habit to invest in low-fee index funds. About a year ago, I turned that into automatic investments after each paycheck. (Retirement account funding has always been a priority for me, so maxing that is a given.) This gives me a sense of peace. Best wishes.

Credaholic
Credaholic
6 years ago

Great read, and the best part is that what you did is really relatively simple! It’s something we can all do. Not happy for your losses, but at the same time I’m glad you didn’t have magical premonitions before the crashes and pull out all your money, because it really proves that we can ride those bad times out – as long as we stay on the horse! Thank you for sharing.

Jim
Jim
6 years ago
Reply to  Credaholic

Yes. Your emotions play a huge part in your reasoning during times of turmoil and it wasn’t easy. But looking back, because the shares were still there and Dollar Cost Averaging back in the market during the “bad” times (sticking to the plan) allowed me to be in a better place than if I had sold everything when I was scared and chasing the “good” market the last 20 years.

Ultimately, when your money is making money with little effort on your part, time is your ally and discipline/patience can go a long way to your freedom.

Credaholic
Credaholic
6 years ago

Giving this comment thing another try – sorry if it’s a repeat! I just wanted to say thanks for taking the time to write this. I love how you are living proof that anyone can do it! Not that I’m happy you lost so much in the crashes, but I’m kind of glad you didn’t have a magical premonition and sell off at the perfect time – it proves that even with recessions and downturns, holding steady and continually investing really pays off. My hubby just happened to start his 401K at exactly the right time – the bottom. Since… Read more »

Jim
Jim
6 years ago
Reply to  Credaholic

I know exactly what you mean, but don’t let it make you complacent. I too felt lucky in 2009 for the comeback, I was gracious for my increase in 2013. But in 1999, I was greedy and felt it would last forever. IT DOES NOT LAST FOREVER. Be active, take a little profit, transfer it over to some good performing bond funds, or perhaps International if they are offered in the 401K. You risk a larger gain during this period, but when there is a correction (and there is ALWAYS a CORRECTION), you can move the profit back in. My… Read more »

financialblogger23
financialblogger23
6 years ago

I love how your ability to spot bubbles and knowledge matured over the years. Did you ever consider Gold as a currency/Treasury Bond hedge? Are you gonna take profits on this bubble? Or will you hang in there? Fascinating story. Thanks for sharing.

Jim
Jim
6 years ago

Thanks. I had to read your comment twice, because my immediate thought was I didn’t predict a bubble but definitely learned from them LOL. But yes, this time I am cautiously more aware then ever hence the comment about managing debt payoff is ALOT EASIER than asset management. Besides the return for debt payoff is guaranteed 🙂 Yes, I have taken profits over the last 14 months and am in a catch-22 at this point. Sitting on 6 figures in cash kills me and am constantly trying to find a safe alternative in preparation of the next correction. I regret… Read more »

John
John
6 years ago

Great story. Thanks for sharing Jim!

Peach
Peach
6 years ago

Great post–very inspiring! Glad you’re
spreading the wisdom around, which is really important. I’m wondering if your father recovered any of his portfolio value before he cashed in?

Babs
Babs
6 years ago
Reply to  Peach

I was 55 at the time of the last crash & watched my portfolio dive 40%. It was nerve wracking but I left it alone & kept contributing at the same rate. It has come back of course but as I get even closer to retirement age I wonder how many times I could go through that kind of roller coaster.
Thank you for sharing your story!

Jim
Jim
6 years ago
Reply to  Peach

He did not. He made back some of it, but because he pulled out most of his holdings in the middle of the turmoil, he lost the chance for it to even out. When we compare now, his prefaces it with “I am more invested aggressively” 🙂 He is fully retired now and he is happy as his assets now produce more than enough income for my parents lifestyle (thankfully). We were just talking about it the other day on our vacation about how he will be forced to withdraw from IRA and won’t need it. Good place to be… Read more »

Tanmay Roy
Tanmay Roy
6 years ago

Loved this story. Thumbs up! I also want to share my get rich slowly stories. How can I do that?

Ellen Cannon
6 years ago
Reply to  Tanmay Roy
Sean
Sean
6 years ago

Fantastic just like Part 1.

Thank you for sharing. Really inspiring and lets us know in the long-term it is all worth it!

Stephanie
Stephanie
6 years ago

Thanks so much for sharing the inspiration! I work in nonprofit and, assuming I will never make more than $35K, a lot of the stories on this site of people who reach financial independence seem waay out of touch with my reality. I am so happy to read your story about accomplishing so much with an average salary. Appreciated, I am renewed. 🙂

Mac
Mac
6 years ago

Thank you very much for sharing your story. I started investing 10% of my income in a 401k in 1999 and watched it take a serious dive in 2008. Although I understood the rules of dollar cost averaging, it was very hard to watch. I increased my allocation during that time and it has come back nicely. Some financial “experts” say we are nearing the tail end of the current bull cycle. They talk about how hold and hoper’s like us loose over the long run because we don’t take our gains out at the top and reinvest them at… Read more »

Jim
Jim
6 years ago
Reply to  Mac

I am not an expert either, but like I said in a previous response (credaholic #17), what I would do is begin looking at the performance of the other funds your 401K offers. I would look at the performance during 2007-2009 and take the lesser of evils. Take a serious look at which funds loss the least especially if the managers are still there from back then. Since the moves are tax free from capital gains, it is a no brainer. I didn’t do this in the past, but have done it this time around. If you are limited in… Read more »

KALENA
KALENA
6 years ago

Thank you so much for a great story. Now I’m interested in what you have learned about keeping your nest egg safe even though there are many more years before your retirement (you don’t want to plop it all in bond funds and CDs since you need growth.

It is refreshing to hear that someone else is concerned about the financial direction of this country. We are mortgaging our children’s future.

Kirs
Kirs
6 years ago

Thank you for sharing your story. It shows that begin consistent and thinking long-term are crucial for financial security. I’m myself in somewhat different position. I have comfortable income as well as my husband. We should have no financial trouble (and we don’t debt other than modest apartment loan). However, I feel constantly insecure about our financial situation. We have practically no savings and each month we use our credit cards (in my country, living on credit is not normal but you are expected to pay with debit). Our credit is almost never paid in full, although we don’t pay… Read more »

Jim
Jim
6 years ago
Reply to  Kirs

Seems like you are at a crossroads. Many people would love to be in your shoes, but you are making excuses. I am not a professional finance guy or relationship counselor, but I can tell you have to take care of yourself when no one else will. To me, it sounds like Credit Cards are giving you guys a false sense of income! A piece of plastic is not tangible, it means nothing. I know when my 7 year old son looks when I pay for whatever with a credit card, I regret it, he is probably thinking “wow neat”… Read more »

Kirs
Kirs
6 years ago
Reply to  Jim

Jim, thank you for your reply. Things are rarely black-and-white, and so it is in this case. I agree that while in many other respects my husband is responsible, caring and supportive, financially he still is immature. We’ve been discussing about this and he’s aware of the problem. I think the key issue here is to be able to take a hard look on the spending over the past few months to see where the money goes and what things affect the spending (for him one clear issue is keeping up with friends). For that, I think baby steps are… Read more »

Kirs
Kirs
6 years ago
Reply to  Jim

Hi, a quick update. I wanted to thank you Jim for responding to my message. For some reason I found more courage from unknown person in the internet than I felt I could have gotten from my friends. (Maybe with them you still feel like keeping up appearances, as almost all of them have the same or higher income as we do but no kids. That also puts some pressure, although I try to be very open about the high cost of kids in the family – daycare etc.) In short, I mentioned already that I brought up the savings… Read more »

shares