The Turning Point

I had lunch with my friend Bo recently. Over our enchiladas, we talked about how dumb we were when we younger, and how we'd do things differently if we could. To what point would we return if we wanted to change our lives?

“I'd go back to the end of my sophomore year of high school,” Bo said.

“That's a long way,” I said.

“But think of compound interest, J.D! And by then I was earning money. I was earning money and I was spending it. If I could go back, I would save like crazy. I would invest in mutual funds. I would buy a house — a fixer-upper. I'd spend much less on food and clothes and comics.”

Like me, Bo is a comic book collector. In fact, when we were in college, I gave him a bunch of my comics. Boy, was I dumb. I was dumb in a lot of ways then. If I could go back, that's the time I'd pick.

I told Bo about signing up for my first credit card, I told him about the $1500 Frisbee, I told him about trying to spend money to keep up appearances with the other students on campus. “If I could go back,” I said, “I'd go back to the sophomore year of college.”

“Your story's interesting,” Bo told me, “because I think it's similar to the stories of so many other people. And because you've managed to make it through and become successful.”

“Thanks,” I said. “I'm just glad to have turned things around.”

“How did you do it?” Bo asked. “What was the turning point? Do you remember?”

Turning away from debt
“Sure,” I said. “I tell this story all of the time. My turning point came in the summer of 2004, after we bought our new house. I had been living paycheck-to-paycheck on $42,000 a year, spending every penny I earned on books, comics, and other toys. Just Stuff, you know?” Bo nodded. He and I have talked about Stuff before.

“Though I could afford it on paper, I hadn't counted on the unexpected costs that come with a 100-year-old house. When we started having to spend for new insulation and to replace the walls and to remodel the bathroom, I felt like I was drowning. I felt out of control. I'd been in debt for a decade and managed to avoid disaster, but I really felt like disaster was just around the corner.”

“But what was your turning point?” Bo asked, sipping his Dr. Pepper.

“Right,” I said. “My turning point came when I started complaining about my debt to friends. A couple of them pulled me aside and shared books with me. I read them and tried to follow their advice. To my surprise, it worked. Ever since then, I've been on this path. I make mistakes sometimes, but that's when I changed direction.”

“That's awesome,” Bo said. “Reaching a turning point is huge. It sucks to be out of control. When you're out of control, it can seem impossible to turn things around. But once you do, it's great. Just like you and your baby steps. They're small moves, but they make you feel powerful. Being in control makes you feel powerful. Being in control is a high. And being in control when you had been out of control is even better.”

“What about you?” I asked. “What was your turning point?”

Seeking a better life
“Well, I was never in debt like you,” Bo said. “If there was a turning point for me, it was the day I realized that I didn't want to work for the rest of my life. Of course, you can't just stop working. You can't just put it on autopilot.”

We'd finished our meals and were picking at the chips and salsa by this point. Bo continued: “I remember sitting down and counting the productive years I had left, and then counting the years that I'd already worked. I realized that I had to get on the ball if I wanted to retire early, if I wanted to have time to do the things I want to do.”

“Early retirement's a great goal,” I said. “But it seems so big and so far away, it can be hard to stay on-task.”

Bo nodded. “Any time I see something that I want — which is all the time — I'll ask myself if it's something I really need, if it's something I'm willing to delay retirement for. Every dollar I spend on Stuff now is a dollar that could have helped me quit work sooner. Do I really want to spend money on frivolous crap that goes into boxes? Or do I want to save my money for a better future?”

Bo paused for a moment before he continued. “This may sound strange,” he said, “but Hurricane Katrina had a huge impact on me. When I saw all of these people with their Stuff floating down the street…when I thought of it in those terms, I realized that my house is just full of crap. I realized that I need to get rid of Stuff, not bring more home.”

“Fortunately, my wife and I are on the same page. We have the same goal. Like everybody, we still buy Stuff. But we don't do nearly as much as I used to. We'd rather have the money so that someday we could do things with our family instead of having Stuff that sits in our drawer.”

“That's great,” I said. “It sounds like you've always been pretty smart with money, but for you the turning point wasn't about changing bad habits. It was about developing better habits.”

“Right,” Bo said. “I've always understood where I wanted to go and how to get there, but I always talked a big game, and didn't really walk it. Then one day I realized that every penny I spent that wasn't part of my plan, was just an impediment to me quitting my job and spending time with my family.”

We paid the check and said good-bye, agreeing to meet for lunch in a few months. But this conversation stuck in my head. Not everyone experiences a turning point, and not everyone needs one. But I believe that for those who do, this turnaround can be powerful, life-defining experience.

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Baker @ ManVsDebt
Baker @ ManVsDebt
11 years ago

Awesome story! My turning point is after we got married and found out my wife was pregnant. We always knew in the back of our mind that we needed to get control of our financial lives, but had been putting it off. I started following Zen Habits and this blog in the early days and read The Total Money Makeover and Your Money Or Your Life. Between those 4 resources, our total financial life began to rapidly change. Lately, I’ve been motivated by factors similar to Bo. I simply want to be debt-free as fast as possible, so that we… Read more »

Elizabeth
Elizabeth
11 years ago

As always, thanks for sharing such an inspirational post, JD! My turning point was last October when I began looking for ways to save on our grocery bill. Suddenly I found resource after resource on budgeting and financial success. I realized a life of debt and “Stuff” is not mandatory–I could choose a different path. And so I did. Luckily my husband fell right into the idea with me, and since then we’ve been much better about living (somewhat) under our income and paying off our debt, which thankfully isn’t astronimical. We are still tweaking our system and have already… Read more »

Ken
Ken
11 years ago

I’m a lot older (57) than most of the people here but maybe my “moment” will be useful to some. I was layed off in 1982 with a wife and two children (3 and 1). I worked for the largest employer in town and the housing market collapsed with word of the layoffs. We had enough money with unemployment to survive 3 months. From then on, foreclosure was inevitable. I managed to find a job within days and the new company bought my house for what I had paid for it 18 months earlier. That’s what I call my “Scarlett… Read more »

Greenman2001
Greenman2001
11 years ago

Such a well-written post, J.D. Excellent work.

BloggingBanks
BloggingBanks
11 years ago

My turning point was when my car broke down and I had to pay to the repairperson almost half of what the car was actually worth! Granted my car didn’t cost much to begin with, but it costed a lot for my small budget. I eventually found a higher paying job closer to my residence and saved as much as possible in 401k, IRA and CD ladders.
In fact my CD income is growing pretty well recently as it is mostly laddered in long-term Certificates of deposit.

racy
racy
11 years ago

My turning point was 1973, in business college, and finding out about the Magic of Compound Interest. Back then computer class involved writing programs in COBOL. My favorite program was one that showed how to make a million bucks by savings and getting interest on my savings and on my interest. It was eye opening to see that after only a few years the money being generated on the interest was huge compared to my contributions. Magic!

Brooke
Brooke
11 years ago

I agree with Bo’s point about the “stuff” floating down the street during Hurricane Katrina. Really does make you think.

Moneyblogga
Moneyblogga
11 years ago

My turning point came when I realized that my emotional/mental issues were at the heart of my financial self destruction. I tried for years to bury my pain with daily emotional highs acquired in shopping bags. I did that for years. The stuff piled up and so did the debt. We never had any money because I spent it all, no matter how much came into the household. I would spend every cent. When I finally was able to see the whats and whys of my actions, I knew that I was taking my entire family straight to the poorhouse… Read more »

David Parker
David Parker
11 years ago

Great post. I really love how often you update your blog JD. *Thumbs Up* My turning point was pretty recent, and lady luck definitely gave me a big kiss because it was only when I was 19 (I am 20 now). I have always wanted to have my own successful business. Where this came from, I am not sure, because my Ma is poor and has horrible financial awareness (but has more love to give than anyone I have ever met :)), and my dad passed when I was 2. I’ll spare the long story, but I always had this… Read more »

Lily
Lily
11 years ago

I guess my turning point was when I realised I didn’t want to buy expensive clothes after all. “But why? I have enough money in the bank, I could indulge in nice new stuff.” That was right, but after all I didn’t feel like it. I slowly realised I didn’t think it was worth (it sounds so simple now!), that I wanted to spend more wisely my money, to buy and own *less* clothes, and then less clothes became “less stuff”.

kitty
kitty
11 years ago

My main turning point is not about money. It’s about personal life and having an inflated opinion about my own looks and turning down a perfectly nice guy while waiting for a prince and having inflated opinion about my looks. As to the money, my turning point is about investment choices rather than spending. It is after 1987 crash when I got spooked by the market and started putting most of my retirement and other savings into CDs/stable value. I wish that instead I had a) invested more in the market back then b) invested some part of my money… Read more »

Joey
Joey
11 years ago

These are my favorite kinds of posts on PF blogs. They generate great discussion in the comments.

Personally, I’m not sure whether or not I’ve reached a turning point. Perhaps I’m still within one. What I am sure of is that I’d like to work less, even if that means earning less. My free time is more important to me than most things, and I’d like to maximize it in whatever course I take after grad school.

Todd
Todd
11 years ago

First of all, what a great site. I’m still a newer internet user, but read this area daily. I had a turning point a few months ago. I had a job loss in June of 05. My company was growing and successfull, but a competitor bought it out and closed my site. I had lived in that area for 8 years after college and loved the area, while making good money. I was single and bought several new vehicles over that time, begining to accumulate a lot of debt, but with cheap rent I didnt care about building equity or… Read more »

KS
KS
11 years ago

For me, getting married was the turning point. My husband-to-be had been a chronic debtor, had declared bankruptcy not longer after we met, and never seemed to really get his finances together. I’d done better for a number of reasons, but when we got married, things HAD to change. We had one salary (mine), had moved across the country, and so on. After tracking our expenses, we paid off all credit cards, bought a house, saved money, etc. We’re left now with student loans (large) and a mortgage, but are fine. We will never be the “let’s scrimp and save… Read more »

Todd
Todd
11 years ago

To KS:

I like the way you think!!!!! “A good balance of spending and enjoying now, and saving for later,” is my target now that I have reached my turning point.

Todd

MikeVx
MikeVx
11 years ago

I’ve actually had multiple turning points in my life. Early on in my life, I had the essentially standard rotten financial skills most kids of the era had. I was a technical geek doing computer support, living in debt due to bad decisions, and much of the usual stuff. My first turning point was when I figured out how I could apply these strange things called “spreadsheets” to my own finances. I learned a few things from the financial analysts whose computers I supported, and ran numbers using my own finances. I was headed for a personal melt-down, but once… Read more »

Tyler Karaszewski
Tyler Karaszewski
11 years ago

I got to the point where I could *not* pay both my rent and my credit card bills. I defaulted on all my debt. I let the bank repossess my car. I stopped using credit cards entirely from then on. That was about five years ago. I was only 23 (at least I got that crisis out of the way early). Since then, I’ve only taken out one loan for anything (a car loan), and only plan on taking one more out in the future (for a mortgage). Everything else has been paid in cash. I’ve done much better since.… Read more »

Jay
Jay
11 years ago

I had two turning points, one major and one minor. The first turning point was when the furnace blew up in the middle of the winter and I had to ask my mom for 1800 dollars to fix it. That’s a pretty low point for some one who is fiercely independent. That set me on the path to wipe out my debt. The minor turning point was when gas jumped last summer, this super charged me to pay off all of my debt. Once the daily costs of living rose significantly in such a short time, I knew I needed… Read more »

Chett
Chett
11 years ago

J.D., I read your comments about the conversation with your friend and I guess I’ve never realized how similar our financial melt down stories are. My wife and I had the same experience of a mortgage payment almost sinking us in 2004 and we used that experience to move to a much more comfortable place financially today. So I guess that was my first turning point. So here’s my second one. I read above your friend is striving for an early retirement by forgoing all current desires for a future early retirement. I’ve been working on my education requirements for… Read more »

SeekingLemonade
SeekingLemonade
11 years ago

GRS is my favorite PF blog. Keep up the good work, JD! My turning point came ten years ago when I got married. The second night I was married I couldn’t sleep, realizing that I had not saved any money! Oh, I had always maxed out my 401K and funded IRAs, so I was doing well in that way, but aside from that, very little else. So I embarked on a full-court press. Started saving (automatic deductions from checking to savings, when saving got up, buy a CDs); started automatic mutual fund deductions, cutting expenses and not splurging on junk.… Read more »

Janette
Janette
11 years ago

Older and slower- I do not regret any travel I did nor places I lived. There are many. They are all a part of me. Learning how to make the most of what you have came from my husband. How to invest it came from Ron Blue and Jane Bryant Quinn- both long gone from the money scene(made enough to leave it). I need little when out on “the farm”, but know how to have a really good time when I visit “the city”. Looking forward to the last 40 years of my life. Mistakes, turning points and grandchildren- there… Read more »

Wilhelm Scream
Wilhelm Scream
11 years ago

I guess my emotional turning point was when my father injured his leg four years ago. He had to spend a summer on crutches, during which I cooked, cleaned and ironed for the family, as my mum was at work all day. It was the summer that I really understood what keeping a household means and resolved to always be financially independent and never to rely on things, because when you’re phoning an ambulance for a family member you don’t give a monkey’s about the latest video game.

Wilhelm Scream
Wilhelm Scream
11 years ago

Forgot to mention – I was in high school at the time.

Steven@HundredGoals.com
11 years ago

Great article, your friend Bo reminds me a lot of myself actually.

Sandy E.
Sandy E.
11 years ago

So many of us kick ourselves about how much money we wasted prior to our turning points, and so I remember something that Dr. Phil said about that that resonnated with me. He said “as far as all that money that you spent, (wasted), in your past, look at it as tuition that you had to pay until you finally learned how to become responsible with money.” Everyones’ cost of tuition is different, but the point is that when I viewed it that way, I no longer felt stupid about my past or wasting my money, and could finally let… Read more »

Michele
Michele
11 years ago

I was always careful with money so my story is a bit different than most. But like Poster #6, what I think made me even more diligent was being a finance major in college and learning if you put money away now and do nothing else – it will be worth a large sum later. However, if you wait 20 years before you put money away, you will have to put away a much bigger amount. That struck a cord and kept me on the straight and narrow. I’ve been able to stay home with my 3 children for 7… Read more »

R. L.
R. L.
11 years ago

Sandy E. – Thanks for that Dr. Phil quote. I’ve been really beating myself up over all the years of lost opportunities.

Irina I
Irina I
11 years ago

Great to think about this! My turning point was graduating from college and realizing I don’t have the hundred thousand dollar salary I was promised by everyone while at Stanford. But I do have some student loans to pay off.

I got depressed and then I got with it. I read personal finance blogs, started tracking my spending and setting up my financial infrastructure.

I know feel more in control and therefore happier about my finances.

Marie
Marie
11 years ago

My turning point was when my mother-in-law died at 52 of heart disease. I realized that my husband’s genetics are a very real threat to us enjoying retirement together, and retiring as early as possible will give us as much time together as possible.

ResortAtSquawCreekTAHOE
ResortAtSquawCreekTAHOE
11 years ago

My turning point was in 6th grade, 19 years ago when someone told me that i could goof off and have fun until the 9th grade. The 9th grade is when it all started, as grades accumulated, and lead to either millions of $$$$$ in your career, or a life of debt and failure if you got poor grades. Hence, I studied hard, got into a fantastic university, and after my full year of work, my W2 form said $99,700. I was below $100,000 because I put $5,000 into my 401k. That was in 2000 at age 22.5. I have… Read more »

Martin
Martin
11 years ago

I wouldn’t call it a turning point in that sence, but as i started working in my first job after university this year, i thought about my future aims. Getting financial freedom got me on the track not spending all that earned money, so that i could possible retire at the age of 60.

So i live on a frugal, nearby student level at the moment. My girlfriend and my parents don’t understand this. They say: now you have money, buy this and that.

Kelly
Kelly
11 years ago

My turning point came a year out of college. I went to pay my monthly credit card bill and realized I couldn’t even remember what I had bought that I was now paying for.

SKM
SKM
11 years ago

My turning point came around 8 months ago. I was tired of living paycheck to paycheck and having to worry about money more then I thought I should. I paid off the small amount of debt I had. I almost have $3,000 dollars saved now. My goal is to enter the work force full time (I graduate from college in 1 year) with $5,000 dollars in savings. This site has helped a lot.

Taz_NZ
Taz_NZ
11 years ago

I always liked the saying “Live your life as if you’ll die tomorrow, but plan your life as if you’ll live forever.” It embodies that balance we fight for between security and not getting so stuck that we don’t live it up while we’ve got it.

Free Your Mind
Free Your Mind
11 years ago

“Fortunately, my wife and I are on the same page.”

THAT is one of the most important keys to anything. Without it, all is lost. I’m sure that many will attest to that!

Liz
Liz
11 years ago

I think my turning point started in around July last year but I am still in the turning circle. There was no real reason my turning point came about – I guess I just realised one day that I had to start ‘now’ rather than always saying – after I graduate, after I get a ‘real’ job, after I get married, etc. I realised there would always be some reason to postpone starting being financially smart. I am now a lot more conscious of my money but I still slip up a lot and so I don’t think I have… Read more »

DDFD at DivorcedDadFrugalDad
DDFD at DivorcedDadFrugalDad
11 years ago

Great post! Things I wish I hadn’t done: – Gotten married in my early 20s– I should have waited until at least age 30 – Staying married as long as I did– I am the one who suggested counseling and wanted to work it out – Not worked harder in college– I could have gotten a graduate school scholarship – Cracked my 401(k) after a layoff directly after my divorce – Sold a completely paid off car and buying a new one Things I wish I had done: – Started businesses at a younger age – Taken a year off… Read more »

Hope
Hope
11 years ago

My turning point–or, as my father likes to put it, ‘scared straight moment’–was three years ago. I’d always been very conservative with money, not out of any real knowledge, but because I didn’t like owing other people. So I’d save up, but it was always for specific things (Stuff) or events. Then, I bought my first home (a condo) with some help from my family–and then two months later, lost my job and found myself with two mortgages to pay and next to no income coming in. On the one hand, I managed to do everything right after losing my… Read more »

Cheap Like Me
Cheap Like Me
11 years ago

Both great stories! I had a huge turning point about “Stuff” after spending a weekend cleaning out my grandmother’s home after she passed away. I truly, viscerally (and physically — we all got sick from all the dust in that house) *got* that each person’s Stuff is just Stuff, and once we pass – pphhhooot, nobody else cares a whit about almost all of it. It has really affected what I buy and what I keep. Had another one a couple of years ago about saving after I had to save and panic for two months for a huge tax… Read more »

Omar
Omar
11 years ago

I’m experiencing a turning point now. I can’t and will not continue to scramble for a dollar. I’m paying off my debt. Thank God it isn’t huge and welcoming financial freedom. Great story!

Beth
Beth
11 years ago

My turnaround came about a year after my boyfriend and I rented our first place together. I had always saved money and like Hope (#38), I always saved money I just had to have a reason to save (down payment on car, books and tuition, vacations, concerts,etc…)So I always paid cash and was never in debt. But one day we were talking and he mentioned, don’t you want a house one day? And at that moment buying a house seemed so far away, but then it hit me like a truck, it might be far off but its a HUGE… Read more »

Eric
Eric
11 years ago

Love these stories. Interesting to see what others have to say. My own personal turning point was when I was leaving a friends house and I needed to fill the gas tank. I whipped out my credit card and they declined the $15 charge. I then proceeded to the next credit card that was declined too. I luckily had a card from my employer that I was to use for business only, but it was my last resort. That was definitely a wake up call. Over the next week I went through and totaled all my card balances and put… Read more »

Faisal
Faisal
11 years ago

Hello, I am currently living in the US, but I am originally from Jordan ( in the middle east ). I come from a middle class family, and we have never been rich. I would like to point out that I find it very surprising ( and a bit amusing ) when I hear my American friends brag about how they “now have started to pay for everything in cash”! The concept of acquiring something before paying for it is soo alien to people from my country, and I really cannot understand it. I have been living in the US… Read more »

Sikosis
Sikosis
11 years ago

Mind you, there is something called “quality of life”. If I was to save all my money and not spending it on things now (when I’m young) — what’s the point of being old and rich and can’t do the things I’d like to be able to do with it.

I tend to ask myself what use will I get out of this stuff, if it’s not going to get used much, then I don’t bother.

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