A couple days ago, a reader named Matt left the following comment on a post about debt freedom versus investing:
I’m starting to think that Trent makes a lot of this up. The “my friend quit his actuarial job to become a forklift operator” strained credulity and now it seems as though he can’t keep his story straight from post to post.
If he simply changes his mind a lot as he learns his way, what is the value to others in reading about it? We’ll never see the results of any of the choices because they never last long enough to be tested.
Let’s back up here. In April 2006, I was in dire enough financial straits that I was thinking about bankruptcy. Over the next eighteen months, I (a) built up an emergency fund, (b) paid off all of my consumer debt (leaving just a mortgage and student loans), (c) initiated college savings for my children, and (d) bumped my retirement savings up substantially. In this period, we also bought a house, moved to this house, and had a second child, the latter of which happened less than two months ago.
So, yes, I think it’s fair to say there have been major life changes in the last eighteen months in my life. The biggest change? I realized that buying stuff really doesn’t matter very much at all. After that, the immediate solutions became clear: get rid of that high interest debt and put my family in a good position (this is why we bought the house, because our previous living quarters would have been untenable with two small children).
Getting a good financial base means your possibilities open up. My financial situation now is completely different than it was then, and the possibilities are now a lot more open than they ever were before. When my son was born, almost two years ago now, the idea of either of us staying at home with him was basically completely out of the question – we would have gone bankrupt almost immediately. Now that we have a firm grip on our spending and have a second child, it’s well within the realm of possibility for one of us to drop out of the workforce.
This also means that we have the freedom to really establish realistic short term, medium term, and long term goals. With all of these possibilities, much of the conversation between my wife and I is about goals. Where do we want to see ourselves in one year? In five years? In twenty years? What’s the plan to reach each of these goals? What’s the most important of the goals to us? This is a living, active discussion – and we’re at the point where we are actually fleshing out our plans to reach our goals.
These plans aren’t set in stone, nor should they be. Things change. Children are born. People lose jobs. People find a passion. People get promoted and get a raise. A car breaks down. Someone makes a life-altering choice. That’s real life, the reality that most of us face.
So, yes, I am making it up as I go along. We’re defining plans that take us to our dreams, but give us the flexibility to change course if the situation changes. We want a house in the country in fifteen years, but we’d also like to be able to have one of us be a stay at home parent. And what happens if something else changes, like the arrival of a third child? We’d like to be able to handle that, too.
We are living a real life, not some cut-and-dried paper fantasy that you read about in a personal finance book. We change. Our goals change. We learn new things. We make mistakes, and we make good moves as well, and we toss all of it out there for you to see. I collect things I learn and put them out there for everyone to read. Sometimes, I’ll change a few details, but mostly it’s to protectthe privacy of people I know and of my readers, so if you want to classify that as “making stuff up,” feel free. I’m not here to write an expose into the life of anyone else.
If you think that the human side of personal finance doesn’t have value, you’re probably better off just running different models in Excel and not reading Money360 at all. I tend to think that the connection between, well, your money and your life is the key issue in personal finance, and I’ll keep writing about it. I like to believe that people will keep reading, too.