Like so many other people, I have a love-hate relationship with money. I love what money can do and accomplish, and I hate how money is so fleeting. It seems like every dollar is hard-earned and easily-spent. Every dollar can be used in a million different ways and so much of life’s anxiety comes from determining how to use too little money to address too many possibilities.
When Aileen and I got married we were just twenty-one (me) and twenty-two (she) years old and earning less than $30,000 between the two of us—and this in one of the most expensive cities in North America. Since then, like most families, we have seen slow but steady increases to our income. Of course, our expenses have increased at just about the same pace as we have gone from renting a home to buying, from driving compact sedans to minivans, and from having no kids to three kids. As I look back on my life and financial history, I see a long list of mistakes Aileen and I made and a list of mistakes we managed to avoid. Here are a few of each.
Mistake Avoided: Credit Cards
There is always someone willing to extend credit to the young and foolish. Thankfully Aileen and I avoided using credit cards when we were young, and for many years either paid cash or debit for all of our purchases. Recently we have taken the opposite approach: We now buy everything on credit cards in order to maximize our points and cash-back. However, we are careful to always pay off the full balance every month. What we did well was migrating to using credit cards only when we had the finances and the self-discipline to avoid high-interest debt. We’ve never once carried a balance on our cards. Impact: Major. Advice: Avoid credit card debt at all costs.
Mistake Made: Learned Too Late
I was never formally taught how to budget or how to manage money. No school I attended offered courses or even classes on financial management. No one ever sat down with me and showed me how to draw up a budget. I had to learn it on my own. Eventually I read books by Dave Ramsey and Randy Alcorn and developed both a theology and theory of finances. Unfortunately, we had already been married for several years and had made more than a few sloppy and ignorant mistakes. Impact: Moderate. Advice: Develop that theory and theology of money as early in life as you can.
Mistake Avoided: Small House
When we were first married we spent several years renting houses while waiting for my career to advance and my salary to reach a level that would allow us to think about a mortgage (Canada has more stringent borrowing and lending standards than in the USA). Eventually we got to the point where we could think about buying a house of our own. We bought the cheapest starter home we could find in a good neighborhood in a great town—a 1,000 square-foot townhouse. At the time the location was ideal because I was working just down the road and we attended a neighborhood church. However, shortly after we bought that house I was laid off and began working much farther afield; around that same time we found a church almost a half hour away. But we have decided to stay put, even though it means a longer commute to work and church. We have owned only this one house and at this point have no plans to leave, even though it is quite crowded at times (and we haven’t yet dealt with the drama of three teenagers and only one shower). Our mortgage payments are low and we should have the house paid off years early. Impact: Major. Advice: Do not buy more house than you need, and once you buy, stay there as long as possible.