As I’ve mentioned previously, Grandma and I were grossing over $100,000 per year and still living paycheck-to-paycheck. We shouldn’t have been in this position, and we knew it. One mortgage, two car payments, a small emergency fund, and we weren’t making any progress toward any goals. We needed to get a handle on our finances.
I started checking out personal finance books, debt pay-down techniques, and the like. I bought Ramit Sethi‘s “I Will Teach You to be Rich.” It was a quick read; read through it in just a few days. After that, I started the 6-week plan outlined in the book.
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One of my favorite things about this book is that it teaches everything I wish I had taught my kids about money, credit scores, and how debt works, in easy-to-understand language. Second is the simplified budget – only four categories. As detail-oriented as I am, until I understood the wisdom in simplicity I would create budget categories for everything in exhaustive detail. I like this book so much, I’ve given a copy to each of my kids.
Deciding What’s Important
Knowing how our money was being spent allowed us to start adjusting based on what is important to us. By prioritizing our spending to match our goals, we are more able to make decisions if something unexpected comes up.
We decided what’s important to us – what gives us a rich life. A rich life may be something else to you, but being able to travel to see our children and grandchildren almost on a moment’s notice works for us. We opened a travel rewards credit card and started using it to pay all debts we could, save the one store that doesn’t take credit cards and the bills that want extra money for billing a credit card.
I’d say, like Mr. Sethi does, get a card that provides rewards that help you achieve your rich life. Since opening the travel credit card account, we have been able to get four airline tickets completely free.
We floated along this way for a few months; I was still reading books on building and keeping wealth. “The Richest Man in Babylon” was next – it changed my perspective on saving…turns out, Ramit Sethi’s work already touched on some of this knowledge. Robert Kiyosaki’s “Rich Dad, Poor Dad” highlighted the difference between “stuff” and “assets.”
Fast forward to today
We own two houses, we paid off one of the cars, and we’re able to put a little bit away out of each paycheck.
Next time, I’ll talk about why we want to pay down our mortgages much more quickly than the 30-year term. Stay tuned to the Fund It section for more!