Talking About Money

Shortly after Isaiah and I got married, I received a tax refund of $1,500. If you've read any of our love story, you know that we basically got married so I could move with him to Switzerland. What you maybe didn't know is this: After our wedding, we didn't even move in together. He had a lease with a roommate and I had a lease with my sister. The leases would be up around the time of our move, so we just took turns staying over at one another's place for the first few months of our marriage. We also decided that we were a little disappointed about not having a big party for our wedding, so we planned to have a big party the following year. For me that meant one thing: I would use my tax refund to go shopping for a beautiful gown and fancy shoes.

At that point we had not merged our finances, so I felt pretty free to use my money any way that I wanted. After all, that refund money came from the previous tax year when we were not married, so it was not really "our" money, right? I got a gorgeous $5,000 Carolina Herrera tea-length gown for $500 at a sample sale. With all that savings, I figured I could splurge on a pair of designer shoes, so I bought those beauties you see pictured above. They cost $795 plus tax. A couple of weeks later, I was talking with my mom about these purchases and she told me something that hit me like a brick, "You're married now, Mandy. You need to consider your husband and your household when you make purchases. You could use that money for setting up your home in Switzerland, pay off debts, etcetera, etcetera."

And just like that, I was guilted into marching back to Nordstrom to return the shoes. Thankfully, the guy who sold me the shoes was working that day, so I went straight to him and explained my story. He told me a little secret. He said that in a few days, all the shoes in the designer section would be 40% off. I could return the shoes then, and he would sell them back to me at the sale price. I called my mom immediately and sang to her to the tune of Papa Don't Preach, "I made up my mind. IIII'm keeping my shoes!" As it turns out, we never had that big party, so I've yet to wear my gorgeous gown, and I wore the shoes a total of 3 times before they became too small for my bigger-after-two-pregnancies feet (once to someone else's wedding -- grrr). All this to say, I have an extensive track record of being terrible with money, but I have come a long way and have a long way to go.

Read on for more of my herstory with money and why I actually find it liberating to talk about my finances! But first, another picture of the shoes. I mean, they are like art, no?

An Open Check Book

I talk about money, and I get specific, because talking about money helps me see where we need to make changes and where we are doing OK. One afternoon I was chatting with a Turkish friend. She said in Turkey everyone talks about money openly, even sharing specfic numbers when it comes to salaries, but Americans seemed to her very reserved about money. I told her, not me. I told her exactly how much money Isaiah made, how much our rent was, and how the only way we could afford to send our child to the same Montessori school was because we were on a scholarship. I found out how much her husband made (double Isaiah's salary!) and suddenly I wanted to know how much all our friends made. I often wondered how they could afford this or that: new cars, new houses, stylish home decor, vacations. Some lifestyles just didn't make sense to me, and they still don't because the money talk is still so taboo.

Sometimes we drive through neighborhoods with giant houses and we wonder, what do these people do for a living? But we'll probably never know because I doubt people who live in giant, fancy houses will ever tell how much money they make -- it would make people uncomfortable or make them sound like they're showing off. I suppose I am transparent about money because we are considered "middle class" (you know -- a house, a car, a retirement account), but we still live more or less paycheck to paycheck, so we're relatable. 

Our Financial Background

You should know that in college I lived off of frozen burritos and foolishly spent money for books on new shoes. I had a couple of credit cards and a job in the Upper East Side stuffing envelopes at a real estate group for $15/hour. One time my sister (who was in high school at the time) sent me a check for $40 to hold me over until my next paycheck. (She earned money after school working at Chuck E. Cheeses.) I would have graduated from college debt-free had I chosen to go to a state school because that's what my parents could afford, but at 17 years old I chose to go into major debt to follow my dream of going to NYU. I did not have a clue about what it would mean to be in student loan debt. At graduation, I owed $50,000 to Citibank. I think the only good financial thing that came out that time was that I established credit pretty early on so that now I have an excellent score (in the low 800s). 

Isaiah had no clue how he would pay for college so he joined the Navy as a helicopter mechanic. After his enlistment was over, he used his GI bill money to attend community college. By the time he transfered to a University to finish his degree, the GI Bill money was gone, and he had to take out loans to finish school. His coursework was intense, so he only made a little money on the side as a TA. He lived off of credit cards and loans. I was working full time as a teacher making $55K a year, so when his roommate failed to pay 3 months of rent, I was able to help out. By the time he graduated, he was $25,000 in debt. The best thing to come out of all that? Isaiah is eligible for VA loans, which means we can buy a house with zero down. 

When we moved to Switzerland, we had combined student loan payments of $700+/month plus credit card debt. I worked as a live-in nanny making $900/month, then I quit after 8 months and had no income of my own. It was difficult to go from being in charge of my own finances to relying on my partner to pay all my bills. Isaiah had a good salary in Switzerland. Living modestly in a small town and simple apartment allowed us to travel, eat well, and enjoy life, but because of the high cost of living there, our debt was starting to overwhelm us. While we didn't acquire any new debt, we were still only able to make minimum payments on our credit cards, and that was worrisome. We came back home to only one job between the two of us. (I got back my old job working at an elementary school.) Isaiah was unemployed for half a year, so it was my turn to pay his bills. We lived with my dad to save money.

When finally we both had full-time jobs, we started saving up to buy a house. For us that meant paying off my car, paying off our credit card debt, and setting money aside to fix up a house because we knew all we could afford in San Diego was a fixer-upper. Luckily, we had the luxury of not having to save up for a down payment since we qualify for a VA loan through Isaiah, as I mentioned before. 

Along the way, we discovered I had fertility issues, so we ended up paying $5,000+ in acupuncture bills to be able to conceive naturally. (Thankfully, it worked!) When I was about 6 months pregnant, we bought a fixer-upper for an astoundingly low (for the San Diego market) $191K. We had about $10K saved to fix it up. That money disappeared in a flash. Our mortage was only $1,200/month, but Isaiah's salary was low, we had taken out a loan on a new-to-us car, and I stopped working to be home with baby Hunter. We lived paycheck to paycheck. Our credit cards were finally paid off, but we still had those student loans. I knew I needed to go back to work, but I couldn't fathom going back to teaching elementary school. Isaiah eventually got a promotion, but it still wasn't enough. Two years after we bought our house, we sold it to do three things: pay off our student loan debt, pay for my Montessori training plus childcare for Hunter, and take my MIL to Sicily for 2 weeks. The house sold for a little over $300K, so shortly after closing, $93K was deposited into our bank account. It was frightening how quickly that money disappeared over the next year. 

How We Can Afford What We Have Now

1. We got rid of our student loan debt (thanks to the real estate investment that paid off).

2. We lived in a crappy place until we got back on our feet.

3. We moved away for better job opportunities.

4. We now have two incomes.

5. We're going to get on a bonafide budget. 

After we sold our house, we found ourselves with a higher housing payment ($1,415/month) than our mortgage (to rent a dumpy duplex) plus a second child and school tuition for Hunter, so we continued to live paycheck to paycheck. Something had to give, which is how we arrived at the decision to leave San Diego for better career opportunities. When we moved to WA, even with a higher salary for Isaiah, we had higher rent ($1,700/month) and still no job for me, money was tight. We ended up having to put some expenses on a credit card, which is something we hadn't done in years, and it definitely brought ill feelings. I finally went back to work last May and we could breath a little. We had some financial freedom. I didn't feel like we were living paycheck to paycheck. I wasn't constantly checking our bank account. And then we decided to buy a house. (Tell you more about that in another post...)

I've often said that we live on a budget, but that isn't really true. I've only used that phrase to mean that money is tight and we have to be careful and somehow we make it through each month. Currently, we spend way too much money on Amazon buying who knows what. We have about twenty boxes in the garage filled with crap that I obviously don't need since I've been living without it for the last three months. I feel like our money just goes to stuff, and that's got to stop. 

Now that we have a $2,600/month mortgage we are going to have to actually set a budget. The amazing thing about living on a bonafide budget is that it isn't about living paycheck to paycheck. It's about living comfortably within your means and feeling free to actually spend your money. I haven't worked out all the details, but I am genuinely excited about putting us on a budget. It will help us focus on long-term goals, needs vs. wants, and what really matters. Because a house full of stuff is not what I really want. 

Plan of Action
For the next couple of years I want to:
1. Build up our savings
2. Contribute to Retirement
3. Pay off Car

Once we've reached those goals, then we will look into investing, which is something that both bewilders me and makes me nervous.

How about you... are you a locked safe when it comes to talking about your finances or are you an open check book? Do you budget out your money each month? Got any tips for making a budget feel like a positive thing and not a burden?