Financial Lessons I Wish I Could Teach My 25 Year Old Self

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The Frugal Farmer Screen ShotI Love The Frugal Farmer

Hey everyone, as you probably know, I’ve recently started a new column as the home for posts by my favorite bloggers. Laurie from The Frugal Farmer is by far one of my favorites. If you haven’t checked out her blog, click here and make sure you do! OK, enough peanuts from the gallery, here’s Laurie herself….

Hey, everyone!  Joshua graciously offered for me to guest post today at CNA Finance, so allow me to introduce myself:

My name is Laurie, and I’m 46 years old.  I’ve been married to my husband, Rick, for nearly 18 years.  We’ve got 4 of the best kids on the face of the earth, and raising them well is among our top priorities.  In our nearly 18 years of marriage, we’ve owned 3 different houses, had several different jobs, lived in two different cities and had lots of other great growing experiences.

We’ve also gotten ourselves into a boatload of debt.  And by boatload, I mean we started 2013 with a debt-to-income ratio of 65%.  No, that’s not a typo – I really did say 65%.

I remember being younger and thinking we “knew it all”.  We were smart, hard-working twenty-somethings with goals, aspirations and dreams.  By 2001, we had moved into our dream house; a 3,600 square foot mini-mansion with all of the bells and whistles.  We had one kid, and the second followed a couple of years later, followed quickly by numbers 3 and 4.  Life was great!  Or so we thought.

As we continued on the road to “having it all”, we wandered in and out of consumer debt, home equity loans and refinanced mortgages.

In 2010, my husband got laid off, turning our one-income family into a no-income family.  Seven months later, Rick got a job at an awesome company, but at a 20% pay cut from what he was making at his old job.  Ironically, even with my husband being out of work for 7 months, we still hadn’t had that “light bulb moment” concerning our finances.  We were about a grand short every month, due to the cut in pay that Rick took with his new job, but instead of reducing our spending and learning to budget and spend-track, we just continued to spend like we had, convincing ourselves that we had “no other options.”

Then, we “traded up” in housing, telling ourselves that because our payment would be the same (due to the low interest rates at the time) that it was “okay”.

By the end of 2012, we “found” ourselves saddled with more debt than we could manage, and thus, in January of 2013, we began our “journey to debt free”.

That’s a whole other story, which you can find at our blog site, The Frugal Farmer, but what I wanted to talk with you about today is the hard lessons we’ve learned, in hopes that you won’t make the same mistakes we did, and wake up in your mid-forties a very, very long way away from your financial dreams.

So, what did we learn?

Time Passes Much Quicker Than You Think it Will.  When you’re in your twenties, there’s generally a mindset of “I’ve got all the time in the world”.  SO not true, especially after kids come along.  We had all four of our kids in 6.5 years, and suffice to say that those first 10 years of kids are pretty much a blur.  A good blur, but a blur nonetheless. J

If you’re in your twenties and thinking you’ve got lots of time to get out of debt/save for retirement/think about a financial plan, you’re wrong!  Make your goals and your plan TODAY, and stick with it!  The time will pass quicker than you ever imagined it would.

You’ll Likely Want Different Things in Your Forties and Beyond than You Do Now.  Priorities, goals and dreams change.  Whereas our list of dreams in our twenties included more material things, those goals and dreams have changed dramatically in the last decade and a half.  We’re now much more interested in things like early retirement, experiencing life, and financial freedom.  Material things are completely unimportant to us now.  Unfortunately, our financial picture doesn’t match up with our dreams; due to years of thinking that those material things like the mini-mansion were what we really wanted.  Sit down today and don’t just think about the life you want today, but think about the life you want to live forty years from now, and make your financial plan based on both pictures, not just the current one.

The More You do to Prepare Financially Now, the Easier it Will be To Grow Wealth, Both Now and Later.  This is HUGE, my friends.  It’s kind of the same as how we take care of our physical health.  As an example, my uncle, who is nearly seventy years old, was a very talented gymnast during his high school years.  If you know anything about this sport, you’ll know that you’ve got to have a super strong upper body to compete in gymnastics.  My uncle did, and still does, have rock hard “pipes” to this day, even though his workout routine (if you can even call it that)for the past 40 years has consisted of his job as a window washer (which he retired from a decade ago) and biking around the neighborhood in his uber-small town.  Although he’s active, he does very little in terms of “working out”, yet is still much stronger than most men I know.   Maintenance, where finances and health are concerned, is MUCH easier than repair and clean-up.

As another example, our journey to debt free has been much more difficult than it would have had we made and kept at a sound financial plan from the get-go, as we are doing cleanup now as opposed to maintenance.  If you choose today to:

-live within your means

– have an automatic savings plan and stick to it

– stay out of debt

– have a plan for your money and your life

you may have to sacrifice a little bit now, but you’ll have the freedom to do what you want in life very, very soon, and for all of the decades that follow.  And it’ll be well worth the “sacrifice”.  You can take that from someone who’s done the “you only live once” way and is now digging out of the crater-sized whole they’ve made.

Friends, today is the first day of the rest of your life.  Do you want to live that life living your dreams, or dreaming about your dreams?  The choice is yours.

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Hey, Im Joshua, the founder of CNA Finance. I enjoy following the trends in the market and finding the catalysts that are making the moves. If you want to get in contact with me, leave a comment below or email me at CNAFinanceHelp@gmail.com Please keep in mind that I am not an investment advisor and nor is CNA Finance. This is a news and information gathering outlet. We may work directly with some of the companies that we write about. If we have a business relationship with an issuer, we will mention that in the articles. We also have various affiliate relationships with advertisers and may be paid if you sign up for a service that you were referred to through our website.

12 COMMENTS

  1. Such great advice and the younger we apply it the better. I learned a lot during my marriage and have changed how I manage my money so much in the last few years. I’m hoping to teach my daughters by example so they don’t make the same mistakes I did.

    • We’re in the same place, Kylie, and in spite of past mistakes, doesn’t it feel great to know you’re teaching your children a better way? That is likely the biggest blessing out of this whole thing for us – knowing that our kids will have the tools to make wise financial decisions. Thanks for the comment!

  2. Laurie, I’d like to take this opportunity to thank you for taking the time to write this post. I’ve been following you for quite some time as you know. So, it’s an honor to have you featured at CNA Finance! I loved reading this and if you ever want to guest post in the future, please don’t hesitate to let me know!

  3. I loved this post! I will definitely take this ideas into consideration as I am turning 25 in a few months. I really like the message about taking care of your finances actively as you go instead of having to do a “clean up” one day.

    • Liz, if you start now, you will be SO glad you did. It will open up a whole different realm of possibilities for you in ten, and even five years from now. If you work toward financial freedom now, you’ll be able to choose where, or if, you want to work later on, instead of being forced to because of debts. You’re a wise woman for educating yourself so young! Thanks for reading. 🙂

  4. I think a big key is the sacrifice is a lot easier to do when you are younger because it will only affect you and maybe a spouse. It becomes a lot harder to sacrifice when it’s not just you and the spouse, but also children. Because nobody wants to feel like they are depriving their children of a good life. The added benefit is you give yourself more time to let the money work for you which makes things a lot easier down the road.

  5. Great post Laurie! I am trying to not put things off too much, because I am concerned I will wake up at age 55 thinking “oh crap, I want to retire in ten years – where is my money!” It will take me into 2015 to get debt free, the same year I will be 30 – so hopefully I figured it out young enough, because I know throwing kids into the mix makes it crazy on finances (I had this discussion this morning with a coworker who is the sole earner for his family of five).

  6. Great guest post, Laurie! My fiance and I are in our mid twenties and getting married in (oh. my. God) 7 months. We are trying to ensure we are on the right financial path by investing, saving, spending wisely. The best part is that we are debt free except for the mortgage and my hope is that we keep it that way!

  7. At 26, I hope I can take all the things I have been learning and be able to successfully apply them towards financial independence, and be retired, or at least not “have” to work by the time I am 45-50.

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