Reader Profile: RM

The following is the latest post in my “Reader Profiles” series. Each post in this series details the financial situation and challenges of an FMF reader. The purpose of this series is to help us all identify with people like us (in similar situations — not all will be, of course, but eventually I’m sure you will find someone like you here), get to know the frequent commenters on the site, and hear some financial wisdom/challenges from people other than me. If you’re interested in contributing to this series, then drop me an email. The series seems to be very popular with readers and I need a steady stream of new ones to keep it going. Next in the series is FMF reader RM. She answered my questions (in red below) as follows: Please tell us a bit about yourself. I am a 38 year old working and married mother of 3.  I received my education both before and again after joining the US Military, and am fortunate to have a solid educational background that makes my skills very marketable.  I’m lucky to believe I’ll be able to stay employed, even in tough economic times.  My husband is in the same industry, and we count ourselves very fortunate. I grew up in a family where money was never, ever discussed.  I had no idea what my parent’s incomes and expenses were (when asked, was told it was none of my business).  I remember spending most of high school not being allowed to answer the house phone because we were being hounded by bill collectors.  I emulated much of that well into my adult life (I’m very sad to say). I left home at 17 and have worked my way through college and the military, as well as settling down for rewarding post-military career with my wonderful family in the Southeastern part of the US.   Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.). My husband and I both work, though that was not always the case.  We met in the military when we were quite young, and because I had more education than he did and had a marketable skill set, we decided he’d stay home with the kids while I worked when we were both honorably discharged in the late 1990’s.  He eventually went back to work, and we are now a dual income family. Our combined yearly income is approximately $200k.  And to be honest, I’m just now getting a handle on what our expenses are. We have a total debt of $59,150, which includes my student loans, credit cards, and my car payment, as well as some medical debt from an illness. Our monthly non-negotiable living expenses total about $6745 (rent, car payments, groceries, etc), which is 60% of our net income. We’ve started putting 24% into savings and/or retirement accounts.  That percentage really needs to go up in the coming years. 15% of our income is our WANT expenses, things like cable, gym memberships, dining out. I have two children in high school who will be heading to college, and a third in grade school. What are the current financial issues you’re facing (saving, paying off debt, etc.)? Well, things have been quite the mess.  My husband and I (both with no good financial role models) have not paid much attention to our finances.  We live paycheck to paycheck, pay the minimum on our bills, end up carrying debt forward, and have destroyed our credit scores. Thankfully we have come to our senses, but realize it’s going to take us some time to undo all the damage we’ve done.  We have a budget that we’re following, and a plan using the snowball method via an application called Debt End to eliminate our debt. Our biggest financial issue is the time it will take for our credit scores to improve over time as we’re becoming diligent in bill paying and savings.  Our dream is to own a home, and we know we have a long road ahead of us before we can make that happen. In addition to this is to save for retirement.  Neither of us has saved adequately, and that is a priority as well.  Most financially well-adjusted people my age have a home and are building a sizeable retirement.  I feel about 15 years behind the game on all of this.  But late is better than never, right?   What are your plans for the future. (retire early, build your career, etc.)? My plans for the future right now center more on short term goals (5 yrs or less).  Pay off my debt, build savings, put my kids through college, and buy a house. My long term desires of early retirement will be predicated on my ability to increase savings and create another income for myself.  My dream would be to do that via writing.  While I absolutely love my career, I would prefer a way to work from home and maintain my income.   What’s your best piece(s) of financial advice and/or your general philosophy on personal finances? I’m probably the last person who should be giving out financial advice right now. I would say: 1 – it’s never too late to wise up and take control of your finances and your future.  2 – Don’t assume a college education gives you the skills to manage your personal finances.  That’s a totally different skill set that must be learned. 3 – Talk about money.  Talk to your kids and to your parents.  Be transparent, open, and honest.  And of course 4 – leave beneath your means, be happy with life instead of things, and pay yourself first every payday.

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Reader Profile: RM