Family and Finances: Episode 2, Part 1

And today we're going to talk about our financial mistakes. We're going to try to narrow down the list to maybe five. And that was the hard part about setting up this podcast. We made mistakes from the day we got married. We started out as a mistake. I mean, I had student loan debt, had a lot of scholarships, but I went to a private university and I brought $5,000 of student loan debt into the marriage. And I had a $1,000 gift from my grandmother, I believe. So we were negative $4,000. So you bought negative $4,000 net worth into the marriage. And I really hadn't saved or prepared. We had the philosophy that marriage would be held together by love, and we could pay the rent with love, and we figured it out as we go. But we started out in a negative financial situation. And it didn't get better from there. No, I think we assumed it would because we were both getting ready to graduate. We were going to start our careers, and we would make money, and we were both working, and we would just solve all these problems. What we didn't realize is that you have to spend so much money to get established and to start a home. And so we're going to list our financial mistakes. I'm going to give you the first one that I think was the most serious, is that we had zero savings. And so if an emergency came up, which it always did, we just weren't prepared for it. I don't think we even knew how important savings were. No. I hadn't. I mean, I'm not blaming anybody for it. I just didn't have the discipline to be a saver. I didn't see it as something you do as a way of life.

And I didn't see the need for it at our stage of life. I like to have money in the bank, but I had no concept of car problems or needing to pay a down payment for a home. It didn't enter my mind what we would need it for. Yeah, and in my optimism, I assumed that as our income increased, we would always outrun the expenses. Right. And so we lived without a safety net, which caused friction because your security orientation, it kept you in a constant state of insecurity. And I didn't realize how important it was just for the marriage relationship to have savings. And so ultimately, we had to do something about that. We had to correct that. And maybe let's go through the list of things we did wrong, and then I'll maybe go back through the list of how we corrected it. Sounds great. So without savings, you would think that the first thing you needed to do was to live on a strict budget. But we didn't have a budget. And I didn't want a budget. In fact, when you would bring it up, I remember telling you, I don't want to live on a budget. It sounded like something that people did that were just, you know... Nerds. Brought back memories of accounting class, probably. And I figured if we kept a balance in the checkbook and there was a little bit money left over, that was a budget. And so without the budget, we literally just were flying blind, hoping to make it to the end of the month. And then the next month, we would cycle into maybe a raise, you know. Something would come along that would help us out of a mess.

And without the budget, we were constantly treading water. And I remember that was so stressful to you, but not to me. Because I felt like, yeah, it'll get better one day. And you were waiting for me to say, hey, that day needs to come now. But for me, it just didn't come. I kept putting it off, putting it off, putting it off. Well, and I think in the back of my mind, it was like, OK, end of the year, we're going to get a bonus, we'll get a raise, then we can save that money. But that didn't happen because we'd spend it. Well, it led to the third problem, which is the use of credit cards. And when I look back on that, Ann, I just, I can't even believe some of the things we did. No, it was pretty bad. If we didn't have a credit card, we'd get store credit back then. Basically, if you think about it, the credit card was a substitute for our savings account. Because we didn't have cash, we would just go and get another credit card. I don't know if you remember this, but Chase Manhattan Bank sent us a check. checks in the mail, and you could literally write a check and pay for things instead of using a piece of plastic. And I used every single one of those checks without knowing that it was 24% interest every time I wrote one of those checks. I used every one of them. The whole limit. Well, I remember not having enough money to write a check and having to buy diapers, and it was just... I just felt so guilty having to use a credit card to buy diapers. Do you remember having overdraft protection at the bank? Oh, thank goodness they offered it. I mean, I don't know if people even have that option today, where you have a relationship with your bank.

If you write a hot check, they won't bounce it as long as you pay a fee and agree to come in and cover it later. Well, we paid for that service, so we could write hot checks. In fact, we used to float checks, even for things like diapers. And so we were just dancing on hot coals. Waiting for our ship to come in. Yeah, and I was always promising the ship was coming in soon. And on those credit cards, Ann, I remember at one point we had nine credit cards, or the equivalent of a credit card. Some were those checks. And then we had all these store accounts. We would go in and open store credit accounts. And we had a personal line of finance at the bank. So we piled up all kinds of consumer debt. Yeah, and you were working for your dad and thought that we would hit a well, and it would all be fine. Oh, that was it. Yeah, I was going to be like Jed Clampett. One day the oil would come bubbling up out of the ground, and we'd pay off all the bills. So that was our third financial mistake. We had no savings, no budget, and using credit cards as our safety net. And then we had an issue with the way we wanted to buy cars. So my dad was raised that you buy a new car, you finance it, and you drive it to 100,000 miles, and you trade it and get another one. So the way he operated was he always had a car payment. He decided to gift us with a new car as a wedding gift, so maybe he thought we wouldn't have a car payment. But after that one wore out, what did I do? Well, we bought a new car, but I can't remember which one we bought. Was it the Volvo?

We bought a Volvo, brand new, and financed it. I remember my sister driving up one day in a brand new van that they wrote a check for, and I thought, how in the world do you write a check for a car? It was beyond my comprehension. Me too. I remember thinking, what? I don't even have hardly any money in the bank. How could you buy a car and not have a car payment? In fact, I had adopted the idea that we would always have car payments. Well, I loved the idea of not having one, but I didn't know how to get to that point. Well, I remember going to the lot and looking at what we wanted and asking, how much is the payment? I didn't ask necessarily how much does a car cost. And I didn't think about all the other costs. In fact, you know the Volvo that we bought, remember why we bought it? Because the advertisement said it was the world's safest car. And we decided, all right, if it's the world's safest car and we're having babies, we're going to drive that. And we picked it out and we bought it. And I really do believe I paid for it double. I paid for it twice with the amount of interest we paid on it and the amount of times we had it repaired. It broke down all the time. Well, it was good at first. For a little while. But then the air conditioner wouldn't work, the brakes wouldn't work. It had problem after problem after problem. And it really cost us, I think I calculated later, twice the amount of the original purchase price. So if it were a $10,000 car, it cost us $20,000 over the life of that car.

And you would think we would have learned from that. But sort of from then on, every car we bought, we just went down and financed. And just took whatever rate there was and assumed that was a natural part of how you lived. I remember at one point we had a pickup, though. We bought a new pickup. Remember that? Yes. And I had taken over payments at this point. And I remember the joy of doubling up those payments. Once I put you... In charge of paying the bills, they started getting paid on time, and you started reducing our debt. That's some of the corrective action we took. But we, in just listing the mistakes we made, if you think about it, we have no savings, we have no budget, we're running up debt on credit cards, and then we're borrowing money to drive a car. So it's like every single bad decision you could make with money, we're doing it and thinking it's normal. Yeah, but then it got even worse because we're having babies and thinking we need a house. How in the world did somebody loan us money for a house? We did need a house, but the way that I decided to pay for it was the problem. So thinking back on that, that really was our biggest mistake. I mean, it's the biggest part of your budget, and it's the most devastating mistake you make financially. But at that point, we had some assets, we had made some investments, and those investments were improving steadily. The strange thing is, and I'm going to admit this here, I borrowed money. How anybody had loaned me money, I don't know. I guess against our salary.

But I borrowed money and invested in an oil and gas well, took that kind of risk. Eventually, it produced to pay that back and to give us some extra income. But I didn't use it to pay down debt. As that income came in, we decided to buy a house. I think we had 10% down, which is the minimum. And then we got introduced to private mortgage insurance, PMI. And so we were having to pay that on top of our house payment. Well, and that was, our rate was outrageous, too. Remember? I think your dad was shocked that we bought a house. Well, that was back in the hyperinflation days. And when we went to apply for that loan, mortgage rates were 18%. People listening right now have the lowest interest rate possible in history, like at 3% for a mortgage. But what we did is we got an adjustable rate mortgage, where we were paying 6% for three years and then they would adjust it after that. So you didn't really know how much your payment was going to be in three years. So we took the worst possible financing with the lowest down payment and the private mortgage insurance. And then we did one more thing on top of that. Do you remember? Well, I don't know if you're going here, but we remodeled. That's where I was going. I mean, we bought a wonderful house, great bones, but boy, it needed updating. And so we updated it and borrowed the money to do that. So imagine how much debt we have. Plus, when we updated it, Ann, we didn't add any square footage to it. We didn't make it larger to make it more valuable. We just made it the way we liked it. And then in the midst of all of that, I lose my job.

And so it's like a nightmare scenario. No savings, no budget, consumer debt, car debt, and house debt. And I'm a housewife. And by that time, you'd stopped working. And then the well that was producing went dry. Literally, it went dry, the oil and gas well. It stopped producing as well. And when you look back on it, you think, surely God was trying to get our attention. And yet, with all that pain and all that stress, I still did not get it. I still did not figure out what we were doing wrong. No, we didn't even go to God for answers, Chuck. We weren't seeking there. We were just seeking for another job. I was just seeking for more money. In fact, I need to admit this. I always believed that it took more money to solve financial problems, that more money would fix the problem. That's the worldview that I had. It wasn't that I was mismanaging it. It was that I just didn't have enough. If you think about how illogical that is, the problem wasn't me, it was the lack of money. But, I mean, that's what I thought. The real issue was, I wasn't managing what I had. Well, also, Chuck, we moved into three houses. We kept moving up, up, up, up, up, in a very short period of time. Three houses, maybe in five years or something. It was crazy.