I’ve received a bunch of awesome emails from readers in response to the introductory email that I’ve sent to everyone who signs up for EPF’s mailing list (top right sidebar! do it!). There are a LOT of awesome people in EPF’s readership who don’t even comment (and many who do)! Anyway, these emails have given me many new post ideas for EPF and for Grad Student Finances. The reader question that I’d like to address today is: How did you get into personal finance as a hobby? (This reader was concerned that question might be too personal, but I haven’t found anything yet that I’m unwilling to address!)
I have a story that is a different from many other personal finance bloggers. I think that many personal finance nerds are born in the crucible of a giant, finite goal, like debt repayment or building wealth for getting into self-employment or early retirement. I felt I had to learn about personal finance just to avoid screwing up with my money.
I wasn’t exactly a financial blank slate when I graduated from college, but I was close. 1) My parents (and school) taught me nothing about money growing up, but what I absorbed from observing them was spendthrift behavior, that “cash is king,” and to never quit a job before having another one lined up. That’s it. 2) I had managed my checking account during college, which basically just amounted to depositing my workstudy paychecks and not overdrawing my balance while buying groceries. 3) I had about $17,000 in federal student loans, plus an informal obligation to help my parents pay the loans they took out for my education.
I was planning to apply to PhD programs, but for the first year after undergrad I did the postbac program at the NIH. I was a full-time research assistant, and my pay was a fellowship, which allowed me to defer my student loans. However, my yearly salary was only $24,000 and I was living in the DC area. For the first six months I lived with my parents, but due to the long commute and familial conflict on January 1 I moved into a house nearer to the NIH that I split with three other postbaccs. Looking back on it, especially in the period when I was living on my own, I had a crazy ‘budget.’ I was taking home $1,800 a month after taxes (which I had to pay myself through quarterly estimated tax payments), and I had $550 in rent, was giving $500 to my parents, $200 to my Roth IRA, utilities, food, cell phone, and the rest of my life. Thank goodness I didn’t own a car at that time!
Basically, I could see right from when I got out of school that things were going to be tight and I had no room for error. And I knew this period would last for my postbac and then at least five additional years through my PhD, although thankfully I ended up moving to a lower cost-of-living area and stopped repaying my parents. I was also keenly aware of my lack of knowledge. I didn’t have any financial imprint on the world at the end of college other than my student loans and a checking account, and thought that should be different but I didn’t know exactly how.
I was an avid reader so I naturally turned to books to help me learn about personal finance. The first book I read was Get a Financial Life: Personal Finance for Your Twenties and Thirties by Beth Kobliner, which was an awesome introductory guide. The book convinced my to start saving 10% for retirement immediately, which I guess was a pretty good message for a 22 year old. 🙂 In response to its advice, I also signed up for my first credit card and moved my primary checking to an internet bank.
I didn’t do everything correctly from the get-go. I invested in cash, I didn’t have an emergency fund, and I took out a car loan. But I was started, you know? My interest grew over time when Kyle and I got married and I got involved with the PF blogosphere. And look how that journey has played out – $100k in combined net worth by the end of grad school! I’m so glad that I did develop that interest, even if it was just a little one at first.
I think the big “why” question goes back to responsibility. I had a big challenge in front of me in terms of my low income and I just didn’t consider living beyond my means an option (‘means’ included saving back then and also tithing now). I knew I needed a good plan to make it through, so I learned a bit and developed one and refined it over time.
Why did you develop your interest in personal finance? What has been the biggest financial challenge in your life?
photo modified from Simon Cunningham