One of my favorite podcasts of 2017 was Philip Taylor’s (PT) Master’s of Money, where he interviews what he calls his “money nerd friends”. In each interview he asks a series of the same questions, inviting the interviewee to share the habits and mentality that has helped them become and be successful along their personal finance journeys.
My family’s income is no where in the vicinity of those PT interviews, and I’m not actually friends with PT (let’s be friends PT!). But I’ve learned a lot and I’ve taken a very close look at my family’s finances over the last couple years to develop intentional money management practices. And I thought it would be fun, and possibly even beneficial to a few of you to share some of my personal finance story.
Below, I’ve simply answered several of the standard questions PT asks his guests.
Enjoy!
Q1:
What’s the one thing you do that you feel maybe others don’t that’s been the biggest contributor to your financial success so far?
Bruce:
I’m by no means alone in this, but what’s made me feel most successful is that my wife and I track our income and spending regularly. A friend introduced us to the budgeting app YNAB a few years ago, and we’ve been logging our transactions ever since.
We abide by a suggestion to give, save and spend – in that order at the beginning of each month. So we give to the Church and one other non profit organization first, and then filter money into a few savings categories, including retirement. Whatever is left over is used for monthly and rainy day bills.
Since we’ve been budgeting for a couple years, I’ve gotten pretty good at estimating what our expenses will be each month. We’re mostly really close to those projections, but any monthly expense category that is not completely used up by the end of the month moves to one of our savings categories. For example, if we budgeted $500 for groceries for the month and only used $450, then $50 would move into one of our savings categories. It’s a really fun incentive for us to try and have money left over at the end of the month to add to a savings goal.
To sum up what I feel makes us successful with money – we develop a plan for every single dollar we’re given.
Q2:
Take us back…Was there a moment that you decided to become a “master of your money” and improve your financial life?
Bruce:
Looking back I can connect the dots as to why I geek out over this stuff. I’ve never had an issue saving money. If I remember correctly, by the time I was in college I had a little over $15,000 saved. I just always had a natural bent for pocketing my earnings.
And then before discovering YNAB, I can remember keeping every single one of my receipts and typing in my expenses at the end of each month on an Excel spreadsheet I created. My wallet was a maze to sift through at that point in time. I can’t remember for certain how I allowed the spreadsheet to inform my spending habits, but looking back it was great practice for manually logging transactions, which my wife and I still do on our YNAB app. Somehow my wife still loves me even though it’s much more of a chore for her to log transactions (#FreeSpirit). She’s such a great budgeting partner!
I think becoming a master of one’s money is typically a series of events. For me I remember a few to date:
- In 2011 I was attending Life.Church and they did a four week series on finances featuring Dave Ramsey. At that point in my life I had significant savings, but I also had student loans. After hearing Dave talk about the importance of an Emergency Fund and knocking out debt with the “debt snowball”, I dipped into my savings over the course of about three months to eliminate my school loans, which weren’t scheduled to be paid off for another 7 years or so. I could have paid them off immediately upon hearing that advice, but I was a little unnerved to make such a large one time payment. Luckily I still had a sufficient amount of money left over after the self proposed three month payment process to feel like I could handle an emergency should one arise. It seems to be a rarity for my wife and I at our ages to be without student loan debt. Knowing that we were entering marriage debt free allowed us mentally to feel more comfortable pursuing other big financial goals.
- Shortly after getting married in 2015 I was assessing our financial situation. One afternoon I was listening to Dave Ramsey’s podcast and I heard him discussing his suggested Baby Steps. According to his model of money management, because of me and Holly’s financial position (Emergency Fund developed with at least 3 months of expenses and no debt), we should have been investing 15% or more of our money toward retirement and saving up for a down payment on a house (if home ownership was a goal) – neither of which we were intentionally doing. So I reached out to one of Dave’s Endorsed Local Providers in the area of investing for advice. I think it took us six months after that meeting, but we finally pulled the trigger to open a couple Roth IRAs for each of us to contribute to, in addition to the 401(k) I was contributing to at my job. Our money obviously grows a lot faster in these vehicles than any other savings or checking account we’ve had money in.
- We bought a house in January of 2016! However, we did most of our research on buying a home AFTER buying the home. The whole process just seemed to go so fast, and we didn’t totally understand everything we were being told. Looking back, we allowed ourselves to be guided into decisions much faster than I would have liked. We love our home, and the purchase has not put us in a financial bind. I only wish I had done more research on the entire process to be more efficient in certain areas. This was the most recent financial transaction / life event that really made me hone in 100% on our finances.
Q3:
Were there any tools you were using to manage your money and keep track of things?
Bruce:
As mentioned earlier, before I was married I had been keeping track of my expenses via receipts and an Excel spreadsheet. And then I discovered YNAB, which changed my personal finance game in a BIG way. YNAB is basically Dave Ramsey’s envelope system, only in a digital format. In YNAB’s software application, the user creates a zero based budget each month, allotting earned money into a variety of categories (think tithe, mortgage, utility bills, etc.). Anytime income is received or an expense paid, the user must log that transaction (easily do-able on the YNAB cell phone app). For an expense transaction, the user designates what category that money will come out of. YNAB then automatically does the math for you. For example, if I had $50 set aside in a “Bruce’s Personal Spending” category and then I spent $5 on a movie ticket, I would log that $5 transaction from that specific category, and YNAB would subtract the $5 from the $50, leaving me $45 leftover in Bruce’s Personal Spending.
After purchasing our home I dove deep into several of Dave Ramsey’s materials (podcasts, books, etc.), which offer very sound and simple advice. Somehow beyond that I discovered the Financial Independence and Personal Finance blogging community. There are so many people out there to learn from with advice and personal stories about their financial journeys.
Personal Capital is another major tool I use to track all of our accounts in one place (cash, investments, mortgage and other assets like cars and home equity). This app allows you to view all of those accounts on one simple screen, and it populates and tracks your net worth and cash flow trends in real time as those figures move up and down.
Q4:
What about investing during this time in your life? Did you do any investing at all? When did you open up your first investment or brokerage account?
Bruce:
Retirement and investing were terms in my 20s that were really vague and uncertain, and it seemed like the purpose was for some distance lifetime that is still even really hard to imagine. However, as mentioned earlier, I heard Dave Ramsey breakdown his Baby Steps in a podcast one afternoon and realized, according this his simple plan, that Holly and I were in a position to begin investing some dollars. Around the same time I had started a new job that had a 5% match on their 401(k) offer, so I contributed enough to get that match. And then we visited with a local investment advisor to open two Roth IRA accounts (one for Holly and one for myself) spread out across a few mutual funds. In 2017 we did our best to max those out. We didn’t quite get there, but we were really close.
Q5:
Is there any part of your personal finances that you’re just not good at?
Bruce:
I would say investing at this point. For one, we don’t have big money to contribute. Also, in all the research I’ve done I probably lean toward passively investing in a total stock market index fund in hopes of incurring lower fees over my investing lifetime. However, Holly and I currently both contribute to an actively managed fund, which it seems might have higher fees associated. There are all kinds of articles and opinions weighing the pros and cons of each. I’m not really sure how to make the switch at this point. Either way, it appears the key to success is consistent contribution. I’m excited to learn more about investing along the way.
Q6:
So what about now? On the personal finance side do you have any financial goals? Do you have any personal finance goals you are trying to achieve right now? Whether that’s paying off the house you own or saving for a specific goal? Anything like that?
Bruce:
We have one major personal finance goal in 2018. My wife and I really want to start a family, and we understand it costs money to have a baby. We have set a dollar amount we want to have on hand before a baby arrives in what we’re deeming our Baby Doane / Emergency Fund, and we’re SUPER close to achieving that number, which will alleviate a little stress going into a hopeful pregnancy and healthy birth. We should have that taken care of in the first quarter of 2018.
We also want to get as close as possible to maxing out our Roth accounts. Neither Holly or I have 401(k) accounts through our current employers, so all investing dollars go toward the Roths.
And we will plan to take a vacation together this summer. So we’re actively saving for all those things in 2018.
Super long term we want to pay our house off early. We signed up for a 15 year mortgage on a house that didn’t cost a ton of money. But it’s situated in an ideal location and serves our needs. If we can get that paid off by the time Holly and I are 40 (roughly 10 years) I’ll feel really good moving into a season of hopefully helping our kids with college and beefing up retirement accounts.
A MAJOR dream Holly and I have is to travel to Africa with some kids in our neighborhood. Their families are refugees from the Ethiopia area, and most of those kids were too young to remember being in Africa, or they were born here in the states. Holly has known them for 8 years now, and I’ve known them for about 4. In a lot of ways they feel like family sometimes, and we think it would be a really fun shared experience to travel with them to see their roots in a more tangible way.
Q7:
Looking back… how do you feel about it all now?
Bruce:
To be cliche, I wish I knew it all sooner! In all honesty, I’m extremely grateful for the skills and knowledge I now have. And I realize learning is a life long pursuit, so I can’t wait to see what else I learn along the way.
In life, a lot of things that mean the most to us are connected to money in some way. So learning to handle money in the ways I’ve talked about has really made my wife and I more intentional people. Discussing what categories we want our money to go into forces us to discuss what we want to do for vacation, or if a family is a reasonable idea, or what date nights might look like over the course of a month, and a host of other things. Being intentional with our money helps us to be intentional with our lives, and vice versa.
Q8:
How can folks learn more about you and what all you have going on?
Ask me! I don’t have any of my own personal finance tools to sell or a website and products to promote. However, I thoroughly love talking about this stuff, and I would like to help you make progress with your personal finances if you feel like you want support and / or accountability. Find me on Twitter (@brucedoane) or shoot an email to icyclesometimes@gmail.com and let’s chat.
Experience the Dilemma 