So before you start reading, I wanted to preface this blog entry by saying that I am nervous to write about this topic. I get so excited talking about personal finances, but I was worried that no one else would care (and that still might be true) so I asked my husband if he thought people would be interested in me writing about finances. He laughed and said of course people would care because people love to talk about sex, money, religion and politics. With that said, here I go to start the discussion of money on my blog. (And maybe more to come if people really are interested!) And no, I don't think I will be discussing sex anytime soon on my blog, I'll keep it to money!
Our Financial History and Current State
Early in our marriage, Brian and I decided we wanted to avoid debt as much as possible in a world where it seems most people are comfortable having loads of debt. We were fortunate to get married without any debt and we both were able to avoid debt in our undergraduate degrees by working, scholarships, and grants.
Our Debt and Money Issues
We first went into debt when Brian started law school. It was a calculated choice since Brian could not work for most of law school and I was staying home with James. We also bought a home here in Las Vegas for under $70K. We lived very frugally during those three years and we were very creative with our spending and saving of money. What creative tips do you have for staying out of debt? Or stretching a dollar?
Soon after Brian graduated from law school, Christina was born. We had health insurance with a high deductible so my prenatal care and the birth were several thousand, but not atypical prices with insurance. However, baby Christina's cost became astronomical in only a matter of minutes. A stint in the NICU will cost you several thousand per day. Yes, thousands per day! She stayed in the NICU for 19 days and her final bill was over $100,000. So after a little math, her stay cost well over $5,000 per day! And I don't say all this to say "Woe is me" but on the contrary because we had insurance. (If you don't have health insurance, go buy it today! You cannot afford to not have it!) We only had to pay a mere fraction of that! But even with only a fraction of that due, it was still a lot of expense and Brian wasn't a licensed attorney yet and was making minimal money. It was the first time that we didn't have any money in the bank because we had exhausted all of our savings and even our emergency fund to pay for the birth and NICU bill. Even after baby Christina was discharged from the NICU she had LOTS of specialty doctors and surgeries and the costs still seemed never ending. At the rate it was going we feared that we would never financially get ahead of it! And luckily we were able to avoid debt, but it was month to month for a couple months until we were able to get ahead! And we can thank monthly budgeting and Brian's increase in salary to that! I mentioned in a previous post how I hated budgeting but at that point I knew something had to change. We had been hearers of the word (Dave Ramsey's word that is), but not doers of the word. In the last six months we have been able to get very ahead and we feel very in control of our money. Do you worry about money month to month? Do you budget each month? Do you hate it like I used to? Or are you a nerd and love to watch your money?
And I stress the word choices because as we control our money and our debt we are able to have more choices and I can't wait until all of our debt is gone and all the choices we will have then! But back to the point, our only debt is our mortgage. Our current choices are to knock out our mortgage as fast as we can or to invest 15 percent of our income in retirement (401K and Roth IRA). Currently we are only contributing about 10 percent. Dave Ramsey (our favorite financial adviser and author of The Total Money Makeover) suggests at the point we are at to invest 15 percent into retirement before paying off the house. The reason we are debating the issue is that we want to be moving to a better area and to a bigger house in the next two years and we want to have as much money into our mortgage so that when we sell we can have a big chunk of our next house paid for. What are you thoughts? Are you putting money away for retirement? How much? Should we be more aggressive with retirement savings, as Dave says to do? Or with our mortgage, as the Nelsons want to do?