Why I’m Writing This…
If you aren’t following along on Instagram, you may be confused by this post about finances coming out of left field on this mostly home design and DIY site. Recently it weighed heavily on my heart to share what my husband and I have learned about finances, and how we have been able to improve our financial health and position. Patrice Washington said, “you are blessed so you can be a blessing to others” and that hit hard with me. After a resounding “YES” to the question of whether my followers had an interest in learning more about what we have learned, I set to trying to organize it all into a thoughtful series. But I don’t want to jump into all of that without giving a little history of our lives and financial history. I hope you wouldn’t take advice from just any Jo Schmoe out there offering you wealth. I hope you take the time to do the research, decide what is applicable to you and your unique situation, and move forward in a way that will benefit you the most.
I am not a finance professional. I have exactly zero experience in managing any kind of portfolio, offering financial advice or guidance, and I’m not pretending to. My goal here is to share how we, a couple with fairly average lives, parents of two small children, wanting a comfortable, fulfilled life learned to manage our finances that has allowed us a great level of financial freedom and stability. So here is our story.
Where We Came From
Going back a few generations, we both came from families who were poor. No other way to say it. My Grandfather was one of 10 children, living in a tiny three bedroom cabin home. To this day I think he eats abundantly and lives large because in his childhood it wasn’t uncommon to fight for food or sleeping space. My husband’s side was similar. For both of us, our grandparents, and then our parents worked hard, saved hard, and eventually made some good investment choices and improved our families’ standards of living greatly.
I will fully admit we were privileged in that our parents supported us 100%. While we didn’t go to premier schools for grade school, college or even graduate schools, we did start our married lives mostly without debt. We think this is one of the best gifts you can give your kids and I will touch on that later.
I grew up with a financially savvy father, and a mother who liked to shop (I think she would be ok with me saying that haha!). My Dad always stressed the importance of saving, so when I got my first job in high school I would keep enough money to cover my gas for the week and would put the rest into the mutual fund my parents had set up for me and my sister. It was a nice little nest egg, until I lost it all in our early married years.
Our Humble Beginnings
For college, we both went to an in-state college, and afterwards I took my first “big girl” job at a local clothing retailer corporate office, working to help my husband get through law school at a local, brand new, not even yet accredited law school. I also used the money in my mutual fund to put a down payment on a house, the other important financial step my Dad had always driven home. I was 22 and one of the only people I knew that owned a home. I couldn’t even get financing to purchase furniture to put in it. I didn’t get a credit card until my senior year of college and my credit score was laughably low if not non-existent, so once I used all of it to buy the house, I didn’t qualify to even buy a bed.
Thinking back now, the pennies we were living on also didn’t stand a chance of being able to pay for the general upkeep a house requires. Not only did we have no clue what we were doing owning a home, we also had no money to do it with.
It’s like buying a Mercedes. You might be able to afford the payments, but then you realize that it’s $500 to replace some random part that breaks, or just to pay for the normal servicing. Owning isn’t just about buying the thing, it includes maintaining said thing.
In spite of our small income, I still contributed what I could to my 401k to try to maximize the contribution match from my company, and we started an IRA for my husband.
I bought the house in 2007, the peak of the housing market, which subsequently crashed in the recession the next year. A few years later my husband was graduating law school, and getting nothing but rejection letters from every law firm he applied to in spite of graduating in the top of his class and being the Editor-In-Chief of his school’s law review, AND having completed a successful internship his 2L year. We ended up putting our house on the dismal market in the height of the recession, and moving into the barn on my in laws property (that is where my previous blog name came from).
A few months later we accepted a job offer with the Air Force JAG, a few months after that we ended up selling our house for $30k LESS than we had paid for it. Although we had made every payment we ended up losing our entire down payment and had to bring money to the closing, resulting in a nearly $40k loss. It was painful. And very extremely defeating as a young married couple. But we were being stationed in South Dakota and it felt impossible to try to hang onto a rental property so far away, especially without the finances to take care of any issues that might arise or months without renters.
We were scarred and vowed to not buy a house for a very long time.
While in South Dakota I took a few months off before taking a part time, and then a full time job. With two incomes, military paid housing, no kids and living in an area that wasn’t exactly a metropolis, we spent our time outdoors hiking, fishing and camping, and saving aggressively. One year we saved over 45% of our income! It was during this time it became a priority to max out our IRA contributions each year first and above any other savings. We also started contributing to the military Thrift Savings Plan which is like the military’s version of a 401k.
Our next move was to Turkey. I wasn’t able to work there, and I had just given birth to our first daughter. Thankfully we were still in military paid housing so our smaller single income stretched farther. We were able to tack onto my husband’s work trips allowing us to travel pretty extensively without super high costs, and we continued to save. My husband had some law school debt left after we paid some along the way, his parents paid some, and the military paid some. We made the final balloon payment during this time and were finally debt free.
Coming Home + Our First Flip
When our assignment there was over we made a hard decision to separate from the Air Force and move back to our hometown of Asheville, NC. The housing market there is insanely high for the income potential, but we felt like getting a job offer at one of the biggest and well known downtown law firms was a once in a lifetime opportunity. So even though the salary was crazy low, we took the job. We didn’t know how we would live. We couldn’t afford to rent. No hope of buying. We truly didn’t know what we were going to do, we were just determined to figure it out somehow.
One Sunday, while discussing our situation at Sunday lunch at my Granny’s she offered to sell us a house she had inherited from a lady at her church for what was left of the mortgage (there are reasons why there was a mortgage on an inherited house). It was a small brick ranch (a style of house I swore I hated at the time), with a hoarder renting in it who had been there for 15 years (we had to have her evicted). It had good bones, but needed a major overhaul. Thankfully we had a significant amount of capital in our savings, and it was then our house flipping, DIY roots got their start. We all but gutted the house and remodeled it down to the light switches with the help of family over the next three years.
A year after moving back and taking the job with the firm, my husband was pretty miserable. He had gone from an extremely fast paced, high responsibility, trial packed job, to trying to drum up his own business and hardly seeing the inside of a court room. Not to mention the pay was not very motivating. After spending a weekend at a Christian marital retreat and doing some deep soul digging, we decided he had to leave that job and find something, ANYTHING else. Two days later a job popped up in South Carolina. It was possibly a little above his qualifications at the time, and would mean a 1.5 hour commute each way, but something felt right about it. He ended up accepting it and although the commute sucked, it ultimately nearly tripled our income and we both couldn’t love the company and the people more.
My husband also continued to serve the military through the Air Force Reserves, mainly for the insurance benefits. Alone they saved and continue to save us over $1000 a month. And the extra income is always a nice perk.
If you are wondering why I did not get a job, at that point I had not worked professionally in nearly 5 years. I had a toddler and was pregnant with our second child. I couldn’t have gotten a job that would have paid what childcare would have cost us. So it made more sense for me to stay at home. I worked hard to build a business with Young Living, and was able to bring in around $600-1300 a month through that for a while.
Creating our Goal + Reworking Our Financial Stewardship
Around this time, once we started to relax with more money coming in, when the commute was starting to wear on my husband, we sat down to assess what we were doing with our lives. My husband had gotten into the teachings of people like Zig Ziglar, Toni Robbins, Tim Ferris and Mr. Money Mustache. We both agreed we weren’t born just to work. We talked about when we wanted to retire. The specific age we wanted that to happen. How much we would need a year to make that happen. What we needed to get in place to make that amount of money passively each year. Mr. Money Mustache had a timeline for how he retired in less than 10 years, and we looked to it as a sort of guideline.
We also discussed what retirement would look like for us. We didn’t see it as playing golf every day and bingo at night. We both love to work in some capacity and knew it would need to play some part, but retirement would mean complete freedom to do whatever we wanted to do. Money to live and travel as we wanted, within reason.
From here we began to set goals to achieve the passive income we would need, and my husband began to heavily research how to improve our financial situation. We wanted rental properties to be a big portion of the passive income we needed, and determined that five properties should provide our goal income.
We totally changed how our accounts were set up, what and how we used our credit cards, how we invested, and we started using a number of different strategies to maximize the income we had.
Moving To Greenville + Our Second Flip
Two years of commuting later we bit the bullet and moved to South Carolina, deciding to put our little brick ranch up for rent. The market in the Asheville area was still incredible and we could have made $100k++ profit in selling it, but we also had the potential to make a lot of income each month from renting it. In the long term, making that much extra money each month and still being able to sell it later if needed and making a good profit seemed smarter.
When house shopping in Greenville it came down to two scenarios. We could spend $100k more for a new construction home where we still wouldn’t really get to choose any custom finishes and would have a shoebox sized yard, OR spend $100k less and buy an older home in a more established neighborhood, knowing it would need work to update.
After having spent the previous 3 years living in a construction zone I was adamantly against doing any work, but as the search continued I slowly realized I would not be satisfied if I couldn’t make a house my own in some way – which meant doing work. Which meant buying an older home. But it also meant that the income from our rental house would cover all but a couple hundred dollars of our total mortgage cost between both houses.
In the end we bought a house below our budget, in a neighborhood we love, and we immediately set to completing the extensive renovations. It hadn’t been maintained well at all since it was built in the late 90’s. There was water damage and a general need to bring it up to date.
This was another time in our lives where finances were tight. When we bought the house we intended to take out a secondary loan to cover the renovation costs. Because we hadn’t sold the brick ranch, we didn’t have that extra capital to put into the renovations of the new house. But we got started before we applied for a loan, and after having paid for a fair portion out of pocket we made the decision to just continue as long as we could, hoping we could just pay for it all.
We all but depleted our available capital. It was extremely stressful to me after having just gotten used to being comfortable financially again. We were back to having to watch every dollar. And had to add in the additional cost of paying for both of our girls to be in a Montessori preschool (a mortgage in itself!).
There wasn’t eating out, or buying new clothes or furniture. All of our money was poured into the house (not including what was put into our investment and retirement accounts), and preschool, with the exception of the expense of our 10 year anniversary trip to Bali that had been preplanned – which couldn’t have been at a worse time financially.
Getting Back on Track
We learned a lot from the brick ranch flip, and hired out a portion of the work in this house to help speed things up. In just over a year we completed almost all of the large renovation projects, and are now down to mostly cosmetic finishes that I want to do. Now that the big expenses are over, we have enjoyed a few months of living comfortably enjoying the home we’ve created, and the extra money we have now that it’s not all going to Home Depot and Lowes. We are also shopping for our next investment property.
We have a few balls in the air in regards to the kinds of properties we are considering to buy, but we know we would like an Airbnb property in the Asheville area to be one. The next property will be a true flip/investment as we don’t plan to live in it.
So that brings us to today. We continue to max out all of our IRA and 401k accounts. I shop for clothes at Walmart and groceries at Aldi because I don’t see the point in name brand dish detergent or jeans. We drive used cars because we also don’t believe in car payments (with one caveat I can discuss in another post). Our home is mostly furnished with secondhand items. We don’t spend extravagantly on anything, except maybe travel (pre-Covid) but we have found ways of making travel more affordable as well.
To look from the outside in I don’t think you would be able to discern any of the above. We have a beautiful, comfortable home and a fulfilling lifestyle. We are trying to set up the last few pieces of our plan to set us up for the retirement we’ve hoped and planned for.
We are financially stable to a point that losing a job or having an emergency wouldn’t totally ruin us (within reason).
We aren’t financial gurus, but we did take the time to educate ourselves, to work together to create and work towards goals, and daily we make small choices that add up to help us reach those goals. We still LIVE, but we also sacrifice in some ways knowing it will pay off later.