Category Archives: Family

10 Years Later

This week, my wife and I celebrated our 10th wedding anniversary.  It had a surreal feel to it.  It is hard to imagine that 10 years have gone by.  In all honesty, it has gone by in a flash.  This post is a brief review of the past 10 years.

Our Wedding day

My wife and I were married on August 10th, 2007.  It was the best day of my life.  Sorry, if I sound cliché, but it was the day I married my best friend and the greatest person who I have ever met.

Even though it was 10 years ago, I remember the day like it was last week.  Our wedding was on a Friday night and it rained the entire day.  My day started by going for breakfast with my dad and uncle who came in from out of town.  After breakfast, I had to take by grandmother to the hairdresser.  After that, I went home and relaxed.  That afternoon, I watched the first 2 episodes of Mad Men and just reflected on my life.  At 5 pm, it was time to get ready.  I put on my tux, jumped in my car, popped in Exile on Main Street by the Rolling Stones, and headed to the hall to get hitched.

Our Wedding

We were married in an unpretentious hall in Olyphant, Pa.  For wedding gifts, both my parents and my wife’s parents gave us each $5,000 to use towards the cost of the wedding.  We managed to keep the cost of the wedding close to $10,000.  My future sister-in-law paid to have the string section from Marywood University’s Music Department play for one hour while guests were arriving.

When we were planning our wedding, my dad gave us a solid tip.  He said that people will be coming after work on a Friday night, so be sure to have plenty of food and alcohol ready for them as they arrive.  We followed his advice and our guests were pleased.

Our wedding went off without any hiccups.  We said our vows, ate, danced, and had a great night.  It was the beginning of a new life.

Our House

After our wedding, I moved in to the house my wife owned.  My wife had purchased this house from a relative a few years after she finished college.  The good news was that she almost had the house paid for.  The bad news was that it needed to be remodeled.  Over the past 10 years, here is what we accomplished:

Doors: $2,000

Garage door: $1,200

Shed: $1,400

Windows: $3,500

Bathroom remodeled: $6000

Kitchen remodeled: $8,000

Deck: $9,000

Roof: $8,000

Addition: $30,000

Lawn & landscaping: $5,000

Awning: $2000

Generator: $3000 (following Super Storm Sandy in 2012)

All the projects other than the addition was paid for in cash.  A home equity loan was taken to pay for the addition.

Salary & Savings

The first year we were married our combined income was just over $80K.  Since then, it has doubled.  Every year we have maxed out our Roth IRA accounts.  We also fund our 401K/403B accounts.  We started by contributing 10% of our salary to the 401K/403B accounts and have increased our contributions to the maximum amount allowed.  We also save money in a taxable account.  Our savings rate has increased from 40% to almost 55%.

Education

My wife is a public-school teacher in Pennsylvania.  To get to the top of the pay scale, she had to complete 60 credits beyond a Master’s Degree. When we were first married, my wife had her Master’s Degree.  For the first 4 years of our marriage, she took classes and finished the required 60 credits.  She did so without incurring any student loan debt.

When we were married for 5 years, I switched careers from Marketing to HR.  My new employer offered tuition reimbursement as a benefit.  It was my goal to go to graduate school.  I took advantage of that benefit and went back to school to earn a Master’s in Organizational Management.  The degree cost me about $2,000 and my employer paid for the rest.

Volunteering

Prior to getting married, my wife did a great deal of volunteering.  She did mission work in China where she volunteered to teach English to children in orphanages.  After we were married, she has shifted her efforts to volunteer more at her church.  She has inspired me to be more community focused.  I have become active in helping teach career and interview skills to young people who are developmentally delayed at The Arc of Luzerne County.  We also volunteer together and have taken on a commitment to pick up roadside litter as part of an Adopt-A-Highway project.

 

(Actual Photo of us wearing matching shirts)

Travel

It has not been all work since we have been married.  We have gone on many nice trips.  Here are some of the places we have visited:

San Francisco, Ca (honeymoon)

Tampa, FL

Las Vegas, NV

Miami, FL

Key West, FL

Puerto Vallarta, Mexico

Bermuda

Charleston, SC

Burlington, VT

Ocean City, MD

Washington D.C.

OBX, NC

Asheville, NC

Virginia Beach, VA

Quebec City, Canada

London, England

Paris, France

Our Relationship

My wife is my best friend.  She is also the kindest person who I have ever met.  Our relationship is based on trust, honesty, respect, and communication.  We are not perfect, but we try to be good to each other and to be considerate.  I am not going to lie, it has been easy.  I would not change one thing about her and would marry her again.

Conclusion

Looking back, it has been a great 10 years since we have gotten married.  Moving forward, we are planning on doing more of what has gotten us to this point.  Our goal is to retire in about 11 years, so we need to continue to work hard, save, and invest.  Life is short, so we are also going to continue to travel and enjoy every day we have together.

How I learned about money

I learned about money from my Grandmother.  I was a precocious kid.  As an only child, I spent a great amount of time with adults.  The adults in my life had the tendency to try to have dialog with me as if I too were an adult.  Friends from school would come over to my house to play quite often, but I remember spending a great amount of time with my Grandmother.

My Grandmother owned her own small business.  She was a seamstress.  She worked for a few different bridal shops.  She also worked for a men’s clothing store.  Most days, she would pick me up after school and take me to her shop.  She would watch me until my Mother would pick me up on her way home from work.

It did not take me long to catch on to the theory of commerce.  Her customers would drop off cloths to be altered.  She would make the alterations with her sewing machine.  The customers would pick up their cloths and pay her.  When I earned good grades, she would take me to KB Toys and buy me Star Wars action figures.  Even though I was only 5 or 6, I understood this process.

There were also times when I would ask her to buy me a toy and she would say that she could not afford it.  She would explain that business was slow and she did not earn much money that week.  She said that she only had money for food, gas for her car, and other needs.  She taught me at a young age that if you want money, you must work to earn it.

That was a complex theory to comprehend at such a young age.  I was only in first grade.  I do not have a psychology degree.   I can, however, see that my frugal ways and entrepreneurial spirit were shaped by her teaching me how business worked.

The second lesson that she taught me was equally as profound.  She and I would sit together in her shop.  I would do my school work and she would be sewing.  I would spend about one hour per day with her.  We would have conversations.  She would ask what I learned at school that day?  She would tell me about her work and other stories.  She would talk about her life when she was growing up, her church, and money.

Money was her favorite topic.  She once told me that she invested in CDs that had paid out an interest rate of 13%.  She would double her money in 6 years.  She was so excited.  I am now referring to the early 1980’s when inflation and interest rates were sky high.  She explained that she would let the bank borrow $1000 from her and in 6 years they would give her $2000 back.  I found that fascinating.  Now remember, I did not understand compound interest.  I was not introduced to multiplication yet.

This first blog post is a tribute to my Grandmother.  Looking back, she truly shaped my view of money.  If you want money, you must work for it.  Also, if you have money, you should invest it.

In case you might be interested, my Grandmother is still alive.  My parents take care of her now.  She is 94 and ran her business until she was in her 80s.  She had to finally give it up because her body was breaking down.  Sewing was her passion.  At the end of her career, she was just doing alternations for her neighbors.  I don’t think she even charged them.  She just liked them coming over to talk with her.

Occasionally, my Grandmother will call my wife and ask her to come over for a visit.  She wants to teach her how to use her sewing machine and pass on her legacy.  Maybe she will also share some investing tips with her too.  We have never consistently earned 13% returns on our portfolio.

How did you learn about money?

The Power of a Dual Income Couple

Albert Einstein said that compound interest is the 8th wonder of the world.  He who understands it will earn it, and he who doesn’t will pay it.  If compound interest is the 8th wonder of the world, then I feel that the power of a dual income couple is the 9th.  Being in a dual income couple can be a powerful wealth building partnership if managed correctly.

At my first full-time job, I worked with a guy named John.  John trained me when I first started at the company.  He and I became friends and we would often have conversations during lunch hour.

John was more than 20 years older than me.  He and I would talk and he would give me advice about life.  He told me that his wife was a stenographer and they lived off her salary.  They used her salary to pay their mortgage, car payments, buy groceries, and all their other expenses.  He said that they saved all the money he earned from his position.  They invested all his earnings and were planning on retiring in 20 years when they were both age 60.

I was a young man at the time and never heard of living off one salary.  This was just around the time that I was getting interested in personal finance.  It truly did sound like an ingenious plan.

When my wife and I got married, this was the basic strategy that we planned on using.  In my own experience, I have found that being in a two-income household has many financial advantages.  Here are some tips on structuring a plan to get the most out of a dual income household:

Salaries

Start by analyzing both salaries and identify the higher of the two.  Use the higher of the two salaries for paying all the reoccurring monthly expenses including housing, food, insurance, recreation, miscellaneous expenses, and child care if you have children.  Set a goal of one day being able to use the lower of the two salaries to pay these expenses.  This can be done by focusing on reducing expenses, career growth, and even side jobs.

You might be thinking that living on one salary would be impossible.  It might not be easy, but it is defiantly doable.  Check out the Story about Liz who was featured on budgetsaresexy.com.  Liz provides for a family of five people while also saving to reach early retirement (FIRE).  Liz is also the author of the blog Chiefmomofficer.org.

Debt

Before you start savings and investing, you want to analyze your debt.  If you are part of a dual income couple that has a debt, first work on paying that down.  If need be, take a few years of using the lesser of the two salaries to pay down your debt.  Start by paying off all credit cards, auto loans, and any personal loans that you might have.

Next, pay down your student loans and mortgage.  Once you are left with only student loans and a mortgage, pay them down to debt-to-income ratio (DTI) of under 15%.  After your debt-to-income level (DTI) is at a manageable level of under 15%, the higher of the two earners can work towards reducing the (DTI) even further.

To calculate your Debt-to-Income Ratio, see the formula below:

Debt-to-Income Ratio = Monthly Debt Payments/Monthly Income x 100

Example: $1000 in Monthly Debt Payments/$4000 in Monthly Income x 100 = DTI of 25%

Savings

When you are in the paying down debt stage, you should also contribute to a 401K if there is an employer match.  You want to contribute to get the max amount of what your employer is matching.  To do otherwise would be to refuse compensation.

Now it is time to start saving and investing.  First establish an emergency fund of 3-6 months of expenses in a FDIC insured savings account.  Second, max out both 401K accounts to take advantage of tax deferred savings.  Third, max out both Roth IRA accounts to grow that portion of your savings in a tax-free account.  Forth, use any additional savings to invest in broad market ETFs in a taxable account.

Conclusion

No matter if you are newly married or have been in a dual income couple for many years, you too can take advantage of the powerful wealth building capabilities that you have been blessed with.  My wife and I have been following this approach to reach financial independence for almost ten years.  Our savings rate is over 50% because we have learned to live on one salary.

One last note, I ran into my old co-worker John last summer after not seeing him in many years.  I was having breakfast at a local diner one Saturday morning and John was there with his wife.  We had a brief conversation.  He told me that he is retiring next year and moving from Pennsylvania to Texas where his wife has family.  It appears that he truly did follow the simple yet profound approach to reach financial independence that he introduced to me a long time ago.

Please remember to check with a financial professional before you ever buy an investment and to read my Disclaimer Page.