So last time with “How I got here” I had left off leaving graduate school with a combined debt mess of about $60,000. I knew it was a lot, but figured I was going to graduate school and most of it was student debt, which is supposedly “good debt” right? So I continue to make bad financial decisions.
The very first one I made is that I got a moving company to move furniture I had bought to where I was going to graduate school. I guarantee you that the furniture probably wasn’t worth more than $1000, but I ended up paying over $1500 to have some guy move that furniture for me. And I actually had to help him move it into my apartment on my birthday, right in the middle of my grad school orientation. Of course I financed with little move with the ye olde credit card. Face Punch me now! (BTW, I keep using the term face punch because there is a great blog called Punch Debt in the Face, which chronicles one family’s journey to pay off debt and become financially independent. It has become a common trope amongst many financial bloggers to say they should be face punched or punch debt in the face in order to get rid of it).
So I move away from friends and family to work on my Ph.D. For the next two years, I pretty much keep doing what I am doing: rack up debt and keep taking out student loans. By the end of my second year during my doctoral program I had accumulated over $95000 in student loan debt and about $12000 in credit card debt.
During this time I started dating another girl (not Mrs. Reaching Our Balance). She happened to be someone who was very conservative with money, had an excellent job, and really seemed together financially, and just in general. We began dating and after a while we moved in together, became engaged, and eventually got married. She also had massive student loan debt, but her father was making payments on that debt so it didn’t seem like a big deal.
My ex also (and I must thank her again for this if she ever runs across my blog) helped me out immensely financially because she helped me pay off my credit card debt, I only had to pay for a small portion of housing expenses, and allowed me to focus on finishing my dissertation without taking out more debt. However, during this two-year window I found out how much in student loans I had really accumulated and the number scared me. I couldn’t wait to get out of school and start paying those off, not that I knew how.
As luck would have it when I went out onto the job market during my final year of graduate school I received multiple interviews and a couple of different job offers (this was before the market tanked in 2007). That summer was a whirlwind. I got married, defended my dissertation, accepted a job offer, and we put the house my wife had bought onto the market and proceeded to move. During this summer I began turning my dissertation into my first book.
It was here that I guess I began a mini financial awakening. I have always been interested in money and investing, but never really did anything about it. While I was in graduate school I started listening to Dave Ramsey and he got me inspired to pay off debt, invest, and live my life like no one else so you can live like no one else. The problem is that I didn’t engage in Dave’s gazelle intensity and my ex really wasn’t interested in it as well. So my enthusiasm for paying off debt quickly waneed, but my education into finance kicked into high gear. I fully admit that the job I accepted was the one that paid the best, had the best 401k match, and health benefits for my family. It was primarily a financial decision and one that I don’t regret to this day.
So we move so I can begin my first job and I continued to make stupid financial mistakes. Two of those mistakes stand out. First, when we moved we paid movers to transport our second car up to where we lived (my ex was scared to drive and couldn’t have driven the second car). That little expenditure was almost as much as the car was worth. Second, we didn’t do a good job of scouting the area and proceeded to rent a very nice apartment that we truly couldn’t afford. Our apartment, every month, ate up about 40% of our income. We got the apartment, partly, because it offered a shuttle service for my ex to the train station that was free and it had a gym where we could both work out, which didn’t stop us from also purchasing gym memberships as well. Yes I know I AM A MORON!!!
During the first few months of my job my ex and I were actually carrying her mortgage and our rent. It amounted to about $3200 a month. I only took home about $3000 a month and my ex hadn’t gotten a job yet. As I mentioned my ex was very conservative financially and she had saved over $50,000. We used part of that money to live on for a few months.
So we sell the house and actually make a little bit of a profit on it. We took that money, paid off my ex-wife’s student loans and had her dad send us a monthly check instead. By this time my student loans had come due. I, initially, was on the standard payment plan. My payment was over $1000 a month. It was hard financially, but we were able to actually make that payment. My paycheck basically went to pay rent and my student loan. You would think that at this point in the story I would’ve learned my lesson. We would have gotten Dave Ramsey gazelle intense and scorched earth my student loan debt. Nope. We just kind of went about our business. We continued to eat out on the weekends. Took some vacations and weekend getaways. We had a massive amount of money in the bank, but we didn’t even think about paying off the student loan debt. I worked diligently on my career. My ex-wife tried to find her footing in her new position. Financially, we ambled along. I could’ve taught extra courses, but I turned them down. I didn’t want to put in the sacrifice to pay off debt. We just kind of ambled. I even re-financed my student loans to the extended payment plan so I could have a bit more breathing room. But there was no urgency I just accepted the debt, even though I hated it, and continued to live life.
Things in my personal life weren’t going well. For a variety of reasons my relationship began to go south, I was throwing myself more into my work, and becoming more isolated. All I did was get up, go to the gym, say hello and good-bye to my ex-wife, go to work, and come home. I didn’t make extra money. I just worked on improving my classes or publishing more or whatever it was. I wasted a lot of time and opportunity and I was undisciplined.
Yet my interest in personal finance continued. Although I wasn’t paying off debt I was investing in my job’s 401(a) plan, I started a 403(b), and a Roth IRA. I began to accumulate a nice chunk of assets. I enjoyed reading about mutual funds, paying down debt, etc. But I focused primarily on accumulating assets instead of paying off debt because I was convinced student loan debt is “good debt” and it was just a cross I had to bear in having these massive loans.
In 2010 everything came to a head. I couldn’t keep living the way I was living. I was miserable in my personal life. My finances weren’t great. I was depressed. Professionally things were pretty good, but it was all a façade. I was not in a good place. I ended up splitting with my ex-wife. We ended our relationship amicably. We split our financial stuff 50/50. I probably had about $75000 in student loan debt, some car debt and the like. And I also rekindled an old relationship with the love of my life, Mrs. Reaching Our Balance. She put the light back in my life, but in pursuing our relationship I continued to make more financial mistakes.
Part III will chronicle my continued stupidity with money (although it was a lot of fun) and what finally woke me up.