The Smartest and Best Financial Decisions I Have Made

The Smartest and Best Financial Decisions I Have Made

In a post I wrote about a year ago I chronicled the worst financial decisions that I have made. Since it has been about a year later I thought I would focus on some of the smartest and best financial decisions I have made. I think there are several decisions that have paid off and will pay off in the future.

  1. Taking control of my financial life and paying off my debt. I was/am like a lot of people. I would get my paycheck, maybe save for retirement, and spend the rest. I always paid my bills on time and although I hated debt I never did a lot or make a pledge to get out of it. After Mrs. ROB and I got married a couple of years ago that changed. I realized I needed to get my financial house in order. It didn’t help that I had a total of about $120,000 in debt (including student loans….which made up about $75000 of that debt). I have since shaved about $45000 off of that debt. I still have a ways to go, but I am better off than I was a couple of years ago.
  2. Investing beyond my 401k plan. At my current employer I had a choice of taking a pension plan or investing in basically a 401k. I chose the 401k plan because I didn’t know how long I was going to be at my current position. Ten years later I am still here. However, in January 2008 I also opened up a Roth IRA and a 403(b). Since that time I have contributed to both accounts fairly consistently. This year will be the first year that I have contributed the max contributions to 401k and 403(b) ($18,000 combined between the two is the max) and my full ROTH IRA contribution. It has been 9 years since I started investing and while I wish I would’ve started sooner and invested more I do have a nice little chunk of change in my investments. I am not going to be part of the two comma club anytime soon, but I will get there (hopefully by 50).
  3. Buying a house. The truth is I am not a huge fan of home ownership. What I mean by that is I don’t have much of a green thumb, I don’t like lawn work, etc. However, I love the fact that I don’t feel like I am throwing money down the drain by renting. Yes, I know sometimes renting makes more sense. And yes it can. However, if I am going to be in a particular environment/situation for awhile then home ownership makes sense for me. The value of the house increases, I feel like my net worth grows, and eventually this little piece of America will be all ours. Yes, there are a variety of negatives and at some level it is more expensive then renting. But a rental place doesn’t increase your net worth (unless you are living in a super cheap area/apartment or house). Mentally, I feel like I am making more progress as an adult.
  4. Taking the long road for my career. Perhaps the best decision I have made financially is that it took 10 years for me to get into my career. Over the first ten years I was out of my undergraduate program I was in graduate school 8 out of 10 years. During the other two years I worked in a professional position, taught part-time, and worked as a college speech coach, but those 8 years taught me to be a teacher. And every year I learn something more. A few posts ago I mentioned how I felt like I was a decade behind. That is true. When most people were getting their first jobs out of college I was a graduate assistant making $5000 a year and getting free tuition. I worked during the summer, but nothing like I would make at a “real” job. I was 33 when I got my “career” job. And for me it was worth it (even though I complain about it). So many of the people I read in the personal finance world are ready to leave the rat race, be financially independent, and retire early. I will be 50 before I am probably financially independent. However, I have a job I love. Even if I was financially independent I don’t think I would stop working. I love being an academic. I drank the kool aid and I am ok with that. I get to travel, interact with smart students and colleagues, have my name in print, and feel like I am actually making a difference in the world. Not a bad way to spend your life if you ask me. I don’t know if I will do this forever. I have visions of quitting my current job, moving somewhere else and maybe teaching on the side or just being lazy. But I don’t think that would work. My brain doesn’t work that way. I need to express opinions, do research, feel like I am making a contribution. It keeps me young, makes me feel good, and helps me in other ways. I maybe a decade behind, but in some respects I already have financial freedom.

What are your BEST and SMARTEST financial decisions?

6 thoughts on “The Smartest and Best Financial Decisions I Have Made

  1. I love the “two comma club” reference! Too funny! I like this posting, as it highlights the good things that you have done (and, by extension, that we might do).

    1. Thank you. I can’t emphasize the negative all the time. And I know you are part of the two comma club already Tom.

  2. We decided not to replace our second vehicle after it was totaled out 4 years ago next month. We’d only been a 2 car family for 2 years at that point and didn’t feel it was worth the expense. With payments, insurance, maintenance and gas we were spending $1500/mo on our vehicles that weren’t even nice vehicles.

    1. Hi Amy, what a fabulous decision. Mrs. ROB and I were a one-car family for a while, but we then bought a house in another state and we have different schedules and jobs so we are to do two cars. Although I would love someday to go back to that. Fantastic decision and thanks for stopping by.

  3. Just read your “dumbest” financial decision as well. I wouldn’t call cancelling full coverage on an old car dumb…maybe unlucky or bad timing. I’m considering doing just that since the KBB value of my car is about $4k and my deductible is $1k so the premium I pay for full coverage won’t make sense at some point…though maybe I should wait until after the winter =)
    As for my best decision, it would definitely be investing in my employer’s deferred compensation plan as well as an IRA right after graduation at my first job. Compounding really works its magic.

    1. Hi Andrew. Well, you are right. I mean I think I was thinking that because I tried to get one over on the insurance company and then after my car was clearly undriveable and should’ve totalled I spent all that money to repair it with a credit card. I mean how dumb can you get. And i certainly understand about the coverage changes. I am thinking about raising the deductible on my car. I have a paid for 2009 Nissan Sentra that is maybe worth $6000. I only have liability on it, but to reduce the insurance I may raise the deductible to $1000. On my wife’s car we have full coverage because she is still paying it off.

      And those deferred comp plans are great. Once I get rid of this one debt I am opening a 457 with my employer. I should have enough money left over to really start kicking down some dinero with that along with my 401(a) and 403(b) and it reduces my tax burden. Considering I have had to pay Uncle Sam for the past two years I am looking forward to not doing that again.

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