I can safely say that this episode of the podcast is unlike any other I’ve done.
If you’ve listened to at least one other episode, you know that I interview someone new every week and find out all about when they decided to become a master of their money, what tools they use to manage their finances, and the one thing they’ve done that has had the biggest impact on their financial success.
But today, PT is in the hot seat. I asked my friend and former guest on the podcast, Rob Berger, founder of the website Dough Roller, to step into my place and ask me the same questions I have asked of others in the previous 51 episodes of this podcast.
If you have ever wondered when I decided to get control of my money or the personal tools my wife and I use to handle our finances, then stick around. This should be interesting.
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Ownership and Intentionality
When it comes to financial success, I firmly believe there are two things I have done that have played the biggest role.
- Choosing ownership. For the first 27 years of my life, money just “existed” for me. I earned it, I spent it, I borrowed it, I saved it. I didn’t pay too much attention to my money for those years.
- Being intentional. Around age 27, I decided to give my money something it deserved: a home of its own. I knew that I had to pay more attention to money and not just let things happen anymore. It was time to tell my money what to do and not just sit around waiting to see what happened.
I actually graduated with a degree in Accounting and got my first job in corporate accounting. You would think I would know how to handle personal finance, correct?
Well, I did not. I was making mistakes like getting into debt, even credit card debt. I also had student loan debt. What I knew was that I wasn’t getting ahead, in spite of a good salary and a great education.
Making Things Automatic
I knew how to save. I knew why I needed to save. I even saved. So what was the problem?
I couldn’t make it stick. I had a great salary, and with some super lean living, I was managing to have a couple thousand left at the end of the month which I would put into savings. The next month, I would do it again.
And then came the part that didn’t work. Because I didn’t have a system for saving, I sometimes simply forgot to move the money over the third month. Or I did something stupid like pull money out of savings to go on a trip, with no plan to replace it.
As soon as I made my savings automatic and set up different accounts for different goals, I began to see progress.
The real problem was that I had a skewed idea of what financial freedom was. I thought financial freedom meant that I could buy whatever I wanted whenever I wanted it as long as I had the money. I was dead wrong.
That kind of spending never brought me any measure of peace or happiness. More stuff wasn’t what I wanted. I had to sit down and figure out what my goals were. My real goals. Because buying whatever you want whenever you want is not a worthwhile goal.
The Shoemaker’s Children
You’ve heard the old story; the shoemaker’s children have no shoes to wear because their father is always too busy making shoes for others to make shoes for his own children.
For a long time, that was me. Okay. It still is me, to some extent.
I have found myself focusing so heavily on growing my business that I have let things slide in my personal finance. The upside to this is that it has forced me to greatly simplify. I literally had to move toward automation in most everything to keep things in line.
The great thing for me is that my wife, Teresa, is naturally frugal. I am not. We make a great team because she helps to keep me in check with spending while I work hard to build our businesses.
My wife really is a great compliment to my approach to money management. These days, I tend to focus on the big wins (the mortgage, alternative income streams, investing), as well as setting up automated systems to help us achieve our goals. Once those big things are in place and working on their own, I’m mostly content to just “spend the rest”.
Mrs. PT, on the other hand, is excellent with the day-to-day choices that help us avoid lifestyle inflation and busting our budget. This skill comes in handy now that we’re living on one income. Here are a few of the ways she helps us reach our financial goals, frugal-style:
1. Taking Advantage of Freebies – Dining out is a big expense of ours. Mrs. PT helps cut that expense in half by suggesting places where we can dine 2 for 1, or even eat for free with a coupon. She doesn’t go overboard here. She only finds us the freebies that apply to the places where we’re already spending. She’s not cheap (although she wouldn’t be offended at the comment), she simply aims to get the best price for the things we’re already paying for.
2. Returning Things We Don’t Use – Fair warning to all the stores: Just because Mrs. PT buys something from you, doesn’t mean it’s a final sale. She gives every piece of clothing the at-home fashion show test (I am required to attend these “shows”). She does a great job of holding on to receipts and packaging for the things we purchase in case the product doesn’t work or fit. And she makes the effort to do the returns and get our money back. I realize that most people don’t make this big effort and things just end up sitting around till they’re thrown away or shipped off to Goodwill.
3. Taking Care of Our Stuff – My wife keeps our stuff clean and in working order. Taking pride in the things you own and making them last is a big part of living a more frugal life, in my opinion.
4. Repair Things When They Break – When things do wear out or break down, she’s quick to look for a way to extend their life or to get them fixed. For instance, our old pocket camera recently stopped working. She found the repair policy on the Sony website and determined she could get it fixed for free (minus a shipping charged). We now have the refurbished camera and can either sell it or continue to use it as a second camera.
5. Value Time with Others Over Things – This point is definitely a bit more abstract than the 4 specific points above. But this is huge for helping us to be able to live within our means. It’s this overall attitude really that allows her to make the other choices above. She cares about the other people in her life and invests her time and energy into them, seeking happiness there, instead of focusing on things.
Tools to Make the Job Easier
I already mentioned using automated savings in order to keep things as simple as possible, but there are a few other tools we use to stay on top of our finances and to give both Teresa and I quick access to everything we need to know.
Empower is the #1 tool we use on a daily basis. Empower aggregates all of your accounts, the positives and the negatives, to give you a true daily picture of your net worth. It puts the big picture into perspective. It’s not necessary to watch every single penny and to give it that level of attention, but which direction is your net worth moving in? You want to see positive growth and this tool allows you to do that.
Before moving to Empower, we used Mint for a while. And we are currently discussing experimenting with Mvelopes. With Mrs. PT being the more frugal partner in our marriage, and I the free(er) spender, using a tool like Mvelopes may be what we need to bring tighter control and management in our spending.
But before all of these online tools, I simply used Excel. I had a spreadsheet that I designed with our monthly budget on it and this is what allowed us to pay off over $30K of debt in just 3 years after we got married and before having kids.
Obviously, automating savings and retirement requires more technology than a spreadsheet, so we began using Capital One 360 accounts for all of the automated savings accounts. Speaking of the spreadsheet, you can still download that on the blog, so if you need an easy budget tracker, be sure to grab that.
PT’s Personal Household Budget
I thought about leaving this section blank since Teresa and I don’t actually use a monthly budget. I know, you can’t believe that, right? That’s why I figured I had better use this section to explain.
We pay ourselves first out of our income. That means all our savings goals get their part first. Remember I talked at the beginning about becoming intentional about my money? This is how I do that. We use our Capital One 360 accounts for the specific savings goals we have and Vanguard for our retirement accounts.
After those things are met, we put the rest in our checking account and live out of it and don’t worry about the spending for the most part. Sometimes that free spender comes out in me and we have to move a little bit of money from savings over to checking. And now you see why we are checking into Mvelopes.
Managing Business Finances
We talk mostly about personal finance on this podcast, but this personal finance podcast is actually my business.
I am extremely fortunate to have a business that is location independent, which means that I can work from anywhere. So when school is out, my family travels a lot. We use weekends and school vacations to get in as many trips as possible.
I am also fortunate that my father is my CPA. He handles my taxes and helps me with my financial projections every year. He prefers Quickbooks so that’s what we use. Honestly, I just kind of throw everything in there and he handles it.
Saving, Paying Off Debt, and Investing
I mentioned earlier that my wife and I paid off a ton of debt in our first 3 years of marriage. What I didn’t mention was that we also saved over $40K for our first home during that time as well.
Lean living combined with paying ourselves first really helped us meet some pretty big goals over those 3 years. We used a simple savings account to set the money aside so that it was completely liquid as well as safe.
When it comes to investing, I do handle my own accounts. Maxing out my retirement accounts is my first priority every year. I understand all the investing advice that’s out there because my degree is in finance.
But my goal from the beginning has been to max out my savings every year. Any investing I do is through the stock market using low-cost index funds.
And let me add this…current trends tell us to save 5-10% of your income. I disagree with that. I think it should be more in the neighborhood of 30-40%. If you want to get ahead and do it sooner, savings has got to be your number one priority.
What’s the Future for PT?
My wife and I definitely plan to continue to streamline and simplify our finances and become even more intentional, so setting up our Mvelopes is a priority for us.
Another thing I am very interested in is a fund offered by Vanguard called a giving fund. I would love to set one up and be able to give more.
Of course, saving for our kids’ college funds is a huge priority for us. One piece of advice I want to give is to check out all the college plans before you begin saving for that. As residents of Texas, where there is no property tax, it would not be advantageous for us to use our own state college savings plan. Know your state and the advantages and disadvantages before deciding on a plan.
I feel extremely lucky that I became obsessed with personal finance and have been able to make a business out of it. I feel blessed to have met so many other people who have helped me grow this business and this passion into what it is today. I am thankful for a wife who is a great partner and help to me in achieving our goals.
As we close out this season of the podcast, I want to thank you all for listening and for your feedback. I am looking forward to the next season and would love for you all to let me know what you hope to see from me and this podcast.
- Intro – Meet today’s guest….me.
- 01:07 Of course, I chose 2 things I’ve done that have most contributed to my financial success
- 02:30 When I figured out that I didn’t have it all figured out
- 04:00 I had a skewed perception of what financial freedom meant ( I thought it meant I could buy whatever I wanted. Hint: that’t not it.)
- 06:15 How Mrs. PT (Tƒeresa), and I handle our personal spending, debt, and which one of us is more frugal
- 11:15 My favorite offline and online tools to manage my money
- 13:00 PT doesn’t live off of a monthly budget?!! Say what???
- 16:09 The tools I use to manage my business finances
- 16:30 How we saved over $40K in a year and a half while paying off the same amount in debt
- 18:16 Does PT manage his own investments?
- 22:00 Has PT arrived? Are there any goals left to meet?
- 26:45 How many savings accounts does PT have?
- 27:30 How much does PT actually love talking about personal finance?
Links/Terms/Concepts from the Show
- Vanguard Donor Advised Fund
- Capital One 360
- Motif Investing Challenge
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This show is part of the FinCon Podcast Network and was produced by Steve Stewart.