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Today I have another session of M$D Dollars & Debts Interview Series. This interview features Paris over at Finding Wealthy.
Dollars & Debts Interview Series – Introduction
I own a blog called Finding Wealthy, where I mainly focus on dividend investing and entrepreneurship. I’m in school right now and plan on working for a few years to build my savings, but long term I want to be a business owner and real estate investor, in addition to my stock portfolio.
When did you start learning about money?
I started learning about money when I was sixteen. My parents always struggled with money debt. I grew up poor, especially after my dad died and my mom had to support five kids by herself.
When I was younger we’d always get calls from collectors. I’d listen to my mom scream at them about not having money to pay them, and I never understood why she didn’t just hang up instead of talking to them.
Around the time I started high school I realized that if I didn’t want to end up like my parents I needed to do something, so I started looking for books about money at my high school’s library. I didn’t know what I was looking for, but I knew that debt was a major issue for my family, so I started reading books about managing debt. I don’t think it occurred to me at the time that I, personally, didn’t have any debt to get out of. Eventually, I moved on to reading books about building wealth and investing.
What got you started on your financial independence journey?
After I started reading about how to get out of debt, I started looking at my parents (my mom had remarried at this point, and my step-dad is just as bad with money as my dad and mom) and seeing that most of the misery they were experiencing was a direct result of their poor money habits. I realized that I went through school as one of the poor kids because they didn’t know how to make wise financial decisions.
I would say that the main motivator for me to start my financial independence journey was to make sure that I didn’t end up poor, stressed, and miserable like my parents.
I remember being in a thrift store with my mom when I was probably eleven or twelve and asking her if I could have a toy. I don’t remember exactly what she said anymore, but it was something along the lines of:we can’t really afford this, but I’ll just use some of our rent money and hope things work out.Click To Tweet
Essentially, what I heard was that my mom was so bad at managing her money that she was willing to put our home at stake for a second-hand toy. What a terrible message to send to your child.
I’ve taken that moment as a symbol for what I want to accomplish financially in life. I will do whatever it takes to make sure that my children never experience a moment like that, but it goes beyond that.
My goal in life is to make sure that my children, grandchildren, and great-grandchildren never have to experience the prison of poverty.
How much debt did you have?
Because of what happened with my parents I’ve always avoided debt like the plague. The most debt I’ve ever had, personally, was $700 dollars when I bought a car from my older brother and his wife.
We agreed that I would pay them $1,800 up front and I would pay them $100 a month for seven months. I hated having to answer to someone and owing them money, so I ended up paying them back in two and a half months.
Before that and after that I’ve been debt free, except for when my wife and I got married.
We got married in December, and at the time she had about $5,500 in student loans. Again, we could have paid them off immediately, but we felt like we didn’t want to deplete our savings so soon after we got married.
Again, I couldn’t stand owing money to anyone, and my wife wanted to start going on vacations. We talked it through and decided that if we wanted to travel, we didn’t want to do it at the expense of our financial well-being, so we paid off a couple thousand over the next three months and then made that last payment as a lump sum of about $1,500 when we got our tax return.
We’ve been debt free since then, and we’ve been able to take a few vacations, which makes my wife happy. The last one we took was on the northern coast of California, and we transferred about $1,500 into the checking account and didn’t look at it again until we got home. Obviously, that’s not a huge vacation for some people, but we had a blast.
Additionally, it was an extremely freeing experience not to worry about how much money we were spending or having to deal with the bill when we got home.
How much have you paid off? And what steps did you take to do it?
Like I said, we’ve never had much debt, but between my car and my wife’s student loans we’ve paid off $6,200 in debt, mostly in large payments that were well over the minimums.
I know some of the people have a lot more debt than we did, and to them, I want to say this, first of all.
You can do it!
You can pay off your debts and be free of financial obligation to anyone. When that happens, I promise you that you’ll be less stressed about money and life, and it’s worth whatever it takes to get there.
That said, what steps did we take to pay off our debt?
The biggest thing, I think, is using a budget.
When we got married my wife was a little resistant to the idea of a budget, but as we kept talking about it, she eventually adopted my view that a budget is a tool you use to free yourself, not something that chains you down. Putting in a line item for her to spend on soda, which she’s addicted to, helped with that.
Please note, if you’re married, that your family finances and budget must be a team effort. I didn’t force my wife to use a budget before she was ready, and I didn’t try and force her to keep a budget that I made myself. What I did do was try and pitch a budget to her as a tool to get the things she wanted without having to worry about where the money was coming from. Budgets should help you manage and eliminate stress, not create it.
Soda and vacation can be powerful motivators.
Because we knew where our money was going, we could look ahead and determine how much money we could plow into her student loans, and once that was taken care of we were able to reward ourselves. I think that’s a big part of paying off loans. In some sense, all of us are still little kids, and we want toys.The trick with money is to give yourself toys, but only after you’ve forced yourself to earn them.Click To Tweet
One last thing that helped us pay off our debt was that we were living below our means. We’re both in college right now, so we don’t have much of an income as it is, but we made sure we weren’t paying for unnecessary luxuries. Our first apartment was a dinky little one bedroom place we rented for $600 a month, and we rarely went out to eat or bought expensive items unless it was in the budget and we’d been saving for a couple months.
What are your money goals for the next year and long-term?
Our goal by the end of the year is to have $20,000 in savings, in addition to our stock portfolio. We’re trying to save up a down payment for a house, which we’re planning on buying a year after we graduate.
Additionally, we have a goal to reach $500 in dividend income by the end of the year, which we should easily meet since we’re at $489 right now. We also have the goal to receive $400 in dividend income this year, and so far we’re right on track.
Long term our goal is to buy a portfolio of rental properties and have 50 units with a cash flow of at least $300 a month. We also want to reach a point where we’re receiving $100,000 a year in dividend income and own a business with at least $1,000,000 in revenue a year with a 20% net profit margin. Our net worth goal we’re working on right now is $50,000, but long term I’d like to achieve a net worth of $10,000,000.
Obviously, those are lofty goals from where we’re standing, but I’m a believer in the idea that you shouldn’t limit yourself. Even if we don’t accomplish any of those goals, we’ll still be better off than if we hadn’t tried.
What obstacles have you run into that you had to overcome?
I think the biggest obstacles I’ve run into and had to overcome is my background. When I was younger, I had a pretty rough time and learned a lot of bad habits, including lack of motivation, lack of focus, and laziness. Especially when it comes to wealth, and life in general, you are your worst enemy.
I’ve also really struggled to learn how to get started because I didn’t have anyone else in my family or my circle of friends and acquaintances that had money or was interested in building wealth. I had to find my own way, mostly through reading, and it’s taken me a few years longer than I would have liked.
Along those same lines, I’m in a nationally ranked business school right now, and it’s been frustrating to see how easy it is for some of my peers to make connections and secure capital for their ideas. I’m a lot more stressed about money than they are because I have to pay my own way and I’m terrified of sinking back into poverty. I’ve had to learn to let those fears go, stop comparing myself to them and being jealous of their upbringing, and be willing to explore.
Any words of advice for those that are afraid of starting their journey or are feeling like they aren’t making enough progress?
If you’re afraid of starting your journey, don’t be. If you think about it, you’re going to need wealth at some point in your life, whether it’s to accomplish your goals or so that you can retire with dignity. Ignoring money or putting off your journey to financial independence is just going to leave you worse off in the future.
Scott Adams has this thing he calls the law of slow moving disasters. Essentially, it’s that humanity can avoid a disaster if we can see it coming. I take the same view about money. All else equal, you’re going to need money to retire. Better to do what you can now when you have 10, 20, 30, 40, or for some of us, 50 years to do something about it than waiting until the last minute.
If you feel like you need a kick in the pants, I also recommend you read everything you can about building wealth and managing money. Read books, browse websites and blogs, and listen to podcasts about it until it becomes your obsession and you have this fire inside you screaming that you have to do it. Not that you should forget the other things you love, but money has to be one of your passions.
If you’ve already started and you don’t feel like you’re making progress, I’ve got a couple things to say.
The first thing I want to share is a Haitian proverb:“Piti piti zwazo fè nich li.” It means, “Little by little the bird builds his nest.”Click To Tweet
Most things in life are like that. You have to keep trucking along and working at it. Maybe you feel like nothing you do makes a difference, but the truth is that it does. If you give up on your journey you’re still going to be where you are now, but you won’t be doing anything about it. You never know how far away success is, but it’s definitely not going to be behind you. You might be developing the skills or making the connections you’ll need to tomorrow.
One thing I’m working on myself is getting in the habit of doing something every day to build my wealth, whether that’s working on my site, researching an investment, reading and learning from others, or checking up where we’re at.
Diligent work is more important than raw talent or natural skill.
That said, you need to realize when it’s time to throw in the towel with what you’re trying right now and change gears, and you need to recognize that some things should be worked on later. Just don’t stop something without starting something else.
Also, have fun!Building wealth should be something you love doing, not a chore!Click To Tweet