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Today, I’m thrilled to welcome Jon back onto the site! We first heard from him a couple years ago when he discussed how he and his wife paid off $89,000 of student loans in just over a year, and while he’s written a few articles since… it’s been a minute. That’s why I’m stoked he’s here today to talk about some of the financial mistakes he’s made and how they may have actually benefited his family!
It’s not all $89,000 student loan payoffs, friends – we’ve all made some mistakes from time to time. But as you’ll see – it’s less about the mistakes themselves, and more about how you respond.
Take it away, Jon!
4 Financial Mistakes That Actually Improved our Lives
If you’re anything like me, it can be easy to obsess about money. Concerns about making enough, saving enough, and meeting short and long term financial goals can make a lot of life’s choices for you.
For me, I haven’t always seen this as a problem; I don’t enjoy accumulating “stuff,” and I would generally rather just have extra money available for down the road (for an unexpected expense or opportunity, or to save for retirement) than to spend it on something that may or may not make me “happier.”
Over the last year or so, however, my wife (Heather) and I have made some decisions that have drastically improved our lives that I never could have made if I didn’t set aside my obsession with always making decisions based on what is financially best for the long haul.
Side note before I dive in:
Perhaps you are in a place where you’re just struggling to get by, operating paycheck to paycheck, and you don’t have the margin right now to sacrifice any opportunities for financial progress—been there, done that. You can read about our journey out of 89k in student loan debt.
As difficult as that was, we ripped that band-aid off so that we could start creating the margin to meet our financial goals and be able to make decisions like the ones I mention in this post.
I won’t pretend to have it all figured out…
This post is here as much to remind me as it is to remind you: financial goals are only important because they allow us to live out what is truly important to us.
Decision #1 – Change jobs and take a pay cut
When Heather and I got married, she was still a student in middle-of-nowhere Ohio. Amazingly enough, I managed to land a job in my desired field of work just 30 minutes away. A year after that, a promotion came, and I was locked in for a pretty good career there.
The problem was, we didn’t particularly like Ohio: cornfields for hours, only one member of our immediate family lived within a 4-hour radius (the rest were 7+ hours away), and when Heather did graduate, she had a very stressful job that she couldn’t help but bring home with her every day.
Because I enjoyed my work and didn’t want to leave the field I worked so hard to be in, I assured my wife that we would be leaving, but only when I could land a comparable job elsewhere.
Finally, after turning down a couple of less-than-ideal opportunities, and almost 4 years of marriage, not just one good opportunity opened up, but two.
In came spreadsheet upon spreadsheet comparing my (former) job to two other job opportunities: including pay, health insurance and other benefits, retirement contributions I would leave behind, and all of the intangibles. All of these told me one thing: taking either of these jobs was taking a big financial hit in both the short and long term.
I had put this decision off long enough, so we decided to take the leap and I submitted my 2-weeks notice. For me, it was scary to start a new job, move to a city I had never so much as visited before (aside from the interview), and to take a pay cut all at the same time (on top of not knowing when my wife would get a job and what she would make)—and don’t think I didn’t consider backing down every time I did the math.
Ultimately, this decision has been great for us
We love being closer to family. Heather got a new job that she actually enjoys and even managed to start it on the exact same date that I did. While it has been difficult to adjust to a new job and new surroundings, we couldn’t be more pleased with how this decision turned out.
Decision #2 – Buying a house (the first house we were shown) and buying out a lease
Sure, buying a house can be a great financial move. After we finished paying off our student loans, we immediately began saving for an emergency fund and a down payment for this very reason. After a year and a half of that process, we had enough saved to put a respectable down payment on a modest home.
We ended up starting to look at homes way sooner than we should have—just ~3 months into our 1-year lease. I told our agent up front, “I don’t want to be wasting too much of your time, we won’t buy anything for at least 6 months.” We asked to see our first house about a week later and felt foolish that we actually wanted to put in an offer.
We consulted with family, had my dad come down to take a look at the place, and considered all of the financial expenses that would come with it. One of the bigger upfront expenses was that we needed to buy out the 12-month lease that we were just 3 months into.
This would take away from our down payment or whatever we had left over in our emergency fund after that. Sure, it would have been a little better to wait and time the move to coincide with the end of our lease, but we were here now, and if we wanted this house it was time to put in an offer.
A few weeks of stressful negotiations, inspection, more negotiations, repairs, and an emptied-out bank account later, we were homeowners. Sure, the mortgage payment is quite a bit more than our rent was, the heating bill is way too high in the winter, and we have a host of other new and upcoming expenses due to the age of the home, but after 7 months in our new (30+ year old) home, apartment living seems like forever ago.
Decisions #3 and #4 – Having a baby and taking (another) pay cut
Heather and I have always agreed on wanting to have kids (a good topic to be in agreement on if you’re going to get married). The day we moved into our apartment following our big move and 2 job changes, we found out Heather was pregnant!
This was great news (and was a big part of our rush to get into a house and out of a 700 square foot apartment)—but don’t think that stopped me from immediately starting to count down the time before expenses would skyrocket, and our income would plummet.
Rising expenses are next to impossible to avoid with a baby on the way…between medical costs, daycare, clothes, diapers, toys, and whatever else comes up on a far-too-frequent basis.
As far as the plummeting income goes, we wanted Heather to be able to cut her hours at work to allow us to take care of our daughter as much as possible and to maximize our involvement in her life.
While we don’t pass judgment on anyone who does what we avoided out of preference or necessity, it was our decision not to pay a significant amount of one of our full-time incomes just to have someone else raise our child. Knowing this was a priority for us was a huge driving factor behind all of the lifestyle sacrifices we have made to get to this point.
We ended up being able to arrange for Heather to cut her hours in half (down to 2 days a week) and my employer was gracious enough to allow me to adjust my work schedule so that I can be home on one of those days.
As a result, we only need to pay for help one day per week, and most importantly, we get to spend lots of time with our daughter
If you’ve been sacrificing your lifestyle to achieve your financial goals, I encourage you to take inventory and make sure that you aren’t missing out on more important aspects of life for just another financial milestone
Don’t abandon your important financial goals, but remember that money is not the end goal, it is a tool to help you to live the life you want.
If you’re earlier along on your path to making better financial decisions: while not all of life’s big decisions can or should wait until you are in better financial shape, taking whatever steps that you can take now to improve your financial footing will help allow you to make similar “financial mistakes” that can ultimately improve your life, too.
Mike: It’s crazy for me to see this side of Jon. When we first met he was in hyper-frugal mode working on paying down their crazy sum of student loans. He’s come full-circle to say that maybe spending a little extra could be better for the whole version of yourself (finances are just one component).
What financial mistakes have you made that turned out to be net positives in your life? Let us know in the comments!
Thanks for reading!