The following reader story was submitted by Dr. Graeme Gibson, D.C. You may read more about Dr. Gibson immediately following this post. If you have a story you’d like to share here as a guest post, please contact me.
We had “The Talk”
This July 2nd my wife and I happily celebrated our 7th wedding anniversary. In our seven years together as a married couple we have experienced loss (mother, aunts, grandparents, friend), gain (our two children, nieces, and nephews) and believe it or not, financial prosperity.
This last one may not seem like a big deal on the surface, but I believe our mindset about money is what has allowed us to survive the good, the bad, and the ugly during our years of marital bliss.
We had a “plan”
It is funny when you look back on the past and think about the decisions a couple makes together. In this case, we had a 5-year plan of when we were going to have children, which got interrupted with the arrival of our son one year later.
We also immediately combined finances, which eventually forced us to communicate better about our finances. I believe it was after the third overdraft fee that we started to discuss who was spending what, how, and why.
At this time, I would like to add that I would be considered the larger spender than my wife, but that is not to say she hasn’t had her moments. Over time it has definitely been me.
In spite of the stress of a beginning marriage we have always been open with each other. However, there remained an underlying financial pressure that was created by yours truly. In a time that seemed like the good times would never end, we were no different than the rest of the country:
- We had a nice little home, taken out with a 0% down loan.
- We had 2 cars and one had an amazing $545.00 per month car payment over 60 months.
- I had a student loan payment of $750.00 per month over 30 years at a rate of 8.25% (No problem here, I just sunk it into our home with a Home Equity Line of Credit.)
- We also had a few thousand dollars on some credit cards, but who’s counting?
While my wife is a teacher, and I am a chiropractor in Seattle, we felt that this was a normal and acceptable way to live. Everyone’s doing it right? Wrong. At least the smart ones aren’t.
Shortly after we had our son, I was reading a Harper’s Index where they broke down the potential of the housing bubble and mortgage crisis. This was in early 2006, and we took action by 2007. We took action selling our home at the peak of the market, selling our expensive car, and had a small sum in the bank for the first time ever. My student loans were also a thing of the past.
We felt on top of the world for about 1 day, as the outside pressures to own a home overwhelmed my better judgement. So we purchased a bigger home in an even nicer area. Looking back, you could even say it was the “peak” of the market. Ugh.
How I learned to love the financial collapse
A few months later, we were in our new home. All of the financial gains we had made were now gone, plus we added to the frustration our now extremely large mortgage payment.
You never truly understand the power of “interest” until you put yourself behind the eight ball.
Within 2 years of living in a home that we had to constantly fix (foundation, deck, stairs, plumbing), the financial collapse begins! Is anyone with me when I say I know what a sleepless night is all about? A wife, a child, huge monthly payments, and now the world seems like it’s ending.
In a way, that’s exactly what happened to us.
The Talk
Prior to the collapse, we had just survived an unusually devastating winter in Seattle. I car was stuck in the driveway for 2 weeks (as all cars were), and I began to believe we needed a new car. Maybe an SUV or some type of 4-wheel drive. So I started to look for a new car, only to come across a Dave Ramsey video about a free car for life.
After seeing this video, I began to see the error of my ways, and started the investigation into living debt free. I started to consider living below our means, and living a frugal lifestyle.
Following this revelation, my wife and I spoke about my new found knowledge, and believe you me, it wasn’t an easy subject to approach. Some of the things we spoke about that evening:
- Sharing our home by renting out one or two levels (this would cut our living space from 2600sq/ft to 900sq/ft.)
- Cutting our expenditures
- Clipping and collecting coupons (before it was all the rage)
- Saying no to things we think we want
- Eating our meals at home more often
The toughest suggestion was the sharing our home by renting it out, but I needed to discuss worst case scenarios BEFORE they hit.
There is an enormous difference between choosing to live a frugal lifestyle, and being forced to live a frugal lifestyle.
Once “the talk” was over, I realized how amazingly understanding my wife was, and that she too was worried about the same things. We made the changes accordingly, and began the frugal walk down the aisle together.
Frugal living on our 5th
Our 5th anniversary was the first one where we decided to live frugally, however, we also wanted to do something special since it was such a special number. I decided to spend frugally at one of the most posh places in town. Knowing full well a dinner including appetizers, drinks, wine, and dessert may easily approach $500.00 or more.
Without getting into great detail, we managed to keep our night under $200.00, after tipping the wait staff and valet. Obviously this was an expensive night out, but my wife deserved something extremely nice for putting up with me for 5 years.
Some of the things we did to make our night a little less expensive:
- We brought our own wine and paid the minimal corkage fee
- I purchased 2 gift cards I found on Craigslist (after verifying they would work by telephone)
- We shared our appetizer and dessert (something we normally would not do)
- In spite of our living on the cheap, we made sure we had enough money to tip appropriately, as it is my opinion that you should always tip properly. If you can’t, you can’t afford to eat there.
We had such a wonderful time, and we didn’t walk out of that dinner with any debt or credit card payment. That made me even happier.
Frugality preparation saved our home and marriage
The change to a frugal lifestyle happened in 2007, and in the time that has passed we have been able to solidify our fiances while cutting our debt at the same time. This has allowed us to live freer, healthier lives, and set an example for our children.
It is my belief that if our open communication about our finances, and decision to live frugally together had not happened, there would have been an excellent chance of us not making it to 7 years. If we had, there is no doubt we would be absolutely miserable and crushed by mouting debt.
The decision is always in your hands, and making the frugal living choice togethe is far superior to being forced into that position.
About the author: Dr. Graeme Gibson, D.C. is a Seattle chiropractor. When he is not enjoying his practice he loves to spend time with his family, playing sports, and writing about physical and financial health. If you want to read more, please visit his Seattle chiropractor blog.
This story took a few turns I wasn’t expecting. At first, I thought they pocketed the money from selling their home at the peak and used that as a foundation…but that didn’t happen. Then, I guess I expected that they gave up the house once the market bottomed, only because too many people see that as their best option, but they chose to stick with it, make some difficult choices, and live with their actions. And, they ended up living happily even though they were costly.
Great story and a fantastic way to start the day!
Some great tips in here, but $200 out for a dinner is living frugaly? Seriously?
As long as the couple paid cash, and don’t do it every week, I can’t find a problem with it. Some might say $200 for a hotel room on vacation is not frugal. Others might say $200 on car parts to restore a classic is not frugal.
I can’t judge how others assign value to things with their own dollars.
Chris,
It was once in 5 years and we saved for it! We still talk about that night and how special it was. I’m hoping to eat there again for year 10! It’s all about what’s important to you. Graeme found a couple deals as he talked about in his post and with the other decisions we made to save we were able to celebrate with a very special dinner. For our 7th anniversary this year, we spent much less. Our relationship is one to celebrate and that’s what is important to us. We would never say a $200 dinner is living frugally but the frugal choices leading up to that dinner allowed us to do it.
And we dined next to Billy Joe Armstrong and his wife (Greenday)! So cool!
Jason, I agree with your comment about value. Unfortunately, I believe that too many people associate “frugal” with “miserly”. To me, being “frugal” means always being cost conscious and in control when I spend money. While I see some similarities between Dr. Gibson’s story and my own (student debt, credit card balances when I was young and had very little money, had car payments, etc.), I have always been aware of it and didn’t like it even when it was happening. Being on my own financially since I was 17, there were periods in my life that I had no choice. But, I incurred as little debt as possible, and always put any extra money to paying it off. I am probably an extreme case, but my Mother kept a ledger on her spending when I was growing up and it would bother her if she could not account for expenditures and she was off on a weekly basis more than a couple of dollars. Six kids and little money were her incentive to do everything to make ends meet.
As I grew older and debt free, I kept what I call my definition of “frugality”. Basically, I never spend money impulsively and always try to get the best “deal” I can on whatever I buy. Our son has picked up on this and everyone jokes that he is “tighter” than his Dad. Like me, he uses coupons, buys only after he does a lot of comparison shopping, watches his utility bills closely and does what he can to lower them, shops at Costco (with coupons when he can), compares prices there vs. local specials at groceries stores, eats what is on sale that week, etc., etc. Just recently he and I had a discussion on “value”. At times, we disagree on what each is willing to spend for a particular item. He lived in Italy for awhile for his first job. He is much more of a wine connoisseur than I am. As a result, he will buy wine on sale that is a higher price point that what I would spend. On that item, it gives him “value” where, for me, I would not pay the extra $ because it does not give me any added value and my price point is lower regardless of whether it is on sale and is a “deal” or not.
The bottom line to me is being cost conscious of every expenditure I make. I have a rep for being “tight”and my wife kids me about it. Frankly, I wear it as a badge of honor. Unlike my wife, I am not a shopper unless I really need something. While my wife is not as frugal as me, she has seen what benefits it has given us over the years. When first married, I used to embarrass her at places like retail furniture stores when I would ask to see the manager and negotiate a purchase price of something not on sale. Often, I would ask the manager what the item cost if it were on sale and I would pay that price. If the response was that it wasn’t on sale then and I would have to pay retail, then I thanked them for their time and wouldn’t buy. Even then, I would often be called back as I was leaving and then would agree on the discounted price I wanted to pay. My mantra to my wife as always been “let other people pay retail as they support people like us that buy wholesale”. Anyhow, enough rambling for now. Just wanted to affirm your comment that “value” is really where its at. After all is said and done, we are here to enjoy life and don’t have to be Scrooge McDucks (for you old comic book fans that remember him).
Cost Conscious Dad,
Thanks for spending the time to reply to my post.
I agree with you that there is a difference between being frugal and a miser(although I first read miserly as misery hehe.).
While I did work through school and have student loan debt, I never truly understood the value of a dollar until much later. The penny saved is a penny earned means a whole lot more now than it did back then.
While we did not carry a serious amount of credit card debt, a huge mistake in my thinking involved debt over a LONG period of time. Since the payments in a HELOC or Home Equity Loan become so small due to the length of time, I believe I had more money than we did.
I am sure it is a common trap for many.
Compared to the way many couples celebrate milestone anniversaries…YES!
I also enjoyed reading the story about making joint decisions to live
a frugal lifestyle. My husband is a physician and I am an allied health professional. Where we live the police, prison guards and chief city librarian earn more than a medical internist, plus they can retire at a young age with pensions and health care. Although our kids are straight A students they never qualified for any free financial aid, as most of it is need based. I see so many of our friends who were able to retire early and how much they spend on country clubs, cruises. pure bred dogs and their upkeep, fancy new cars etc. It seems that the financially well off were involved in real estate and businesses (like a flower shop) and did not need a lot of education. We have always lived frugally, having splurged on the best education our children could obtain. There is a great deal of uncertainy to getting older such as cuts in Medicare, no more dental insurance, donut hole prescription costs, as well as having to hire out chores you may have difficulty doing by yourself. And what about long term care insurance? Yearly premiums are around $5,000 per couple for about $300,000 worth of care . My suggestion to the younger couples is to purchase an investment rental property as your long term care insurance.
Lets see a “special” dinner out is $500 for two people? They cut it down to $200? Really? My wife and I can go to the fanciest restaurant I know and spend a MAX of $70.00 if we order a four course meal. On average we spend between $20.00-$30.00 and feel like we spent too much when we get close to the $30 mark. $200 for a meal is insane.
It’s all about choices. My husband and I can have a great dinner, including drinks and tip for around a hundred dollars. We simply wouldn’t enjoy all the extra fuss that comes with a fancier place and would, in fact, be a little irritated by it. A super fancy dinner is more a chore than a luxury to both my husband and me.
However, that’s how the guy chooses to spend his money. $200 on a special anniversary is not THAT much money. What if they’d spent it on a special piece of jewelry or a weekend away?
They’ve made the choice to have a boarder in their home, which to my husband and me would be a choice made under only the most dire of circumstances. Choices, choices, choices. To each his own.
This was for their 5 year anniversary! Not a weekly, monthly or even yearly event. The nicest restaurant in my town has $15 entrees, we could eat for $70 but for very special occasions we go into the city where entrees are $20-30 and since it’s a special occasion we’ll have apps, dessert and drinks and with a 20% tip there’s $200. My sister does not live a frugal lifestyle, lives in an area where Applebees is the most expensive restaurant yet their constant eating out at fast food places costs $1,000/ month! I’d much rather eat 89 meals at home, spending $400 on groceries for a family of 4 and enjoy one $200 dinner. Still frugal in comparison. You could eat rice and beans for every meal and spend next to nothing but nobody wants to do that.
@Chris – It is when it would normally cost $500 and you are doing this once in 5 years (for an anniversary) which he stated. If you eat there every night, no that is not living frugally. Part of living frugal is the ability to splurge every so often and not let the frugal lifestyle consume you.
$200 for a meal is not insane if you live in a larger city. We go out for a nice meal here (pop 30,000) and spend about $50. We go to Phoenix and the same meal is close to $200. In New York it is much closer to $300.
I appreciate the story. It tells me the next generation IS thinking about how to make those decisions before they end up like my generation. it is no longer a “could” for us – but a “have to”.
Tania- you may be making less than the local head librarian- but s/he has probably worked the job for about 30 years. That includes many years of working under the poverty level- and sending children to public school. You have loads of time to make the money- and with your professions- you should be well off sooner than later… probably the minute after your kids get out of those expensive schools.
No need to run down those who have already worked the years to get to where they want to go. We all make choices. If you don’t get financial aide- then it says a lot about your choices.
Nice story, glad it ended up well. Ive been a huge Dave Ramsey fan for years. Communication and living within your means is so important! (as for the dinner, he said the place was really nice and $500 wasnt unusual, so they did their meal on the cheap for a celebration.)
It was an interesting story. I don’t see where they made the decision to buy a bigger house when they KNEW a housing bubble burst was coming (you buy your learning). I’m sorry but I live in Los Angeles, and an expensive dinner for me and my husband is $50. What were they ordering? Anywho, I’m glad they were able to see the error in their ways and make changes. Here’s the hoping they meet their goals.
20 and Engaged,
I tried to keep the article as focused as possible without getting into all of the exact details on our decision making. Since you made the point of buying the bigger house in spite of suspecting the bubble was coming I will explain.
At the time there was a lot of pressure to own. There was a lot of “if you don’t buy NOW you’ll NEVER get back into the market pressure.” While I didn’t want to believe it I succumbed to the pressure. There were other things I took into consideration such as cost to rent vs. the write off in my area etc and other things we gave up since we moved so close to both our places of work. We sold our expensive car and went to a one car family. That rid us of secondary car expenses including gas, maintenance and insurance. The fact that we were within blocks of work now meant we cut our gas bill from $400/mo to $20.00/mo.
In addition to that, our house is a legal duplex(that was converted to a single residency) and if push came to shove we would have other options.
This is also before I accepted a frugal lifestyle and found the video from Dave Ramsey. If I had been fortunate enough to find his writings prior to the second purchase I wouldn’t have made the same decisions for my family, BUT we have attempted to make lemonade out of lemons.
As far as the dinner goes, it was one of the fanciest and historic restaurants in Seattle, Canlis(feel free to look it up and check out the prices on their menu). For us this is a special event place with superior food, staff, and service. Now you could certainly argue about the price, but due to the nature of our special occasion and change in financial lifestyle, we decided to truly splurge on something in celebration of our time together.
We just celebrated our 7th year anniversary at a nice Italian place on July 2nd, and I believe the total bill was $80.00 with tip. The point being, we might go back to Canlis on our 10th anniversary, since there is nothing wrong with treating yourself occasionally for showing the discipline that we had for the years prior.
While I am not suggesting anyone else do what we did, I am sure there are things we have chosen to not purchase that others have and vice versa. A decent example is I am a no-gift dad, so there is essentially no money spent on me at any occasion. Just hand made or thoughtful gifts.
Anyways, for those of you who have been fortunate to come across the living within or BELOW your means time of lifestyle prior to us, kudos! We continue to do our best and teach our children different.
The path to wealth isn’t smooth. People make mistakes but the ones that make it are the ones that don’t just give up after making mistakes. I enjoyed the article because even though this couple made a poor choice it proves that it’s our daily nickel and dime choices that matter over the long haul.
Living a frugal life with no splurges and no special treats would make the journey so much more difficult. I think this is a wonderful story and the Gibson’s should be respected for their willingness to share their experience – with both the good and the bad decisions made along the way.
I have written about the frugal mindset many times. Where one person may have no issues spending $200 on a meal, another person may prefer to spend the same dollars on new dress or a new tool. Each individual needs to determine where they want to scrimp and where and when they want to splurge. In that manner they can compose their own personal austerity plan in a manner that suits their tastes and their lifestyle.
One more thing: Seattle is a very expensive place to live. A home in Seattle will cost substantially more than in other parts of the country. For example, a condo that sells for $400K in the Seattle area may only cost $180K in Phoenix or San Antonio. Likewise with restaurants. $50 will buy two people a burger, fries, and a simple dessert. A special meal at a nice restaurant will cost a whole lot more.
Gaye
Thank you for the nice compliment, and for putting it into a perspective that I feel is extremely accurate. I am sure there are things that many would be surprised we don’t spend money on that others feel would be a necessity.
All the best.
From looking at Tripadvisor (http://www.tripadvisor.com/Restaurants-g60878-Seattle_Washington.html) , it doesn’t look like the prices in Seattle is any different from where I am in Florida. Dr. Gibson does make a good point about how you choose to spend the money. I would have chosen a nice hotel + dinner for around the same price, but your chose was a top-notch meal. It isn’t any difference in price, but I just don’t see it as frugal (my bias I guess)
Nice job, Dr. Gibson! As one of my friends and colleagues, it’s great to learn more about your personal life.
Todd
Dude i’m glad you HAD the talk. I think so many people put it off because the don’t want to talk about it. I think people feel more comfortable talking about sex than about marriage. I certainly coming from a repressed catholic background feel uncomfortable talking about both:)
It’s so nice to hear that others were helped or uplifted by Graeme’s blog. Basically what it comes down to is a love story. And learning to communicate about money and our future together. Simple as that.
I’m so looking forward to chatting and learning more through Frugal Dad!!! Thanks for the opportunity, Kate
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I hope more young people are getting the picture from those of us who has made mistakes, that they don’t have to go down the same debt-creating path.
It’s about making choices, sure, yeah. But I think all that talk about “special” and “deserve” is a bit odd. Thanks for the openness and sharing your story–but it doesn’t convince me at all that you’re committed to a frugal or within-your-means life. Be careful!
Of course you’re going to write the story you want to write, but I think a more detailed story about how you made the great choice to sell your home and the terrible choice to buy a bigger one would be more interesting and educational–if you ever feel like sharing further.
Hi Wendy,
Read my lengthy comment to 20 and engaged above and it may shed some light on our situation.
As far as the terms “deserve” and “special” being used it is what it is. After making a few costly mistakes and learning from them we chose to do something unique for our special occasion.
I did mention that my wife deserved it, but that was mainly in reference to tolerating me for 5 years, and working so hard as a teacher and mother.
When we purchased our next home, it was prior to converting to a frugal lifestyle, and actually against my gut instinct. However, by moving into this home we actually cut our expenses by close to $1200.00 per month due to location and giving up a few things. In addition, our house is zoned as a legal duplex and I knew if push came to shove we could rent out some of it if necessary. So it is not as if I bought a house with zero thought to our finances, as there were some potential safety nets in place.
I just wish I had understood these things when I was in my early 20′s, but there is a good chance that I would have ignored any of that advice.
I really enjoyed reading your story – thank you for sharing.
We don’t own ‘toys’ (boats, motorcycles, etc.) but we do spend money on nice restaurants. We had a milestone dinner at Le Bec Fin (a landmark in Philly that has since closed) that was a bit north of $500. I don’t regret it one bit!
I agree that the anniversary dinner was a perfectly valid choice. I’m in the “mindful spending” camp. If you have the money, have given the matter some thought and then decide that this is a good use of your resources, then go for it! DH & I spend $150.00 at a nice (not at all fancy) seafood restaurant last weekend, with the only occasion being the Third of July. We don’t go out to eat very often, but when we do, we like to dine nicely.
Car payments are a real drag and you add insurance to it and you are paying a hefty sum each month that leads to a drain in your bank account. NO car payment for me, thank you!
I know Im headed toward marriage myself, so this post is very inspiring. My girlfriend and I have already had a financial discussion or two, and I think the earlier the better. I will say that renting out a portion of my home later on down the road would be very difficult, only because we both enjoy our privacy a great deal. I had a roommate for the first year in my home, which greatly reduced monthly expenses and the pain of the mortgage payment, though even as a frugal financial blogger I dont know if I could go back to that.
It just depends on the layout, our home had the ability to have separate entrances a number of different ways by closing a few doors and soundproofing them. It certainly isn’t right for everyone.
Hopefully you and your better half have a similar goal regarding money.
Great story and I’m glad you had the talk. Congrats on the 7th anniversary! I think having a double income also creates a comfort zone that makes some think that it’s ok to spend a little more. And coming from my experience and as you alluded to in your story, the small changes can make a huge difference over time. Even things like bringing your own coffee or packing your own lunch, that’s an extra $100 you could be putting toward debt payments.
I’m up a snowy mountain without a pair of snow shoes. When I read the part about being snowed in for two weeks I felt your desire of need for a 4×4 or AWD was justified, especially being a parent. (Noted: Maybe not a NEW truck/SUV, but a used.)
I just moved from southern Michigan to mid-Michigan a year ago. The winter is a little more awe-striking, and the county road crews aren’t as swift as the metro Detroit area. I was driving a rental car for my job during the snow months and felt that with the next winter, having a 4×4 or AWD would be better. By then, I will have a 2 year old and a 6 month old. I’m not looking for something BRAND NEW; I don’t have the credit for it. I just want something reliable, enough space for the four of us and our cargo, as well as some traction.
In your opinion, am I justified in desiring a vehicle that could get me “out of (snowy) Dodge” in an emergency?
Great post, it’s always awesome to read personal stories like this. My wife and I reached the point where we made a serious decision about getting out of debt after reading Dave Ramsey’s Total Money Makeover. I work in finance and I thought I had money all figured out, but leave it to a guy like Dave Ramsey – who’s personally seen the good and bad of personal finance – to humble you a little! We started pounding down on our debt right away and the results have been more than worth it. Not having all those payments on cars, credit cards, etc. has been a blessing beyond words. In the world of personal finance debt is death. Not having all those bills opens up a whole world of opportunity you never thought you had, even if you really don’t make that much money.
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