Not too long ago, I shared with you a few of my fondest memories growing up camping with my frugal mentor, my grandfather.  We had some great adventures during those trips, but we had a few misadventures, too!  As I’ve reflected over them these last few months while thinking about sharing camping experiences with my own kids, one particular misadventure came to mind.  Like most everything, I try to find a way to apply the lessons learned to my personal finance situation, and this was an easy one.

This particular trip we decided to take my cousin along.  We traveled deep into the Smoky Mountains along the Blue Ridge Parkway, finally making camp at a campground near Mount Pisgah, a few miles south of Asheville, NC.  As my grandfather readied our campsite, my cousin and I decided to do a little exploring using a crude map of surrounding trails provided by the campground.

Not long into our hike my cousin was ready to call it quits. He was tired from the long day of driving, and was ready to turn back.  I wanted to press on, eager to complete the small hike around the perimeter of the campground. So, despite everything we knew about hiking, camping, etc, which wasn’t much, we decided to split up.  He would return to the campground, and I would finish the trail.

I quickened my pace, half expecting to beat him back to the campsite. But soon I came to a clearing with a number of poorly-marked trails leading back into a new set of woods. Uh oh. This didn’t look familiar on the map. I gouged a large “X” on a tree identifying the path I had come from (the only smart thing I did that day), made an educated guess as to which trail was the correct one, crossed the clearing, and re-entered the woods on a new path.

After walking nearly an hour, I realized I had made a serious mistake. Nothing was recognizable. There was no sign of campers, and it was eerily quiet, except for the footsteps I imagined in my head being made by a large black bear that was surely stalking my every move. I distinctly remember sitting down on a large rock next to the path, looking up at the sky and wondering how much daylight was left, and wondering if I should turn around.  I had no food, no water, and what was obviously a poorly-drawn map. I had a large survival knife, which would have been no match for a bear, and did little to ease my nerves.

After much deliberation, I decided to turn back.  I retraced my steps back along the new trail, and finally came to the clearing. I looked across the clearing and found the tree I marked with an “X.” I walked the original trail for some time before exiting the woods at the entrance to the campground.  By now I was moving in a slow, panicked jog.  I knew my cousin had to have returned to camp hours before, and that my grandfather must have been worried sick.  When I finally made it back to the campsite my cousin greeted me with an irritated, “Where have you been?  Papa has been out looking for you!”  Not long after I returned, my grandfather arrived riding with a Park Ranger.

Later that night we all agreed that I was lucky not to still be out in those woods – in the cold, lost, with no food or water.  I had never been happier to hunker down inside that van!  We look back at that experience now and laugh, but it certainly wasn’t funny at the time.  After having kids of my own, I had a new appreciation for the fear my grandfather must have had running up and down those trails looking for signs of his lost grandson.

Four Personal Finance Life Lessons Learned From My Adventure

1. Have a good plan, and stick to it.  Before setting out on my hike, I should have made more preparations by finding a better map, and packing a few basic supplies (including some food and water).  In life, it’s best to prepare for the worst case scenario, even if it isn’t pleasant to contemplate. Build a solid emergency fund.  Have a good insurance policy in place.  Have your wishes fully detailed in a will. Pay off debts to reduce the risk in your life.

2. Always use the buddy system.  The first mistake I made that day was leaving my hiking partner. In the world of family finances, it helps to have a partner to share your challenges, and your victories.  If you are in a relationship, be sure your significant other is “in the loop” when it comes to finances, rather than shouldering all the burden on your own.

3. Have a good idea where you’re starting. Just like the “X” carved into the bark of that tree, it is vital to make note of where we are coming from.  Baseline your finances before beginning a financial turnaround so that you can monitor your progress.  I talked to a guy once who was feverishly paying off debt with his wife.  I asked him how much debt they had paid off, and he couldn’t tell me. “We never really did an inventory of how much we owed, so we aren’t sure exactly how much we’ve paid off.”  To me, that would kill motivation because I am a results-oriented person.

4. When you find yourself moving in the wrong direction, stop moving.  How many times in your life have you recognized you are doing something wrong, but just kept doing it because stopping, or turning around, was too difficult.  We have all had those moments.  But the practice of simply stopping, taking an inventory of where you are and where you need to go, can often times make the difference in success or failure.

This post originally appeared back on April 7, 2008.  I wanted to run it again today to get some additional perspective from new readers, and because frankly, I needed a break to work on a special project. One note of interest, my rant about the government bailing us out of our financial problems was a good five months before they began doing just that.

A fellow writer recently asked, “Who do you blame for your financial problems?” One of the possible answers was “your parents.” I wonder how many people really blame their parents for their financial problems. I do believe parents play an important role in teaching life skills to their children, particularly when the public education system does such a poor job of preparing students for the real world. However, I don’t subscribe to a line of thinking that parents are to blame for poor choices made by willing adults. There is plenty of blame to spread around.

Lack of Financial Education in Public Schools

There has long been a serious void in public education when it comes to “real life” studies. And in no subject is this truer than the area of personal finances. We continue to teach kids to pass exams, to recite from memory, and to conform to so-called “advances” in new teaching methods. Despite noble efforts, educators are for the most part equipping our children with the wrong skills. Don’t believe me? When was the last time you used an algebraic expression to balance your checkbook, or calculus to solve your 1040 tax form? There is a place for those skills, however I believe that place is college, where it is required of students to indicate a path of studies that may require the knowledge of these higher levels of math and sciences (such as medicine, engineering, etc.). For the rest of us, a basic introduction to personal finance topics would be helpful to prepare for the perils of the adult financial world. Upon graduation, and many times before, students will be exposed to credit cards, predatory lenders, car salesman and if they work part time jobs, Uncle Sam’s maze of tax laws. We should push for an educational curriculum that teaches youth how to be responsible citizens, with their money and beyond.

Poor Role Models in the Media

The media is full of poor financial role models. Soap opera stars who live lives of luxury, but never seem to work for it. Entertainers and sports celebrities who earn ridiculous amounts of money and lead lavish lifestyles none of us could ever afford. Trust fund babies who spend entire decades partying and living it up while waiting for their inheritance. Unfortunately, these are the role models kids are attracted to. In their eyes Warren Buffet, Bill Gates and Dave Ramsey are just “some old guys they saw on the news.” As a society, we worship these celebrities and further highlight their irresponsible behavior by portraying their lives as something we should all aspire to – something that is within reach of the average person. Young people chase this ideal by buying cars, clothes, homes, jewelry and other elaborate goodies they see their idols purchasing. Pretty soon they find themselves in a real financial crisis with limited means to undo their mistakes.

Accountability Crisis

For the last several years we have had an “accountability crisis” in this country. People refuse to accept responsibility for their own misgivings, and shortcomings. The fault always belongs to someone else. You can easily detect this line of thinking in the responses made by those with “poor” attitudes. Don’t earn enough money? “Poor man just can’t get ahead.” Spending too much money? “Well if the government would bring prices down!” Can’t afford college? “College is only for rich people.” No one ever responds, “I’m broke because I want to be.” Or, “I can’t attend college because I am not willing to work for the money to attend.” Imagine how much better off we would all be if we stopped pointing fingers and took control of our own destiny. If we quit waiting on “the government” to pay for something, or bail us out of everything, or to save us from ourselves.

So maybe your parents weren’t the best example, and you did follow the wrong crowd financially growing up and made a few mistakes. Congratulations. You are human. We have all made mistakes. What separates you from serial failures is that you are willing to learn from those mistakes. You are willing to get smart on personal finance topics by reading magazines, books and blogs. You are willing to work extra to dig out from your own financial hole and change your family tree.  Quit waiting on someone else to save you, or someone else to blame it on. Take responsibility for your financial decisions, and start making better ones to provide a brighter future for yourself, and your loved ones.

I remember the point of my financial meltdown very vividly. It wasn’t as much a meltdown as a wakeup call that things could no longer continue the way they were going if I wanted to live a successful life. I was working for what seemed like peanuts and my wife and newborn daughter were at home. Money was tight, but we weren’t starving by any means. We covered basic expenses, but charged luxury items to a credit card and paid for them over time. My decision to return to school added significant expenses to our budget, and again we financed a large portion of my tuition and books compliments of Visa. The minimum payments began to rise, and my income stagnated.

Things Began to Tighten Up

Do you remember those classic action movies like Indiana Jones or Star Wars where the heroes are trapped in a room, and suddenly the walls began to close in from all four sides? That sort of sums up our situation about ten years ago. At first we had plenty of space, despite low earnings and no savings. Over time the walls began to creep in. Student loan repayment, current educational expenses, credit card minimum payments, a car payment, insurance, medical bills from the birth of our first child, etc, etc. all began to eat away at our monthly income.

The Soggy Hotdog

I don’t remember the exact date, but I remember the events of the day like it was just yesterday. It was a normal day on the corporate treadmill. I arrived at work and logged on to my credit card account online to discover I was over the limit – doh! I knew that would come with a $29 fee and could potentially reset my interest rate again. I was kicking myself for using the card to pay for new cell phones earlier in the week. Oh well, I’d make a big payment to bring it down under the limit as soon as I got the rebate from the cell phones. Lunch time rolled around and I headed out to the nearest fast food restaurant. I never carried cash, so I drove around to the first window and handed over my check card. Declined. What? That couldn’t be right. I had over $100 in my checking account (or so I thought)! So there I was at the McDonald’s drive-thru with a dead check card, an over-the-limit credit card, an empty wallet and exactly fifteen cents in the change holder in my truck. Embarrassed, I made up some excuse about it being a new card and drove away apologizing for the mix-up.

Now that I had wasted the first twenty minutes of my lunch break there was no time to head home for a bite to eat. I had no money, and no snacks back at work. I opened my wallet and found my Chevron gas card. It was the one card that would still work. I drove to the closest Chevron station which had a convenient store attached. I went inside and got two of the worst hotdogs I had ever eaten in my entire life. The buns were under the hotdog rotisserie and the condensation had turned them into a soggy mess. I’m still not sure the hotdogs were even real meat, and the mustard was watery. I charged the $2.12 to my gas card and returned to my truck.

As I sat there in the heat eating those crappy hotdogs a wave came over me. No, not just a wave of nausea. I was too smart to live this way. Here I was forced to charge my lunch on a Chevron gas card because I was too irresponsible to properly plan for meals, food budgets, etc. It was time to grow up. I choked down the remaining lunch and returned to work, thoroughly disgusted with my financial life, and with a bad case of indigestion.

A Lifetime of Learning Begins

That night while surfing around for information on money management, I discovered a website by some guy named Dave Ramsey. I began to listen to his archived shows online. I subscribed to financial magazines such as Kiplingers Personal Finance and Money Magazine. Reading personal finance books became a side hobby, though it wasn’t until much later that I really developed a taste for this genre. My television was often on CNBC or Bloomberg’s. My favorite section in the newspaper became the “Business” section. I started reading old Wall Street Journals at work when my boss was finished with his copy. I wanted to learn everything I could about money, even though I had none. One day I would have money and I wanted to know how to handle it better. I had learned nothing in high school about personal finances, and chose to make bad decisions early on because I bought into the mentality, “I can always pay it off later.” Later never came. What did come was a small mountain of liabilities that trapped me in a dead end job for years because I had no options.

Our story is a cautionary tale for newlyweds. In our excitement to live the lifestyle of our dreams, we sacrificed much of our future. We are still not completely debt free, but have made that our number one mission. And when we do reach debt freedom, we will never go back – and I mean NEVER!

So there’s my story, I’m interested to hear your “soggy hotdog” moment?

#1 – Create a conducive environment for growth. The most important step in gardening is to prepare a bed of fertile soil for your plants to grow.

Money lesson: Similarly, investments require an environment where they can thrive. Faithfully contributing money to bad investments, or a bad brokerage, will do nothing but increase losses over time. Take some time to investigate the various brokerage houses and fund managers before deciding where to invest.

#2 – Select the right mix for optimal growth. Some plants tend to do better when surrounded by other certain types of plants. Some plant varieties are good are warding off insects (such as marigolds). Carefully selecting the right combination of plants could improve the entire garden.

Money lesson: Selecting the right types of investments makes for a more balanced, well-diversified portfolio. With my own finances, I have a blend of tax-free and tax-deferred retirement accounts from both my employer, and things I have opened on my own. I also have a couple cash accounts for short-term savings goals, and conservatively invested taxable funds for longer term goals short of retirement.

#3 – Tend to your garden often, but don’t over-do it. Plants need two basic things to grow – water and sunlight. However, many new gardeners with good intentions kill crops by over watering, or watering too frequently. These overactive gardeners would see improved results if they backed off a bit. Deep watering plants every few days encourages a deeper root system as plants dig down through the soil in search of water.

Money lesson: Overactive investors who constantly make changes to their accounts likely see diminished returns when compared to those who buy and hold for the long term. A few active traders can beat average market returns, but keeping up with single investments requires a lot of homework. If you are like me we have other things competing for our time, so a healthy dose of long-term investments set on auto-pilot lowers the hassle factor.

#4 – Be patient – results don’t come overnight. It took nearly two weeks of faithfully watering and tending to my square foot garden before I began to see green sprouts poking through the soil. It would be unrealistic to expect juicy, plump tomatoes to magically appear two days after planting the seeds.

Money lesson: It is also unrealistic to expect double-digit returns on investments in only a couple months. Select a strong portfolio, contribute to them often and check up on them every few days, but don’t obsess over the results in the short term.

#5 – Keep invaders out. The biggest threat to a square foot garden is from outside invaders, namely insects. Aphids, moths and slugs can wreak havoc to a vegetable garden, chewing away on leaves and fruits.

Money lesson: “The Tax Man” can take chunks out of your profits by eating away at your returns. Be careful when selecting investment vehicles to be sure you are not overly exposed to taxes. Taxes are a part of investment life, but some careful planning can reduce the amount of “fruit” you have to share!

#6 – Don’t be afraid to harvest profits. When fruits are ripe for the picking you must be ready to harvest them. Nothing spoils a garden faster than over-ripened, spoiled fruits and vegetables hanging from the vine. You’ve worked hard to produce these crops, now enjoy the fruit of your labor.

Money lesson: When investments, particularly those outside of retirement accounts, produce a sizable return you need to ring the register and take those profits. It is tempting to let the investments sit to try and earn even more, but this plan usually fails when the investment begins to make a declining correction.

#7 – Prune back overachieving crops. In one of the garden squares (top right) I planted sugar snap peas. They took off! So much so they soon were crowding out my tomato plants. I pruned them back a bit, but they came back with a vengeance. I realized that they were probably not the best crop to plant in a square foot garden, so I transplanted them and planted squash in the empty square.

Money Lesson: It is a good idea to rebalance your portfolio at least once a year, particularly if one of your funds has grown significantly. For instance, when the real estate sector was booming a few years ago many investors saw the value of REITs, or similar real estate related investments, increase considerably. These investments quickly represented their largest fund asset. To rebalance their portfolios many fund owners sold off a portion of REITs, investing in other funds to bring individual fund balances back in line with their desired asset allocation mix.

#8 – Get rid of poor performing crops. Poor performing crops take up space and provide low yield. My strawberry plants were not producing, while other crops were taking off. I ultimately made the decision to cut my losses and remove all but two strawberry plants (lower left square), making room for new investments in a variety of peppers.

Money lesson: Many times investors hold on to poor performing investments for too long, either because they don’t want to record the loss officially, or because they hope the investment will regain some value and lessen the financial hit. When you are stuck holding an investment you no longer believe in, cut your losses. Use the loss to offset some gains you registered from another investment. Use the proceeds to fund a new investment you have researched and feel confident will be a winner over the long term.

To learn how to build your own square foot garden, read my popular post, How to Build a Square Foot Garden.