Jun 10, 2008

My Personal Finance Tipping Point

Tipping point: The point at which a slow gradual change becomes irreversible and then proceeds with gathering pace.

I was in my mid-twenties when I graduated from law school. I had a lot of student loan debt, which didn't really sink in until I looked at the monthly payment amounts. Goodness, that was a lot of money each month!

That realization was my personal finance tipping point, the moment when I realized that I needed to learn about personal finance and change my financial situation. Fortunately for me, I had been dating Marc for a while and we had decided to move in together with the understanding that we'd be getting married soon. So at about the same time I had to start paying back my student loans, I also had someone to share living expenses with.

Also at about that time, I discovered The Dollar Stretcher. I learned about living within (and preferably below) my means, how to match coupons with sales, and how to cut expenses. I learned to track my expenses, make a budget, and take control of my finances. I was never irresponsible about my money, but for the first time, I actually felt in control.

Since graduating from law school, managing my family's finances has become my favorite hobby. I am always looking for ways to minimize our expenses while maximizing our lifestyle, build up our savings, and invest for the future.

But as far as I've come, I still have a lot to learn, which is one of the great things about personal finance. I am educating myself more about investing so that when my student loans are paid off (which should be fairly soon!), I can invest more of our money as wisely as possible.

What was your personal finance tipping point?

This post is part of Free From Broke's personal finance tipping point contest. Check it out to learn how you can win a $25 Amazon gift certificate.


ktoth04 said...

I took out a loan to live on while I was in my study abroad, and I picked the most ridiculous amount I could think of... $20k, and I spent it all in 5 months >.>

Not that I regret studying abroad, but I could have done so more frugally, when I got back and realized how much money I'd spent I had an itty bitty freak out.

FB @ FabulouslyBroke.com said...

My loan for $60k when I left school and realizing I was not making any headway was my tipping point.

Thanks for the great post!!

Am linking to this

Anonymous said...

Great story! It's wonderful hearing about how people take control of their personal finances.

LegallyBoston said...

This gives me hope... I graduated from law school last month and am in the process of studying for the bar [in the library as we speak!]. I'm leaving with a LOT of debt too. =/

Anonymous said...

Mine was when we were at our poorest point - with my husband finishing up his BS (after a year of co-op employment with nice pay) and me in the first year of my MS, in an area with few jobs. It was bad.

But I love that time, because it taught me a lot and made me start thinking about finances more. Now that all of our hard work has paid off, we are in a much better position to use it well.

My medical school and law school attending friends definitely have it worse though - more loans than for a PhD. And the salaries aren't always higher. It's tough. I think getting rid of the debt is the way to actually enjoy the fruits of all of that effort.

Thanks for sharing!


Chief Family Officer said...

@Ktoth04 & FB - I'm so glad I'm not the only one, but not surprised either. It was my "OMG, I'm responsible for all this" moment in life.

@Lindsay - Good luck on the bar! And I'm sure you'll do fine, most of us have managed to pay off our loans without too much trouble. You're already ahead of the game if you're reading personal finance blogs :)

@Jennifer - I'm impressed. I sure wish my tipping point had come when I was in school, I might have managed to graduate with less debt.

Anonymous said...

My personal finance tipping point came in 2001 when we lost 50% of our net worth because we had so much tied up in one company's stock (401k & purchased stock). We learned a very painful lesson about the value of diversification.

Chief Family Officer said...

@Anon - Yikes, that sounds like a tough time. And yet, you're definitely not alone (thinking of Enron here). I'm glad you've apparently recovered!