I Broke A Golden Rule Of Finance: Compounding Pennies
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There is a popular saying in the financial community, “One House, One Spouse, One Job.”
It essentially constitutes one of the “golden rules” of finance and is advice often given to those seeking financial independence.
Breaking one or more components of this tenet implies that you may find yourself in a financial pit with little chance of escape.
It is therefore quite easy to become disheartened, and even give up before starting the journey to financial success, if you happen to be one of the transgressors.
As the purpose of this blog is meant to uplift and not discourage, I thought it would be beneficial to highlight individuals who have indeed broken the rule and still found financial success.
I consider myself one of the major violators of this rule, and have broken all 3 components in grand fashion, exemplified by my 5 part series “I Have Pretty Much Made Every Mistake In The Book.”
These stories are meant to inspire so that others know it is still possible to reach your financial goals despite straying off the ideal path.
Please provide your age, occupation, marital status, and website (if any):
My name is Jon Dulin and I am 40 years old.
I am married with 2 daughters and work full time on my personal finance website, CompoundingPennies.com.
Which of the golden rules did you break?
I broke 2 of the golden rules, the “one house” rule and the “one job” rule.
For each golden rule broken, can you please provide the following information:
a) How old you were when you first broke the rule?
House Rule: In my 30s.
Job Rule: In my 20s and 30s.
b) What is your best estimate for the cost of breaking this rule?
This one cost me the most money.
I bought my house at the peak of the housing bubble.
And when I say the peak, I mean the beginning of the end.
The day I was to close, the lender went under and I had to delay my closing to find another lender.
On top of this, I was buying a house that I couldn’t afford.
But back then, no one cared.
After I bought the house, I needed to bring in a friend as a roommate to help me cover my monthly expenses.
Even then, I was barely surviving.
A few years later, I met my wife and moved into her house.
Because I was underwater so much on my mortgage, I ended up renting out my house.
The problem was that I was losing money every month as the rent didn’t cover all my expenses.
However, I was happy that 90% was being covered.
After nine years of owning and renting the house, I ended up selling it, at a $25,000 loss.
When my wife and I moved from her house into our current house, I made sure that we could easily afford this house.
After graduating college, I’ve had 7 jobs total.
All were great as I learned from them and they each helped me to better understand what I like doing and what I don’t enjoy doing.
While it would have been great to only have one job, the company culture at some of my jobs changed over time and made it an unhealthy place to work.
So by switching jobs, I was keeping my happiness and sanity.
How many years, if any, do you feel breaking the rule set you back financially?
This one set me back a number of years in my estimations.
I would have rather cut my losses sooner and been done with the house, but I couldn’t justify paying $60,000 to sell the house.
In fact, had I been a smarter consumer and purchased a house I could afford, my finances would not have stagnated for so many years.
I don’t feel like this one set me back at all.
In fact, I could argue the opposite.
In most cases, by switching careers and or employers, I experienced a nice bump in my salary.
In order to have earned the same increase, I would have needed to be promoted into a higher role than I was currently in, and that wasn’t of interest to me.
How were you able to overcome the financial repercussions (if any)?
Having a roommate and renting out my house helped by limiting the bleeding.
If it weren’t for those two things, I have no idea where I would be financially today.
There were no financial repercussions to me breaking this rule.
What were some of the factors you considered when weighing your decision to break a golden rule?
I was young and dumb at the time and didn’t put much, if any, thought into buying my house.
I started off looking at houses I could afford, but realized quickly I didn’t want to live in those areas.
Instead of stopping the search and working on building up a larger down payment or earning more money, I just decided to look at more expensive houses.
The biggest was that I wasn’t interested in moving up the corporate ladder.
I enjoyed the roles I was in, but knew financially there was a low ceiling.
So in order to grow my wealth, I knew I had to job hop in order to quickly increase my salary.
If you went back in time and was faced with the same situation, would you defy a golden rule again or would you instead find an alternative course (and if so what would it be)?
I would defy this rule again, but only if I could afford the house.
Buying a house that I couldn’t afford added way too much stress to my life and increased my unhappiness.
But as long as I could afford it, I would break it.
Life is too short to not enjoy it.
As I said earlier, I ended up making more money by breaking this rule than if I didn’t.
But this was mostly because I didn’t want to go into upper management.
So by job hopping, I was able to increase my salary faster than if I just stuck with the same company for life.
If I was interested in upper management, then I would not be so quick to say my decision was the smartest one.
What advice would you offer readers potentially facing a similar decision?
Don’t be in a rush.
Take your time and think everything through completely.
I would even encourage you to take out a sheet of paper and write down a list of pro’s on one side and con’s on the other.
Then wait a few days and review the list and make any changes.
By taking your time and thinking things through completely, you decrease the chances of making a very bad mistake.
This isn’t to say doing this will ensure you always make the right decision, but it will help you more often than hurt you.
Why do you think the rule that you broke is even included in the financial tenet, “One House, One Spouse, One job?”
The rule itself has a good intention.
By having only one house, one spouse and one job, you greatly increase your chances of financial success.
But in today’s world, having one job is not as likely as it was in years past as neither employees nor employers value one another.
As a result, you can be let go at any time and this could force you to have to move in order to work another job.
At the end of the day, the most important thing to take away from this tenet is to make smart money decisions that will set you up in the years to come.
If you were faced with breaking a golden rule today, would you do it?
If it made sense for my family, then I would.
I am not tied to any job or house if it doesn’t make sense for my family.
Is there one financial rule you would never consider breaking and if so why?
I am not a person to say never.
Life happens. Things change.
You may think that you would never break a rule or not do something, but until you are in the situation, you never know how you will react or what decision you will make.
I try to live by smart financial principles but am open minded enough if things come up and I need to change course.
If you have an inspiring financial story as a “financial golden rule breaker” feel free to offer a submission so that your story can likewise inspire others.
For guidance please check out this guest post checklist.
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