In our LearnVest Personal Stories series, we hand over the podium to people with controversial views about money. These are their views, not ours, but we welcome your responses.
Today, one man shares how hitting rock-bottom inspired him to start running his home like a business—ultimately helping his family get out of debt.
Who would have thought that getting laid off from my job could have been one of the best things that ever happened to me and my family?
Of course, it would have been hard to say that seven years ago, when we were going through the lowest point financially in our lives.
It was February 2009, and I was a casualty of the recession. I had lost my job in financial sales in St. Paul, Minn., which turned my wife, Rickele, into the sole breadwinner and me the caretaker to our two young children.
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Although I had seen the writing on the wall, it didn’t lessen the sting when I finally got the pink slip.
What followed were a lot of sleepless nights, when Rickele and I would stay up late discussing how we were going to keep paying the bills.
It was during this time, however, that our family’s relationship to money started to change: We realized we had to stop stressing about the income we didn't have—and start learning to better manage what we did have.
To accomplish that, we needed to set goals, establish principles, and follow rules that reflected our new money values and would help keep our financial house in order.
What started as a few scribbled notes on paper evolved into a full financial framework that would eventually help us get out of debt, start a business—and even go on to help others just like us.
Paying the Price for a Marriage Built on Poor Financial Decisions
Our financial troubles didn’t start in 2009. Truth is, we’d been making bad money moves for a while—and not because we were big spenders.
We simply weren’t informed enough to make smart decisions. And when you combine that with a tough job market, you have a recipe for disaster.
For example, Rickele and I underestimated the potential impact of our adjustable rate mortgage (ARM).
Back in 2007, I was working as a mortgage consultant, which was a lucrative gig until the market began to tank. It was clear to me that I needed to look for another job—not only because lenders were closing their doors, but also because we were expecting our second child right around the time our ARM interest rate was to reset.
That would spike our payments from about $1,100 to $1,800 a month, which we couldn't afford. We tried to sell but had no takers. We tried to refinance but couldn’t get a deal.
In fact, I remember being on the phone with our mortgage company at the hospital, trying to negotiate a payment plan, while my wife was in labor. We ultimately foreclosed, walking away from our home and renting for cheaper.
While I struggled in the mortgage business and my wife was on maternity leave, we started to rely more on our credit cards to cover such basic costs as gas and groceries. As our savings dwindled, we took on even riskier moves—like taking out three high-interest payday loans simultaneously.
All this meant that, by the time I found and lost that job in finance, we were well down a slippery slope—except now we had less than half the income. Could we really survive on unemployment benefits and my wife’s modest income as an ambulatory coordinator at a local hospital?
Running Our Household Like a Business
Rickele and I had to work as a team to figure out our next steps.
After sharing my idea to abide by money rules to keep us financially accountable, we agreed that our overarching principle would be to run our household like a business.
That meant we had to track where all of our money was going, so we could cut costs and eliminate waste.
For starters, we agreed that I should be a stay-at-home dad for a while to immediately free up $500 a month in child care for our daughter, Morgan, then 2, and son, Jalen, then 7. We'd also save on gas costs, since I wouldn't be commuting.
We also cut out all discretionary costs. No fast food, work lunches or happy hours. And we pulled the kids out of after-school sports and dance classes, which was met with some grumbling.
But one of our rules was that the entire household had to be involved—even the members who were too young to understand why our life needed to change.
Another rule? We could only shop with a list to eliminate impulse purchases.
To adhere to that, we met as a family once a month to plan our meals and grocery list. Jalen and Morgan enjoyed this because they liked having a say in the menu.
The big goals we had to tackle: Get out of debt and improve our credit. Between our credit cards, payday loans, student loans and auto loans, we were more than $45,000 in the hole. Rickele and I made a goal to pay that all off in five years.
"Meeting clients was hard to do with a 2-year-old tagging along—there were times when McDonald’s Playland subbed as my conference room."
Our strict spending would prevent us from adding to our credit card bill, but we still needed to tackle the balances we had—which were in judgment. I negotiated a $500 monthly payment with the credit card companies, which helped us pay off those balances in about three years.
During my “Super Dad” years, I was also trying to ramp up my career from the kitchen table.
The same month I was laid off, I’d received my insurance license, anticipating that I'd need a new career. But meeting clients was hard to do with a 2-year-old tagging along—there were times when McDonald’s PlayPlace subbed as my conference room.
Still, selling the occasional insurance policy provided much needed money—and gave a nod to one of my other rules: Create multiple streams of income.
It all paid off: We went from cash broke to debt-free in less than five years.
Turning Personal Experience Into Public Service
I eventually took my musings and expanded them into a bigger framework that included not only financial but life principles, because I believe monetary success is as much about your mind-set as anything else.
I called the whole thing "Wingonomics," but it wasn’t until my daughter turned 5 that I thought about taking it beyond our four walls.
With Morgan in all-day preschool, I could work on my insurance business full-time, and volunteer at a residential house for women and children, teaching a financial literacy class. It was an opportunity to see if my principles could work for others.
Well, I knew it was a hit when people began calling me Mr. Wingonomics.
Life has changed a lot since then. I turned Wingonomics into a book, and expanded my business to include other financial services. And Rickele left her job to become a realtor, and help manage the tax-prep part of my business.
Even though our circumstances today are obviously much better than they were seven years ago, we still live by Wingonomics.
We meet every other week as a family to review our spending. Jalen and Morgan, now 13 and 8, get a “commission” for chores, so they can pay for their wants and learn to save. We also tell them to establish personal and financial goals, and they keep a vision board in their rooms of what they want to achieve.
As for me, the big lesson I learned is that it's not about how much money you make but how much money you keep. And living by our principles reminds me that, ultimately, we were in control of our financial outcome all along.