** Money Diary is about learning from stories. If children can learn for tales and fables why can’t adults. **
Meet Dave and Kayla, they are your typical 30 year old couple living in the Boston suburb of Ashton. They are both graduates of Boston University. Dave graduated in bio medical engineering while Kayla majored in teaching. When they graduated college Kayla found a teaching job at a local public school. Unfortunately Dave struggled to find a job it took him a year. In the mean time he did odd jobs to pay the bills.
Their combined income was $75,000. It felt like a lot, compared to their broke student days. They moved into a 1 bedroom apartment and got married. They planned a small intimate wedding for $10k. In expensive Boston, throwing a wedding for this price was a bargain.
Then came the honeymoon, they took a Europe trip. Visited The louvre in Paris, went to the silver coast of Portugal and visited Lisbon. They had fresh baked croissants in the boulangeries of Paris and mouth watering four course meals in Lisbon. Did it all! All in all they use points for their flights but the rest was on credit. They knew they could pay it off later. All things considered a $5000 debt for a honey moon was fair.
Dave & Kayla’s Financial Past
All of a sudden their balance grew: It was now $7000 and the minimum payments were not moving the dial. Plus they were adding on to the card more than they were paying it down. The combined income they made in expensive Boston and their $30k students loans was becoming stressful. After a year from graduation Dave was able to land a job in his field. As a result they doubled their income. They decided to keep living with their old income and pay off their debt with the difference. They listed their debts smallest to largest and started paying off the smallest first while paying the minimum on the other. In a year they were able to pay off all their debt. When they were 29 they purchased a house in the suburbs of Boston. When they turned 31, they got a big surprise. They were having twins.
Book recommendations:
Once their kids were born, they started comparing child care costs. The child care cost for two kids was the same as Kayla’s take home pay. Plus, Kayla wanted to stay home with her kids. Money was tight. They were down to one income and had two more mouths to feed. Dave & Kayla wanted to do more for their kids. They wanted to save for college and save for retirement.
Kayla came up with a plan. They used $5,000 of their savings to convert their basement space to a child care center. She partnered with a neighborhood mom and they started taking in toddler kids. They charged $1500 per child and split the profits 50-50.
Their Financial Present
The day care was a success. It allowed them to make around $7500 net every month. By this time it was operational for 5 years. They had a good reputation and Kayla was able to use her teaching skills plus she made more money. At present she has no intentions of going back to the public school system.
Now they have enough income to do everything they wanted. She had her prior school pension, saved in a Roth IRA for her retirement and allocated money for her kids 529 plan.
Financial Lessons from this Money diary:
- Don’t spend Money you don’t have. “if you cant buy it twice, you cant afford it” ~ Jay-Z
- It is easy to get into debt but it might take time to get out of it
- Use the resources you have to solve your current problems. They used their house to generate income.
Read other money diary stories. How to pay off $60K debt & A single mom exceling in her personal Finance
