I’ve shared before that some of my biggest financial mistakes of my 20s were not budgeting, becoming comfortable with debt and not saving. It turns out, this is the new American-standard of our consumer-centric lives. Aside from the occasional vague sense that “I should probably get around to that one day,” I didn’t even realize the financial blunders I was making.
Then I got married, bought a house and had my first daughter.
Suddenly, all of the (financial) dots I should have been connecting my whole life came crashing together.
- As a child, seeing my parents spend every “extra” dollar on payday, hoping nothing unexpected would happen before the next payday, moving in to my grandparents house to “save money,” being taught to never answer the phone… you get the idea. Don’t get me wrong – we had a pretty great middle class life, but when badness happened it had a big effect because the plan was always for the best-case scenario.
- As a young adult, watching my mom get her car repossessed and later (along with millions of other Americans who thought they could spend their way out of the middle class) watching her nearly lose her house. Watching a friend of the family (who is in her late 50s) open (and abuse) credit under her daughters’ names – meanwhile the water in her home (where she still has a young child) gets shut off. To her, this is just part of life the same as showing off her new smart phone and getting a co-signer for that new, foreign SUV.
- Today, my mother-in-law lives with us and is completely financially dependent on us (to be fair, her path to getting here had a lot of disadvantages). My own mother continues to buy anything she feels entitled to that her income will allow while still having a dramatically negative net worth.
- On the professional side, early in my career I worked for a huge, multinational IT company whose business model was for other companies to outsource some or all of their IT functions to them… and lay off their internal IT staff. Since then, my career in corporate IT has involved a lot more insourcing than outsourcing – but it has also involved having to layoff and fire people. Add to this the way that the world is evolving… being an email administrator (as an example) used to employ many thousands of people – now in our Cloud Economy, everyone has moved to Gmail (Sorry, Google Apps for Work) or Office365.
All of this adds up in my head to scare the hell out of me. I strive to be middle class and financially secure because:
- Jobs go away, no matter how secure you think they are or how good at your job you are. You can be the best email admin in the world, but if it costs the company less money (or they think it does) to move email to the Cloud, you’re out of a job. Your company could be bought or merge with another that may find they don’t need two Department Xs… your company could simply go out of business (Enron being the “classic” example, Novell (for the old geeks out there) being the slow, painful death of a one-time giant I always think of). Your company could outsource your whole department (not just in IT, this happens with accounting, medicine, anything).
- People get hurt. Even if you’ve got long-term disability insurance — if you’re living on 100% of your income, 60% won’t cut it. Also, most disability coverage says if you can do a different job, even for dramatically less pay, get your ass out there and do it.
- The thought of my wife and kids being homeless and hungry is something I refuse to process. If I can prevent that future by being financially responsible today, that’s part of my job as Dad (and, truly, part of my wife’s job as well).
- I do not want to be a burden on my children in their adult lives. My daughters are not my retirement fund. I have a long life to make right and wrong decisions. If I rob my future for my present today, it isn’t on my girls to then rob their futures for my present.
- Finally, what are we teaching our children if we are spending 95 to 105% of our income every month (mostly on luxury items we don’t need)? Having them move into adulthood feeling they deserve (are entitled to) all the things they saw mommy and daddy getting (luxury foreign cars, iGadgets) / doing (fancy dinners and vacations) their whole lives is setting them up for failure.
I am not trying to be a “Debbie Downer” (is there a male equivalent for that? Harry Harbinger?) but this literally the stuff that keeps me up at night.
Being a good husband and father is, of course, about so much more than “providing” for your family.
Spending time together, teaching and learning, loving one another, being there to catch her when she falls… all of these things are so important and I’d be a failure if these things weren’t ingrained in our everyday lives. But, guess what? If end up without a home (or my children fall into the consumption trap), despite all the blessings we’ve had, I will have epically failed my family. The idea of failing my family epically scares me to death.
Do you think I’m wrong to stress over these things (putting aside the ulcer I’m probably in-store for)? What financial issues keep you up at night?