Our Best Money Moves

Mr. ThreeYear and I will have been married for fifteen years this May. During that time we have done a lot with our money, good and bad. Today, I’ve detailed our best money moves in our decade and a half together, and on Wednesday, I’ll share our worst money moves. 

We've made both good, and bad, money moves in our fifteen years of marriage. Here's a list of our smartest financial moves to date. @lauriethreeyear #fi #smartfinancialmoves #personalfinance

Contributing to Retirement from the Beginning

Even though Mr. ThreeYear and I didn’t max out our retirement accounts from the beginning, we did contribute to them. 

While I don’t remember the exact percentage that we contributed in the early days of our first jobs in the US (in Chile, I contributed a certain portion of my income to retirement because there it’s mandated by law), I believe it was enough to get the full company match (for him) and a few hundred dollars a month (for me). 

Related Reading: The Boon of Investing Early

We continued contributing to the accounts in 2008, until we adopted Dave Ramsey’s method of paying off debt. We stopped contributing to retirement for 18 months while we paid off our $38,000 in debt. Once we paid our debt off in late 2009, we began to again contribute to retirement accounts again. When we moved to New Hampshire, we again took a short break while we saved up a house downpayment, since we sold our Atlanta home at a loss in 2010. Finally, when we moved into our New Hampshire house in 2012, we started maxing out Mr. ThreeYear’s 401k (because I wasn’t working), and then started contributing heavily to my 401k once I started working. 

Maxing out our 401ks is the single best financial move we’ve made, in my opinion. We’ve lowered our taxes, increased our yearly investments, and decreased our spending (because that money is no longer available to spend), all in one fell swoop. I tell friends and family members who don’t know where to “start” on their personal finance journey to start there. In my opinion, for someone who has spending issues, it’s even more important than paying off debt, because of the effects of compound interest and time (plus it forces them to spend less). 

Maxing out our 401ks means that when this guy graduates high school, we’ll retire. 

Increasing Our Salaries

When Mr. ThreeYear started a “really good” new job in Chile, right after we started dating, he made $10 an hour, and was thrilled to make so much (he made more than I did–I was salaried and made a total of $850,000 pesos per month, or about $1060US per month at the time and he made roughly $1500US). This was Chile, so it’s hard to compare that to US salaries in the Noughts, but we made very decent salaries for two young professionals in Santiago. 

Related Reading: How to Be a Rockstar at Your Job

When we moved to the US in 2004, Mr. ThreeYear got a job with a Fortune 500 company through a recruiting agency, and he made $50,000 per year. We were thrilled. When I got a job making $30,000 per year, we thought we were on easy street. 

But, as we learned more about salaries, we realized we were underpaid in our fields and we pushed to make more money. Mr. ThreeYear got yearly increases and increased his salary by over 20% each year (average). I also increased my salary substantially, and I had paid medical benefits, which meant we had no medical premiums to pay. 

It was, ironically, during the year when Mr. ThreeYear was laid off twice that his salary increased the most. When his original company asked him to come back, he negotiated for a lot more money than he was originally making. 

***Time Out*** Here’s one of the reasons that Mr. ThreeYear could be ballsy enough to do that. He had a former boss who helped him out hugely during that time by coaching him on how much he was worth (more than he was currently making). I was at his side, pushing him to negotiate for more. And in the background, were my parents, grandparents, and relatives, who we knew could bail us out financially if worse came to worst. 

Having family with their own secure financial situation to help us in times of financial trouble gave us the confidence to take more risks with our jobs. 

When we lived in Chile, even though I knew my parents could bail us out there, too, if need be, we had a more conservative philosophy regarding asking for pay raises. While I did negotiate a handsome pay raise at the university I worked for, I was much more nervous about losing my job, since there was no one we could really live with if we both lost our jobs. 

The reason we were able, and have continued to be able, to be pushier, about negotiating raises, is because we had financial backers and now have enough FU money that we can back ourselves. 

When Mr. ThreeYear got his job with the New Hampshire company, he negotiated once again, and was able to negotiate a much larger total package with this company. His huge salary increases did stop with his current company, though. They are much more conservative in giving raises, and while Mr. ThreeYear got the highest possible raises for many years running, that number was much less than with his previous employers. His total compensation, though, with bonus and stock included, has continued to grow each year. 

When I started working again after being a stay-at-home mom for seven years, I started at a fairly low salary with a non-profit, but I pushed for raises there, and increased my salary substantially there. 

When I became a teacher, my pay increased again, and I became more stringent about billing the hours I was warranted as an independent contractor, so my pay has continued to increase. 

Drawings--www.thethreeyearexperiment.com
Becoming a teacher increased my hourly rate, as I became a contract worker.

Part of the reason we’ve been able to ask for, and receive, more pay, is that we prove our worth by working hard, taking responsibility for our mistakes, and becoming the go-to person at our jobs. There’s a lot to unpack behind that sentence, including many years of expensive education that other people paid for, a work-ethic modeled by our parents (my mother-in-law worked three jobs for years), and a support network to help at home when work got busy. 

Tracking Our Net Worth

We began to track our net worth in April 2011, after I started following a net worth tracking website (I can’t remember the name now). People posted their net worth anonymously, so of course I figured ours up and started posting updates. That first year, I only calculated our net worth for three months–April, June, and October. In 2012 I tracked it for four months and then in 2013, presumably when I read Your Money or Your Life for the first time, I started tracking it each month. 

Related Reading: I Changed This One Habit to Save Over $11,000 This Year!

Tracking our net worth became a game, albeit a very slow-moving one. I could look at where we stacked up with people of the same age group, the same profession, and the same state. It became a game to see how fast we could stack another $100,000 on top of our net worth. How fast we could get to $1M. 

I highly recommend tracking your net worth (positive or negative) as a way to shine light on what you’re doing right, and wrong, with your money. I’ve learned a lot from tracking our spending about what we’re wasting money on, and where we’ve spent to get good value (based on our own personal values). It also helps you get motivated to pay off debt quickly! 

If you’d like a copy of the spreadsheet I use to track our net worth (and spending), send me an email and I’ll send you a copy.

Paying Off Debt

Without a doubt, paying off debt has been an incredible boon to our financial lives. While it wasn’t the first smart money move we made, paying off our debt has allowed us to take out a 15-year mortgage, max out our 401ks, and eliminate debt payments from our lives (except for our pesky mortgage payment of course!). 

Related Reading: Freedom from Payments9

I’ve written plenty about how to pay off debt, and how we did it, specifically. At first, it seemed impossible that we’d ever be able to get out from under the mountain of credit card and car loan debt that plagued us. But budgeting helped a ton, as well as evaluating our spending with fresh eyes. A lot of the things we assumed we couldn’t live without, like yard or cleaning services, security and pest control, could go. Some, we really didn’t want to live without, even while getting out of debt, like travel. 

It’s hard, a decade after the fact, to think about just how we went about paying off our debt. But last year, I realized we had gotten into more debt: two car payments and our mortgage for our apartment in Chile, that added up to over $1000 in payments each month. At the beginning of 2017 (or really, the end of 2016), I imagined what it would feel like in December of 2017 to have $1000 less in payments per month. We could save so much! 

Pilot www.thethreeyearexperiment.com
No more debt means we bought this car with cash.

Envisioning that freedom helped me keep a laser focus during 2017, and we reached our goal. We paid off the two cars and the apartment (two years early), so we freed up over $1000 in cash flow each month. That’s part of the reason we were able to feel comfortable buying a more expensive house here in North Carolina and why I haven’t had to get a teaching job yet. 

And now, we just bought a bigger car in cash, which was such an amazing feeling. 

Taking Out a 15-Year Mortgage

We’ve taken out exactly three 15-year mortgages in our lives, and the one time we didn’t, for our house in Atlanta, we took a major financial hit. We took out a 15-year mortgage for our apartment in Chile that we bought back in 2004, for our house in New Hampshire, and for our current house in North Carolina. 

For us, the discipline of paying down the principal faster has helped us save up more money that we would probably have been tempted to spend elsewhere. Each time we get a new 15-year mortgage, the payment feels big. But gradually, we adjust to the amount of money we have to spend, and we adjust our spending downward until we’re spending less.

Related Reading: We Got a 15-Year Mortgage. Here’s Why You Should, Too.

We’ve also made sure not to buy a house that was more than 25% of our take-home pay, although we usually don’t include taxes and insurance in that total. If we had bought a house that we had to spend close to 50% of our take-home pay on, I don’t think we could have adjusted our spending downward to make that payment doable. Has that meant that we’ve bought “less house” than we maybe wanted to at times? Yes. But it’s also meant that we didn’t make any hare-brained emotional house purchases where we stretched ourselves into financial catastrophe.

Our house in North Carolina snow www.thethreeyearexperiment.com
Our new house in North Carolina, covered in snow.

Final Thoughts

I’m glad I’m writing about our smart money moves first, because it’s going to be painful to talk about our dumb ones. But when I break the very complex field of personal finance down for people, I try to encourage them to understand that you don’t have to be good at everything in finances. You can make bad decisions and still recover, still build a large net worth and retire early or reach financial independence. 

What has helped our family, and has helped other families, is focusing on making a few good BIG financial decisions that then have a waterfall effect and help you make good small financial decisions. (Working up to) maxing out your 401K, getting a fifteen year mortgage, paying off your debt. These are decisions that will have very positive financial benefits for you later on.

I’d love to hear what you consider to be your best money moves. 

5 Money Moves We’re Making Before the End of the Year

It’s still hard to believe that almost another entire year has passed. As I was looking through my posts, I saw one I’d written last year about this time, and I thought it would be great to share again. 

Our family's money moves to close out this year and get ready for next! @lauriethreeyear #personalfinance #familymoney #cfomom

The funny thing is, our money moves this year are almost exactly the same as last year’s. We’re creatures of habit, for sure! 

The biggest difference between this year’s end-of-the-year money moves and last year’s is that last December, we paid off all non-mortgage debt so this year, we have nothing to pay off. It feels amazing, and has felt amazing since we did it last December. We feel so much more in control of our finances this year, in large part because we keep more of our money and are able to save and invest more. 

I’d love to hear your end-of-the-year money moves! Let me know in the comments!

While we’re still over a month-and-a-half from the end of the year, we know that soon, December 31st will be upon us, so the ThreeYears are currently working on end-of-the-year money moves to make sure our finances are in good shape.

Here’s what we’re doing to close this year out:

1. Contribute as much as possible to my i401k

Since I’m self-employed, I have an i401k (if you’re interested in the particulars of opening one, read this post). I am playing catch-up with my contributions since we had so many cash goals that we funded with my income this year. So, in the final quarter of the year, and in the first quarter of next year (or at least until we file our taxes), I’ll be contributing a lot to my 401K. Even though the market is high now, I don’t want to miss the tax contributions of these contributions. I estimate we’ll save several thousand dollars on our taxes if I reach my contribution goal for the year.

2. Fulfill our outstanding financial obligations

We’ve got a few outstanding financial obligations, including completing our yearly pledge with our church. We usually wait and pay the majority of our pledge in the fourth quarter of the year, when our cash flow’s better (as a teacher, I don’t get paid in the summer and it takes a month or so after school starts to begin getting paid, so our income rises in October, November, and December).

I also have to pay my fourth quarter taxes for income earned from September through December. I have until January 16th, 2018, to file the taxes, but I’ll probably go ahead and pay what I estimate I’ll owe before the end of the year. I set aside 20% of my income as it comes in, in my business account, so that money is ready to send in anytime I decide to pay the bill. Continue reading “5 Money Moves We’re Making Before the End of the Year”

Location Independence: Six Month Report

When Mr. ThreeYear, our boys and I moved to North Carolina this June, we realized a dream at least a year and a half in the making.

Location Independence Six Months In www.thethreeyearexperiment.com

So how does location independence feel six months in? How have our decisions turned out? I thought I’d give you an update on how we’re feeling about our move now that we’ve had some time to settle in.

First of all, just as a review, our family publicly announced on this blog, just over two years ago, that by the time I turned 40 (in July 2019), we wanted to sell our house and move abroad. I put it like this: Continue reading “Location Independence: Six Month Report”

A Year of Good Food: Grocery Delivery

Just two more months left to report for our grocery experiment. November was a month that was supposed to be short and easy to stay in budget, but, alas, it wasn’t.

A Year of Good Food: Grocery Delivery www.thethreeyearexperiment.com

The Reason for This Experiment

This year, our family is challenging ourselves to spend less on food so we can save and travel more. Last year, I adopted one habit a month that would translate into better money moves for our family. You can read all about our A Year of Good Habits here.

That experiment worked so well that we tried a new one this year. In 2018, we are challenging ourselves to do better at our food spending. Last year our family spent over $12,000 in groceries, or $966 per month.

This year, our goal is to spend 20% less on groceries. That may not sound like a lot, but it’s almost $200 per month in food savings. The extra $200 per month is going into a travel savings fund, so we can see the results of our hard work in spending less on food.

We could have adopted a radical goal to keep our spending under $500 or something like that. But we know better. We thought it made much more sense to consistently hit our modest target, month after month, for an entire year, to show ourselves we could do it, than to maybe hit the $500 goal once or twice and then face plant with more $1000+ grocery bills.

And if we consistently hit sub-$772 spending, then perhaps we’ll challenge ourselves next year to shave off more.

Each month, we’re trying out a new way to save money at the grocery store. Last month, I tried to cook a bunch of food each Sunday for us to eat during the week. But because I didn’t make clear menus for each week, it didn’t work as well.

November

While November was a short month, we packed a lot in. Mr. ThreeYear traveled for a week to New Hampshire. We went to South Carolina early in the month to visit my parents. We went to the beach for Thanksgiving. That meant that we were thrown off our routine and weren’t consistent and thoughtful grocery shoppers.

Continue reading “A Year of Good Food: Grocery Delivery”

November Net Worth Update

Wow! It’s almost December, which means we’ve got just one month left of this year. This year has definitely been an eventful one for our family.

November Net Worth Update www.thethreeyearexperiment.com

This month has been a good one. We’ve been surprised by how cold it’s gotten in Charlotte during the fall (it’s been in the 20s this week in the mornings, but it does warm up to the mid 50s or 60s during the day). The boys both seem to have gotten into a groove at school, I’m running now with a running group, and Mr. ThreeYear has been regularly playing tennis.

Last night, we went to our town’s downtown Christmas celebration via trolley! We parked in a parking lot at the edge of our neighborhood and the cutest little trolley picked us up. The boys actually got to ride standing up in the back of the trolley as we cruised the four miles downtown.

Once we got downtown, there were carriage rides, vendors, a Christmas tree display, bands playing, and Santa Claus. The boys and my niece, who was with us, had a blast. It made me so glad we decided to move to this town, because it’s ridiculous how festive and involved our town is. We are freakin’ Mayberry over here. I absolutely love it.

If you’re just joining, our family of four is on a three-year journey to double our net worth and become location independent. Since we’ve achieved the latter goal, we’ll be primarily focused on the former in each of these reports going forward. Each month, I record our progress on our net worth and our spending. Last year, we increased our net worth by 32% over the year before. This year, we tried to increase it by more than 65% from where we started in December 2016. Even though it looks like we’ll miss our target by a wide margin, we’re keeping our goal in place to see how close we can get in 2019.  Continue reading “November Net Worth Update”

Why We Bought a Smaller, More Expensive House

When Mr. ThreeYear and I moved from New Hampshire to North Carolina, we bought a house that was about 1000 square feet smaller. It was also significantly more expensive than the house we sold. So why did we buy a house that was more expensive and smaller? Well, there are a couple of reasons.

Why We Bought a Smaller, More Expensive House www.thethreeyearexperiment.com

It all started a year ago, when we visited Santiago. We stayed in the apartment we own there, which is about 550 square feet in total, with 3 bedrooms and 2 bathrooms (they know how to pack things in in the big cities). Despite its small footprint, we had a wonderful time together. Little ThreeYear really enjoyed being so close to us, and just being able to call out to find us in one of the bedrooms.

When we got back to New Hampshire, we had several talks about selling our house and moving into a smaller condo to speed up our journey to location independence. We looked into several smaller condos at the beach, and I even wrote a post about it.  In the end, we moved to North Carolina and bypassed the condo altogether.

But the seed had been planted. A smaller space was something that we not only could live with, we wanted  to live with.  Continue reading “Why We Bought a Smaller, More Expensive House”

Drinking My Coffee Black

Hope you had a wonderful Thanksgiving! I’m back after a short break. This past week, I was at the family beach house for Thanksgiving. I had every intention of posting, but my computer battery had 15% life left (and doesn’t work when it’s not plugged in to the charger due to an unfortunate coffee spill a year or so ago) so I had to take it in to the repair shop.

Drinking My Coffee Black www.thethreeyearexperiment.com

Guess what? New battery, $169.99, guaranteed for 90 days. PLUS, the computer now works if it’s not plugged in! It’s a MacBook Pro, so no way was I going out and buying a new computer for $1500. The fact that we could replace the battery relatively inexpensively AND it now works better was an awesome surprise this Thanksgiving!

While at the beach, I was helping my parents put together a budget for the first time. They’re not budgeters, and while they have investments, real estate holdings, and a pretty high net worth, they’ve never really had to think about controlling their expenses because they’ve enjoyed high incomes for most of their adult lives.

I could tell the experience was stressful and painful, especially as they kept thinking of new expenses to add to the total.

The First Budget

I remember the first time Mr. ThreeYear and I budgeted. It was right after I’d found The Total Money Makeover back in 2008, and I was trying my hand at estimating our monthly expenses.

I had a similar reaction as my parents. A little bit of panic. Shock, that we could spend so much, and disbelief that we’d ever be able to save anything, since we currently spent everything we made! Continue reading “Drinking My Coffee Black”

Holiday Gift-Giving Guide

This post contains affiliate links. Please see my full disclosure for more information. Thanks for supporting the blog! 

I am so excited! I’ve been wanting to create a holiday gift-giving guide for a while and I’ve finally done it. I hope you enjoy. I really love everything I’ve picked.

Holiday Gift Giving Guide www.thethreeyearexperiment.com

Christmas is upon us! Hanukkah starts in two short weeks. Get your kinara out; Kwanzaa is coming. Festivus is right around the corner.

Whatever you celebrate (or don’t) in December, this is one of my favorite times of year. If you’ve been reading for awhile, you know that I absolutely love Christmas and tend to go a little crazy at Christmastime.

My love language, if you know about that, is giving. Over the years, I’ve dramatically toned down the level of gift and amount of giving I do, but it still brings me great joy when I can find that perfect gift for my loved ones.

Last year, we gave the gift of experience to our family: a paddle board lesson for my dad, a cooking class for my sister and brother-in-law, and rock climbing for Junior ThreeYear.

Giving experiential gifts is fun, but it can get expensive. So, this year, my sister recommended we adults give each other stocking stuffers only, under $20. I love this idea because you’re not spending a ton, the gift can be practical (and/or a consumable that the recipient would buy anyway), and adding parameters somehow makes it easier to choose for each person.

In the spirit of stocking stuffers, I decided to create a gift-giving guide to highlight some wonderful gifts I’ve come across this year. And because I love books so much, I’m throwing in some book ideas, too.

All gifts come in under $20, to boot!  Continue reading “Holiday Gift-Giving Guide”

When You’re Considering a 30-Year Mortgage

Recently, long-time reader Sarah asked me about the difference between getting a 15- or a 30-year mortgage. I’ve written before about why I love our 15-year mortgage. We’ve gotten a 15-year mortgage on three properties: our house in New Hampshire, our house in North Carolina, and our apartment in Chile. A 15-year mortgage has helped us build equity, save more each year, and pay less in interest.

When You're Considering a 30-Year Mortgage www.thethreeyearexperiment.com

But what if you live in a high cost-of-living area, and the payment on a 15-year mortgage isn’t feasible? What if you plan to stay there for awhile, and renting doesn’t make a lot of sense? Or what if, for a variety of reasons, you want to buy a house, but you can’t make a 15-year mortgage payment work?

On a back-of-the-napkin calculation, it’s clear to see why many people choose a 15-year mortgage is superior. You pay a lot less in interest. But, you also have a much higher monthly payment (for 15 years). Continue reading “When You’re Considering a 30-Year Mortgage”