My financial autobiography, Part I

After reading several other bloggers' accounts of their financial histories, I thought I'd take a shot at writing one for myself. In this first post, I'll look at the way my family has influenced my thinking about money.

I grew up in an upper middle class family. When I was a kid, our town had a lot of economic diversity. I always had friends whose families had less money than mine, and I also had a few friends whose families were really loaded. Although we weren't rich, my father made good money. I remember sometimes feeling embarrassed that my father drove an expensive car. Now, everyone in my home town drives expensive cars, even the teenagers.

My mother was home with us throughout my childhood. She made art off and on, but mostly she was a stay-at-home-mom. My father had a soul-sucking job where he made good money, but the money fluctuated a lot. My parents both favor real estate investments. I didn't know much about their finances as a kid, but pretty early on I started noticing that sometimes they felt comfortable financially, and sometimes they didn't. I knew that my father sometimes borrowed money to invest, and that made my mother nervous. When I was about five, I heard my parents talking about a friend of my father's who had skipped town in the night with his family to avoid creditors, taking suitcases of lavish possessions with them. Although I know now that my father was never actually on shaky financial ground, I was always convinced that he was. So when I was about 11 or 12 I started being anxious that they were going to run out of money. I remember telling my mother I didn't need new clothes for school, because she always took me to Nordstrom and I knew that it was an expensive store. In college, I got a job and took out loans without telling my father, for whom it was a matter of pride to pay for my education. But I thought he really couldn't afford it.

As I've gotten older I've realized that I misjudged my parents' financial situations. They are just not as financially conservative as I am. They have both done very well financially, and perhaps the investments that seemed risky and scary to me (and still do) were really more shrewd than I gave them credit for. And I did learn some really important lessons from them too. From my mother I learned to avoid debt at all costs. She'd prefer to not even have a mortgage if she can help it. She has sometimes used 0% balance-transfer offers, but I haven't known her to pay interest on a loan (except a primary home mortgage when she was starting her business). From my father I learned about the importance of being generous. He is generous to a fault with his kids, his friends, his tenants, his business-partners, fund-raisers who come to the door, everyone. My father is also an extremely hard worker, and taught that hard work and dependability is often rewarded.

My parents split up when I was a teenager. For my mother this was a good thing, financially. As a mother and homemaker, her work had been unpaid for years. The divorce gave her control over her half of their assets. She started her own business, and although I'm still amazed at some of her financial decisions, she is still afloat financially and living in a nice house in a beautiful area.

It took my father ten years to recover financially from the divorce, but he did recover. He's getting close to retirement now. I think he still juggles lines of credit, but his assets are adequate for retirement and the lines of credit seem to be more of a psychological game than a necessity, the way I use different bank accounts to save for different things.

When I was in college, I started seeing more of my older sister, who had moved out when I was a very young child. She has influenced my thinking about money more than anyone else. When I visited her, she showed me how to shop in discount stores, take advantage of sales, clip coupons, buy in bulk for economy of scale, etc. She drives her cars for ten years without replacing them. She lives in a house that is completely paid off and in a nice but modest neighborhood. And all the while she is saving, managing all her investments herself, and amassing a pretty impressive fortune. Her husband has had a successful career, which helps, but they have saved the same percentage of their income (30-40%) for almost twenty years. My sister is one of the most brilliant self-taught personal finance gurus I've ever met.

Related posts:
My financial autobiography, Part 2