Melissa and Murphy provide personal finance tips as they share their own experiences managing debt and striving for financial freedom. We spoke with them about their past financial mistakes as well as the importance of living below your means. Read on to learn more.
Q: What is your current position/role and when did you first develop an interest in finance?
Melissa: I work at a California Community College. I’ve been in the California Community College districts for about 8 years. Prior to that I was in K-12. I didn’t know a lot about personal finance, budgeting, savings, or investing until we began our debt free journey about seven years ago in January 2014. Murph was the one who brought it to me, and I had to do a lot of learning. Now I have a passion for helping others to get their finances in order, start building wealth, pay off debt- basically doing the things that we’ve done.
Murphy: I just graduated and started a new sales role as an Account Executive for a large organization in the finance industry. I started off in the finance industry when I was younger, but I never understood the personal finance side of what I was doing. Fast forward to when I met Melissa and we looked into our lives and realized we were lost. I’ve always loved the numbers behind finance but didn’t know how to get a grasp on my own finances, so that is where my interest started.
Q: What challenges have you faced with personal finance?
Melissa: A lot of challenges. We’ve worked really hard for many years now to clean up our financial mistakes. I took out over 6 figures in student loans. That was a huge challenge that I faced for years of not knowing how to pay them off while taking on more debt on my credit card. I started with a college credit card that maxed out and then tried to get another credit card with an increased balance, which they denied, because I had so much debt already. I faced a lot of mismanagement of money and a lack of knowledge. I didn’t feel empowered in my finances, I didn’t learn about money or how to manage money as a child, so I really had to learn about it in the last few years.
The challenge that we face in our marriage is getting on the same page, learning how to have a common “why”– of why we want to get out of debt and why we want to build wealth as a married couple. That was a challenge in the beginning.
Murphy: My initial challenge was getting a credit card when I was a freshman in college. I didn’t know the logical, fundamental part about what I was getting myself into. That was a challenge for me because I’m someone who loves to understand life and growing up and maturing and becoming a good steward of my finances – but I didn’t know about my credit card, my Dad just signed me up. I just spent it on stuff I don’t even have today. I didn’t know the meaning behind living below your means. I’ve always wanted to affirm myself through others looking at me and saying, “he has this.” But in reality those things were inflated, and that’s something that I had to really realize that I was doing.
Q: If you could give advice to your 18 year old self about managing your money, what would you tell yourself and why?
Melissa: There are so many things I would do differently. But definitely do your research, find a college that you can afford, try to establish a solid cash flow, don’t use student loans – apply for scholarships and grants – start budgeting, start saving, start investing.
Murphy: Looking back, I needed someone who was a true mentor who was succeeding financially. I would tell myself to read more about finances and how to invest. I would definitely say to read more about this company called Amazon, invest your money with them! When you’re that young you need someone in your corner to help guide you and I never really had that person who could help me as a mentor and that would have changed a lot.
Q: What is your top tip for budgeting?
Murphy: First you have to live below your means – that’s huge. Also, you have to have a concept that works for you. We started off writing our budget on a piece of paper which we then graduated to Excel sheets and now we’re doing it all in apps. But before budgeting write everything down: what your goal is, put down what you are trying to attain, what kind of debt do have. That can help you figure out “why am I doing this?” because it’s really important to understand the ultimate goal of budgeting in the first place.
Melissa: Sometimes when people think of budgeting, they think it’s very restrictive, but it really shows you how much money you have leftover and that’s the exciting part. Some people get so frustrated if it’s not working in the first week or two, but you need to give yourself at least 3-6 months to get yourself in the habit of doing a budget and tracking your spending before you give up. You need to have a lot of grace with yourself.
Murphy: Also, think of a budget as a GPS system to your financial future. It will show you how to achieve your financial goals.
Q: What do you think is the most critical step to ensuring financial independence?
Melissa: Having a goal. We put an end date on our debt, so putting a date on when you want to be financially independent. So that there is an end in sight, and you can work towards that.
Murphy: We advise everyone to not compare themselves to other people’s journey. Everyone’s journey is completely different. We’re glad we didn’t start sharing our story on social media until the last year because if we would have done it initially it would have been much harder because we would’ve been comparing our journey with other people. Financial independence starts with you, starts with your why and not looking at other people’s journeys.
Learn more about 5Buckets by exploring the rest of our site.