I warned you that before Mr. MMM and I met and decided to light ourselves on FIRE (figuratively speaking, of course) we made all the financial mistakes in the book. Lucky for you, earlier today I was scrolling through my mental roladex (do they still exist?) and found the file categorized One of the Dumbest Mistakes Ever. I decided I had to share this story with my readers so I can prove to them that making mistakes is normal, and making big mistakes doesn’t mean you’re financial future is doomed.

Single Parenting

Long, long ago in a life that somewhat resembles the one I currently live, I found myself as a single parent to a young child. That period was also marked by the death of my father and supporting my mother, financially. At the time, my parents were living in a home I had purchased as a rental property. However, when I purchased that rental property I was in a stable financial relationship and never expected to be a single parent. Times, they did change. Suddenly, I found myself in an apartment with a child and supporting my mother in my rental property to the tune of $800/mo. Needless to say, I was a little light on savings and even stopped 401(k) contributions for years. During those years, I also decided I needed to buy a second house so that my then very young daughter could have a backyard. Is there a more ridiculous reason than that for buying a second house? I think not. Let’s continue with the story…

Related: The Original Tiny House

Buying A Second House

I found one! It was a modest-sized 1300 SF rancher in the right school district (because I was thinking ahead) with a HUGE backyard. I stretched my budget until it was ready to rip apart. I justified this seriously stupid move by having plenty of money in retirement accounts to cover a catastrophic emergency. My other back up was the ability to move in with my mother in one of the houses and rent the other one out.

My decision was made. I was going to go for it. I planned to “afford” both places by using my annual bonus to subsidize my mother’s living expenses, so I could free up my normal monthly income to cover the new house living expenses. My annual bonus is somewhat reliable, but the amount is not. It was a gamble, but one I could “afford” if I didn’t go on vacations, buy new clothes, or shop at Whole Foods. I would be…house poor. But my daughter was only 1-year old and wouldn’t remember us being house poor. In time, my situation would turn around and my finances would become more fluid. So I rolled the dice and bet it all.

SIDE NOTE:  I didn’t want to move into the house my mother was living in, even though it was MY house and I was subsidizing her living expenses. 

Reasons for this include, but are not limited to:

-Stupidity

-Not wanting to live with my mother as an adult with a child of my own

-Not wanting to move my daughter into a house in a poor school district

-I knew living with my mother would be stressful 

-I wanted to “own” more than 1 house (I still do 😉

-I didn’t want to move in and spend all of my extra money on unnecessary improvements my mom might want to have done

Related: How we almost committed financial suicide

Settlement

This was 2010, so I’m not sure how strict the requirements were yet after the housing crash. I know that my FICO score was and always has been excellent, so thankfully I at least got a great interest rate with my FHA-approved loan. Did I mention PMI? Yeah. P.M.I.

Two days before settlement I was told there was an increase in the estimated costs for closing. The increase was a few hundred more dollars than I had originally planned to pay. Up until that point, I had been ready to close with money I moved into my checking account, based on the estimate. Because of the increase, I had to hurriedly transfer the extra from my savings account into my checking to cover the additional cost.

Settlement day came and I still couldn’t believe I was approved to buy this second house on my single income. I couldn’t check my checking account fast enough; I needed to make sure the extra few hundred dollars posted so I could write the check to close. I arrived. I signed all the papers in a flash. I wrote the check. And I walked out with the keys and $200 left in my cumulative bank accounts. I didn’t miss a zero. I actually meant to type 2-0-0. I had nothing. I had nothing except the money in my retirement accounts and angst in my gut. I knew it was stupid. But I did it anyway. I took a financial gamble.

How did the first year go, you ask. I had to buy a refrigerator on credit. I lived without a washer and dryer. I took my daughter to the beach to see friends and couldn’t afford to stay overnight; we drove 3 hours each way. I lived without cable and all other luxuries. I lived without extra money, period. I mowed my own lawn and did my own maintenance and repairs. Granted, it was a new house so maintenance and repairs were few, but not non-existent. I installed a fence for the backyard and couldn’t afford to have it stained. So, I rented a professional sprayer and did it myself. My finances did become more fluid, but only after a significant raise and super detailed money management, down to the cent.

Turning It Around

Meeting Mr. MMM was a huge relief. We dated for a year before we decided to move in together. He was mobile and so he moved in with me. For the first time since I bought the house 5 years earlier, I had some wiggle room. I could actually think about a vacation. It wasn’t immediate relief though. Mr. MMM had changed careers a few years before we met and now his income was variable and unpredictable. The first year we were together was still rough.

Thankfully, during those early years, I didn’t have a catastrophic event, nor did I need to move in with my mother.  These days, we’re on track to pay off the rental home and our primary home within 3 years. Not too shabby for leaving the settlement table with $200 to my name. Naturally, I don’t recommend this route, nor would I do it again. But, for better or worse, it was the route I chose 7 years ago. Slowly but surely things have turned around and now we are super excited to have this small home that is now, dare I say, easily affordable.

So there you have it – yet another past financial disaster that we I made so you don’t have to 🙂 Tell us your story. Have you made major money missteps in the past? We’d love to hear about them in the comments. Make us feel better!

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