It's no secret to anyone who keeps up with me regularly that 2014 was a tough year for me: both personally and emotionally. 2014 was also a year rife with financial missteps and money lessons well learned. Since writing helps me process my feelings, I thought it would be fun to get “on paper” and share the 5 things I learned about money in 2014.
I Learned More About My Own Relationship With Credit
Some folks love credit cards: they churn, burn, and rack up rewards points like pros. I am not this kind of a person. A) Because it is too much for me to keep up with and B) because I don't have a great track record when it comes to handling credit.
I worked my way out of credit card debt once before in 2011. And I didn't use them again until I needed to fund the massive renovation I did on the home I bought in 2013. 2014 was going to be the year I smashed all of that credit card debt. But alas I am still carrying it, for more reasons than one. Now I know, I'm the type of person who can really only use cash on hand in the bank.
When You Own a Home, You Need Way More in the Bank
A healthy emergency fund is an essential for everyone, but typically when you're paying off debt, you get by with a smaller fund in the hopes of saving money on interest. While this is nice in theory, when you own a home, your emergencies get exponentially bigger…and more expensive.
From a $325 pest control problem, to the $1800 I spent on stairs and insulation for the home, to the $1k rat infestation in my attic I'm currently dealing with. I learned this year that it is always wise to have a healthy emergency fund and a money cushion to cope with what homeownership can bring your way.
You Can't Put a Price on Security
Back in July I had my identity stolen. Aside from being a huge pain-in-the-butt, I realized that 5.95 per month to monitor my credit score and activity on my social security number is a small price to pay for protection.
Rental Property Income Isn't All It's Cracked Up To Be
In June I decided to start renting the third bedroom in my house out in order to recoup more cash and “passive income” thru landlording and real estate investing. I ended up selecting a (former) childhood friend who knew both my brother and myself to live in the house and I thought the arrangement would work out swimmingly. What's so wrong to renting to friends and family? When it goes well it goes well, but when it goes wrong…it can go oh so wrong.
After a scary altercation with my drunk/high former friend (involving cops, ambulances, a general ruckus on my street and both sets of parents), I realized that no amount of extra income per month is worth a person ruining your sanity, stressing out your emotional bandwidth, or feeling like you don't have a safe, calm place to come home to. Thankfully, we were able to come to an agreement and she did the classy thing and moved out, but since then I haven't felt up to bringing in another roommate.
Even though it's a chunk of change over the course of the year, I'm OK with the decision. Everyone thinks being a landlord is an easy way to make money. Nope, wrong again.
Talking About Money is a Minefield…
Talking about money is still taboo. Even for me, as someone who writes and talks about money all the time, I found myself getting a little embarrassed and irritated as loved ones and I discussed Christmas present budgets. Even as the host of Awkward Money Chat, a show designed to break down the taboos surrounding money, it was still a weird experience. Who knew?