I‘m a sucker for an uplifting personal finance story.
We've all gone through a situation in our life where it feels like you got punched in the gut. The key element about those situations is that you learn from it. If you don't, then whole event was a wasted experience.
I emailed my newsletter subscribers and had them share with me what was the number one story or event that made the most dramatic impact on your life financially. I received some amazing stories.
Krissy, a GFC reader, was gracious enough to share her story. Enter Krissy…
Funny enough, it was being denied for a mortgage that I am now thankful for.
My husband and I had just gotten married, I was a Controller at a manufacturing company, he is a Podiatrist. I got a letter in the mail the weekend after we had applied for a mortgage, trying to buy our first home and I was devastated!
I made fairly decent money, but my husband had only been practicing podiatry for about 1 year full-time.
The problem was mostly our credit card debt – at the time our revolving credit ratio was nearly 30%. I have read somewhere that if you have a revolving credit ratio of 25%, you are heading toward bankruptcy.
More from GFC, Below
The reason I am thankful for being denied a mortgage is that I went to the bank on the following Monday and asked why. They told me that our financial ratios were not good enough. I am an accountant, but I had no idea what he was talking about. So I asked them to explain, and they gave me a copy of the calculation of our ratios, both revolving credit and expense-to-income ratios.
Ever since then, I religiously track our ratios and net worth, so before I even apply for any type of loan, I know what numbers they are going to come up with – in fact, I print them my schedule with my calculation of our ratios. It also saves time filling out applications – I can simply print my schedule of assets & liabilities and attach it.
Every time I make a loan payment or get paid and contribute to my 401k, I update my spreadsheets so I can see progress in paying things off and my net worth growing.
Being denied for our first mortgage was the best thing that ever happened to us, because it lead to an early education in personal finance (I was 26 at the time, my husband was 32), which helped us to recently build our dream home and live comfortably, while preparing for a great future financially. Now I devour personal financial material, because although I feel comfortable that I have a good base of knowledge about it, I enjoy learning more that will make me look at things differently that may benefit us financially.
I enjoyed your story about “The Lu” as well because up until this summer, my husband (the Podiatrist) commuted in the 1997 Honda Civic that I bought for $11k back in 1998 after graduating from college. It was rusted out, beat up and had 177k miles on it, but it did the job. We only decided to sell it (for $400) and buy a new Chevy Cruze Eco when the a/c stopped working!
Thanks, Krissy, for sharing your story!
How about you? What's your number one story or event that made the most dramatic impact on your life financially? Do share! 🙂