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There is a popular saying in the financial community, “One House, One Spouse, One Job.”

It essentially constitutes one of the “golden rules” of finance and is advice often given to those seeking financial independence.

Breaking one or more components of this tenet implies that you may find yourself in a financial pit with little chance of escape.

It is therefore quite easy to become disheartened, and even give up before starting the journey to financial success, if you happen to be one of the transgressors.

As the purpose of this blog is meant to uplift and not discourage,  I thought it would be beneficial to highlight individuals who have indeed broken the rule and still found financial success.

I consider myself one of the major violators of this rule, and have broken all 3 components in grand fashion, exemplified by my 5 part series “I Have Pretty Much Made Every Mistake In The Book.”

These stories are meant to inspire so that others know it is still possible to reach your financial goals despite straying off the ideal path.

 

 

This submission is courtesy of Brandon, who responded to a request on Rockstar Finance’s forum for submissions on this series.

[Disclaimer: We have no financial relationship]

Background Information (age, occupation, marital status):

I am a married 32-year-old professor and financial planner.

Which of the golden rules did you break?

I broke two of the golden rules: One house, one job.

House:

I’ve had several.

I’m living in my 3rd home at 32, and have a few rentals as well.

My first home was a foreclosure.

I did quite well on it and the whole process and had been previously featured by other bloggers.

I’ll sell my second primary residence in a few months and will finish ahead on it as well.

Jobs:

I’m a Finance professor, Infantry Officer in the National Guard, and have a retirement planning business.

I like the income diversity and consider it to be my flavor of financial independence.

Yea, I have three jobs but none of them require 40 hours a week and are all very complimentary.

The National Guard schedule works very well with the academic schedule, the retirement planning goes hand-in-hand with academics.

The intersection of National Guard and retirement planning isn’t as smooth, but it hasn’t been a hindrance yet.

My first full-time teaching job was at a community college.

I stayed there three semesters and then got hired into my first University position for an ~50% raise.

I stayed at that job for three semesters (bought a house in that town) and then deployed for a year.

On the deployment I was hired by my current school for an ~ 30% raise.

I’m in my 3rd semester and I’m still here (and also bought a house)!

For each golden rule broken, can you please provide the following information:

House:

a) How old you were when you first broke the rule

28

b) What is your best estimate for the cost of breaking this rule?

Since I kept the old house as a rental, and had to get a new house in the new location I don’t see any true cost here.

Yes, there were closing costs on the new house but I am currently under contract to sell the house for more than my total cost to purchase.

The net effect is positive.

c) How many years, if any, do you feel breaking the rule set you back financially?

None, it moved me forward.

d) How were you able to overcome the financial repercussions (if any)?

Not applicable.

e) What were some of the factors you considered when weighing your decision to break a golden rule?

Certainly, investment value.

The house was a little outdated in a neighborhood of mostly updated homes so I paid significantly less than the home would be worth if updated.

I also factored in my cost of renting if I didn’t purchase a home.

My mortgage payment was a few hundred dollars less than renting a comparable home.

f) If you went back in time and was faced with the same situation, would you defy a golden rule again or would you instead find an alternative course (and if so what would it be)?

I’d do it exactly the same.

g) What advice would you offer readers potentially facing a similar decision?

Think of the whole picture and try to be objective.

Be honest with yourself and don’t convince yourself you are making a good decision just because you want to do something.

h) Why do you think the rule that you broke is even included in the financial tenet, “One House, One Spouse, One job?”

Changing homes can certainly be costly.

The obvious expenses are the transaction fees like realtor commissions.

The not so obvious is the amortization schedule.

It takes a while before the balance between interest and principle of a given monthly payment starts to lean in your favor.

The first several yeas of payments don’t build much equity.

You’ll never get ahead if you keep moving.

i) If you were faced with breaking a golden rule today, would you do it?

Depends on the conditions.

If I thought the opportunity to get ahead was there, I would.

I don’t like to make decisions based on rules of thumb.

Those are simply starting points.

Jobs:

a)How old you were when you first broke the rule

28 (this event actually precipitated the housing one)

b) What is your best estimate for the cost of breaking this rule?

None.

I was in a job that didn’t have upward mobility and received a significant raise to go to the new job.

c) How many years, if any, do you feel breaking the rule set you back financially?

None.

It was an immediate step forward.

d) How were you able to overcome the financial repercussions (if any)?

Not applicable.

e) What were some of the factors you considered when weighing your decision to break a golden rule?

Career progression was the main factor.

I had just become ABD (all but dissertation) and had the opportunity to take a tenure track position.

f) If you went back in time and faced the same situation, would you defy a golden rule again or would you instead find an alternative course (and if so what would it be)?

Yes.

This is pretty much standard operating procedure in higher ed.

g) What advice would you offer readers potentially facing a similar decision?

It is likely different in the self employed or corporate world.

Career progression and salary increases in higher ed are pretty clearly defined and often involve moving to a different institution.

h) Why do you think the rule that you broke is even included in the financial tenet, “One House, One Spouse, One job?”

In most instances I think you could potentially leave behind some positive reputation effects.

There is also the trouble of being the new person on the job and the time it takes to get your feet under you.

If you stay in one place, you can keep building on that.

Directly financial is the issue of vesting schedules.

If you leave before your retirement account vests you could easily give up thousands of dollars in employer matching contributions.

[I touched on this important concept in my article, “All That Glitters Is Not Gold | Golden Handcuffs.”]

i) If you were faced with breaking a golden rule today, would you do it?

Again, if the conditions were right then yes.

Is there one financial rule you would never break?  And if so, why not?

There isn’t a financial rule I can think of that I would NEVER break.

There are several that I would have a hard time ever telling someone else to break though.

Cashing out a retirement account is one of them.

Behavioral biases are strong and there is a good chance someone will rationalize a decision they want to make even if it isn’t really in their best interest.

 

 

 

 

Note:

If you have an inspiring financial story as a “financial golden rule breaker” feel free to offer a submission so that your story can likewise inspire others.

For guidance please check out this guest post checklist.

 

 

 

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-Xrayvsn