Here at Financing The Dream we are dedicated to helping you make sound decisions that will lead you toward you ultimate (or other dreams). The story below is a perfect example of how you can accomplish this with dedication to consistently making smart decisions and understanding that wealth is a slow process.
When I was 16 years old, I spent countless hours daydreaming about what I wanted life to be like when I was older. I dreamed about the sports cars, the big house, the beautiful wife and children, the great restaurants, etc. There was one thing that was always included with any life experience that I would dream about, and that was spending time at my favorite childhood haunt, Matagamon Lake in Patten, ME. My uncle owned a campground on the shores of this lake, and we visited a least once in the summer and in the winter as well. Thanksgiving was spent there for all the men in my family as we would hunt for deer, and later get together with the extended family and other hunters for the meal. My mother would go with the girls to Augusta, ME instead. Though the hunting trips were fun, it was always the fishing and exploring Baxter State Park that intrigued me the most. It was there I always dreamed of owning a summer vacation home.
I knew that it would be expensive, and that I had time to save, so I began my journey toward amassing the finances to do so. I figured that it would cost me approximately $120,000 to buy a plot of land and have my own summer home built. At age 16 I gave myself a 16-year goal to have the means to do this and figured it out from scratch that I only needed to earn $7,500 per year toward my goal to do this. That figure was much more workable and thus I learned my first lesson when it came toward finances; you have to make things realistic and break them down into steps.
I had a friend who’s father owned a dairy farm and figured I could start there with earning some money. I began working on the dairy farm for $6.10 per hour. That seemed like plenty of money to a 16 year-old kid, and I could work as many hours as they needed me during the summer. Before long I was making about $175 to $250 per week while my parents taught me another great lesson when it came to finances, you have to pay yourself first. Instead of blowing all my money on deals for the latest and greatest must have item, we created a coupon book that would allow me to keep track of my savings each week. Whenever I made a deposit, we would mark down the deposits in a book to keep track on paper. Every week when my paycheck came I would go to the bank with my father and we would put half of the money into a bank account that I called “SUMMER HOME” and another 20 percent into a college fund. It was only with the money left over that I was able to spend freely on my own. Not only did this teach me discipline then, but has stayed with me my entire life and allowed me to start funding my retirement at a very early age.
By the time I graduated high school I was well on my way toward my financial plan and had earned over $21,000 toward my goal, and was very interested in seeing how interest made my money grow. I knew this would be important and found out that you should make your money work for you. I was only getting about 3 percent interest in my bank savings account and figured I could do better. At the age of 22 I was working as a transcriptionist and watched financial news all day long. This was back in 1999, before the internet bubble burst. I opened up an E-trade account and funded it with $8,500, and bought up stock of Amazon.com. It was $43 the day I purchased the stock.
I was watching this stock like a hawk to see how much it was growing every day. The only problem was that my stock was losing money, not gaining money, and within 6 months had fallen to only $30 dollars per share. I was sick over losing so much money and sold my stock that day for a loss of approximately 25% in value. After that I learned another lesson about funding my dream and gaining financial acumen – don’t put all your eggs in one basket. You must diversify your assets to succeed. It sickens me today to see Amazon.com trading at over $160 per share, but I learned an important lesson in life.
I kept up my ability to fund my dream account at my bank with different jobs and bonuses from work and by the age of 30 years old I had saved the $120,000 that I felt necessary to purchase the plot of land. I went to Patten, ME and tried to purchase a plot myself and soon learned that a good realtor and attorney is important, so I hired one. Through this experience I found it is important to hire professionals to help you make sound decisions. I finally was able to purchase a plot of land for $35,000 with over 150 feet of lake frontage and was ready to take the next step.
Here though, I realized that in spending the rest of my fund, I would be losing a liquid asset and would not have a rainy day fund. So I looked into another financial tool that could help me reach my dream, the construction loan!! I was able to fund the rest of my dream and keep over $60,000 in my dream fund for any rainy day issues that might come along. In the meantime, I started and grew a great relationship with my bank that taught me one other vital financial lesson in life: “don’t spend your own money when you can spend someone else’s!” I am now 35 years old and enjoy this camp with my friends, children, and family. I realize that I have been able to live the dream and have done so by picking up various bits and pieces of financial advice along the way.
Authored by Seth Dudley, writer for Life’s Financial Lessons. He is still frugal, and always uses coupons, and coupon codes to save money on his next financial dream.