Financial Report Card: Esteban M.

This post is one in a series from real actual life. Along the financial journey, we do some things well and others not so well. We learn as we go, and benefit from sharing our stories.

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Esteban M., 39 (he/him),

Senior engineering manager, Chicago

Looking back at your 20s, how would you grade yourself in the five key areas of personal finance?

Creating income: F

I didn’t really plan for anything because I didn’t know how. My parents didn’t grow up in this country and didn’t finish elementary school. There wasn’t ever any money to plan for, and you can’t plan for something you don’t have. I didn’t grow up with any sense of financial savvy.

Coming out of college, I had an internship and just transitioned to full time. I didn’t really care that the salary was low, but I had no idea how much that was going to bite me in the a** for many years to come.

I’m past that now, but I had to learn how to value my work and advocate for myself as an engineer. The company I was with got bought out by a bigger company, and then they normalized my salary to bring it up to market level. I also had a manager who saw some potential in me and kept giving me raises. Every 6 months he would give me a raise and tell me he wanted to bring me up to the level of pay I was supposed to be at. He had to show me that I was way underpaid for me to realize I was underselling myself.

Spending less than you made: F

I was always spending more than what I made. It was crazy, because even though I started with a low salary it was still higher than what my parents or in-laws would bring in. Even so, I had to ask them for loans a few times.

I wasn’t poor but I always had a certain lifestyle. My wife and I were young, both working, and we’d go out to dinner to nice places and spend money on entertainment. We did sit down with a financial advisor at some point and he made us go through statements for the last three months and categorize. The amount we spent eating out was staggering. Neither of us grew up thinking about money. “I have money, I spend money.” That was it.

Paying down debt: B

We were never really in debt. There were times when we were underwater for a month or two. We’d have $20 in our checking account, but we never got into credit card debt. I did have student loans but never carried debt other than that.

Investing in your future: F

When my manager was raising my salary, that’s when I really started looking into what it meant to have retirement money and investments. I didn’t even start a 401(k) until I was 27 or 28. And to be honest, that was only because the new company was offering an 8% match.

Everyone said it was amazing and if you don’t do it, you’re a moron. I didn’t understand sh*t but I didn’t want to be a moron. So it was total peer pressure. Seeing that money grow made me feel like, ok cool. I should have been doing this a long time ago.

Knowing your money: F

My wife and I got married right after college and were living with parents. I had zero idea about taxes or understanding contributions, and we just didn’t file taxes for two years. I can’t tell you whether we didn’t know, didn’t care, or didn’t know it was going to be that much money. But when we finally did file, it was a LOT.

The only time I was really worried was when we bought our first house. We had kids right away and needed somewhere to live. I had no idea how mortgages worked. I knew you made a payment and that was it. We bought a foreclosure right at the time the housing market collapsed, and it was a huge hassle because the realtor for the seller had intentionally misrepresented the taxes.

The lawyer caught it at the last minute, but we still went through with the purchase because we needed a place to live. We didn’t have enough for the escrow, and I didn’t even understand what that was, so for a while we were close to losing the house. We probably would have had to sell, but then I got a retention bonus at work when the company sold, plus a $25k salary increase. And yeah, I realized I had been really underpaid. Those two things happening together changed the path of my financial life.

We’ve come a long way. I do our taxes now, and I understand contributions a lot better. I can look at my paycheck and understand what each of those are. I’m conservative about paycheck deductions. I play it safe and deduct more from each paycheck as a buffer so I don’t have to pay at tax time. We also have an investment account with professional advisors and they invest in the stock market. I’m a little bit more knowledgeable from that perspective than I used to be.

I hope my kids have a little bit more understanding than I did. My son thinks I make $10k a year. He told everyone in his class that his family was poor because all the neighbors’ houses are much bigger, haha. But everything that he needs, he has. I feel good about that.