Part 1 was basically "try not to live beyond your means." I think if there had been cheap ways to invest in stocks to the early '80s, we might have opened our first stock account then. We had a little savings when we moved to Boston, and strongly considered getting rid of our car since we were on mass transit again. But, we felt a car was useful, particularly since we had a child. For the next few years, Jim took the T to downtown, and I had a car during the day.
After about 18 months in a Boston apartment, we moved to Newton Corner to rent a very old "town house." Basically, we wanted a yard which we got. Almost as soon as we moved there, a friend told me about a job at his computer company. I had an interview with a manager and wound up with a part time job as a support person in a hardware department, helping out with databases. Leslie was almost 3, and had her first experience in day care.
The next few years, as I became a full time worker in the computer industry, most of my salary went to day care. But, a few months after becoming a full-time employee, I could buy company stock at a discount and start a 401k account. The more traditional company Jim worked for did not offer either benefit.
I worked for Stratus Computer full time from January 1984-August 1993. Since 401ks were pretty new at the time, when people were eligible for 401ks, we had a training session. The most important thing I learned was to diversify your 401k portfolio. Invest in big company funds and small company funds. Invest in domestic company funds and foreign company funds. Invest in high tech funds and traditional funds. In short, don't put your eggs in one basket - spread out the risk.
Remember Enron? Here's the detailed scoop,
When you invest in a 401k, you are normally given a number of different
mutual funds/stock funds to invest in. Enron's corporate 401k pretty
much limited its employees to investing in its own stock and nothing
else. When Enron collapsed, not only did its stockholders lose a lot of
money but its employees who were investing in their 401k lost a lot.
I started off investing very little in stock purchase or the 401k. Even if you think you can't afford it, always invest something in the company stock purchase program and in the 401k. Even if you work for a great company with an ever-rising stock price, you want to have a variety of stocks in your portfolio and a variety of mutual funds in your 401k. You may start small at first, but the money usually grows.
Within 18 months of my going to work full time, Leslie was in kindergarten. We decided to send her to a private full-day kindergarten that was on the way to work, but it was a little cheaper than full-time day care had been. And as my salary was increasing, we could save and invest more money. We bought a second car, Jim also went to work at Stratus, and we moved out to the suburbs. We didn't have enough money for a house down payment yet, but we rented a very nice duplex in the country that was closer to work. If you ever take the train from Worcester to Boston, you've seen our duplex - in the 1990s, the Westboro train station was built right across the train tracks from the house we lived in during the mid-'80s.
We were fortunate as Stratus stock price increased during the mid-'80s. We invested more in the company stock account, but also sold a little to buy other stocks. I think the next stock we bought was pretty far away from a high tech stock - Ford. Our 401k accounts also grew. By 1987, we felt we could afford a house, and, after some searching, bought a Cape Cod with a great yard in Northboro, a small town with an excellent school system.
During the late '80s and early '90s, we saved money, paid a little extra on our house and continued working at Stratus. Paying down a mortgage is almost always an excellent investment. It's shocking how people don't care about the importance of having equity in your investments, especially in your house any more. We also kept our debt low. Much as I love to travel, we didn't travel much outside of the northeastern US. We did take a 13-years-late honeymoon to Florida, where we had an unplanned expense - we bought two years in a time share company. We always knew we'd only keep it for two years; we mostly bought it as we were planning to spend extra time in Orlando in 1992 and liked the idea of having a condo for part of the trip rather than just a hotel room. And this company let you rent condos in many places for a week, so we reserved a condo for a week on Cape Cod for 1991. Normally, time shares aren't a great idea, but if you find a company that lets you test the experience for a year or two, that's much better than being tied into a long term contract.
By 1993, we felt we needed a change. Jim sent one resume to a company he'd heard about back in Pittsburgh, they had him down for an interview. They hired him.
We had one weekend to buy a new house.
