Reader Story: How My Upbringing Helped Me Avoid Debt and Build Wealth

This guest post from long-time GRS reader SB is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes. SB writes about personal finance and personal development topics at One Cent At A Time.

Some of you might recognize me. I've been a GRS reader for the past five years.

I was raised in India, a third-world country by all means, and I'm now settled in the U.S. working as a software technologist. English is my third language. Before I started reading GRS, the word “frugal” wasn't even part of my vocabulary. But all the financial practices I learned from my parents are nothing less than frugal, though I didn't realize it when I was younger. We were always a single income family; my mother was married off as soon as she reached 18 (the legal age for marriage) and she never took a job. Instead, she spent her time raising my older brother and me.

My dad was a brilliant student, but in order to support his family and siblings he had to take up a job in a steel company. He completed his Mechanical Engineering degree in the evenings while working full time.

Saving My dad had to take care of my grandparents, my mom, and two children. He never had enough money. My parents didn't set a budget, but they always saved a portion of their income. Like most Indian families, I never had a life of plenty in my childhood. When I compare our lifestyle with that of Americans, I find major differences:

  • We never had AC at our home. We always depended on fans, even in a hot country during summer. When sleeping inside became impossible, we set up folding cots outside in the yard to get a good night's sleep.
  • I only got new clothes and shoes once a year. I wore hand-me-downs from my older brother, who wore hand-me-downs from our cousin. Our new clothes were seldom ready-made; most of the time, they were either sewed by my mother or a neighborhood tailor. A tailored item was almost half of the cost of ready-made clothing.
  • We never had a dishwasher or washing machine. My mother used to wash the dishes by hand, and she washed, ironed, and air dried our clothes.
  • We never borrowed money to spend. We viewed borrowing money as a sin. We never had a credit card and never bought anything on installments.
  • We always lived in company-provided homes. We could have rented a better place, but saving was always prioritized over location.
  • We never had cable television. We only had national channels that were available for free.
  • We never discarded any item just because it was old; we always repurposed every bit of clothing, furniture, bottles, packaging, or other valuables.
  • We ate out very rarely and only to celebrate something great, like getting a top rank in my class (in India, they still allocate ranks to students, not just common grades) or birthdays and anniversaries.
  • We never had a car and my parents traveled on a scooter (a popular transport there) and my brother and I used to catch bus or auto rickshaw (a special three-wheeled vehicle only found in Asian countries) to accompany them.

Before you start thinking that I missed all the fun that childhood brings, let me assure you that I had my fair share of entertainment. We had family outings, picnics, and cultural evenings. We were a close-knit family on both my father's and mother's sides. Every year, there were quite a few marriages in the family. Each of these events brought us a couple days of pure fun. We went on yearly vacations, traveling by train and picking places where we could stay with someone we knew. When that option wasn't there, we booked accommodations where we could cook our own food.

Investing My dad never invested in the stock market but not because he didn't know about it. He was well aware of the risks of investing in individual stocks. He did invest in tax-saving mutual funds every year. I now realize that he didn't have time to research stocks before buying one, so he relied on fund managers.

During my childhood, he bought land far beyond our city limits. It was a barren land, owned by a farmer in desperate need of buyers. This was a brilliant real estate investment idea and an example of planning ahead of time. Along with the growth of BRIC countries, my hometown also got its fair share of industrial investments and soon cities started growing. When my dad sold off that land to a property developer, he got enough money to buy a large enough house and an interest-bearing portfolio that sustain my parents for a lifetime without any direct job income.

My dad always had an emergency cash reserve, which was useful during my grandfather's terminal illness.

In India, there are no Social Security payments. Indians have to save money in retirement savings accounts, and this money is not sufficient for most retirees. This is where the typical family values come in; every son is expected to look after his parents post-retirement. I still follow this philosophy and remit money to my parents every month.

I think this practice is better than Social Security for several reasons:

  • We have to save for retirement. For salaried employees, it's illegal not to contribute to your retirement account.
  • We don't need a special occasion or holiday to show love and affection to our parents. They are always with us, helping us with daily chores, looking after our children, and guiding them when we work outside the home.
  • Our beliefs about taking care of family often eliminate family disputes. No wonder India's divorce rate is so much lower than that of America or other European countries. Family members act as mediators and never let small rifts take bigger shape.

When I was in my final year of study in computer science, amidst the expanding Indian economy, my dad lost his job (ironically) to the younger, more computer-literate workforce when he was still in his early 50s. But my parents survived due to his retirement savings, the proceeds from his real estate sale, and my monthly contributions (I only need to help because in Indian there is near 8% inflation rate).

His job loss taught me to always be vigilant at work and to learn continuously in order to remain wanted in my field.

Education In a country with a population of over one billion and only a handful of good schools, it's always survival of the fittest in terms of receiving a good education. Now (fifteen years after I graduated), the situation has improved, but during my time I had to beat five million other applicants to grab a seat at one of the most prestigious universities.

Since childhood, I was made aware of the tough competition ahead and my every move was centered around clearing that near-impossible entrance test (known as IIT JEE). My dad instilled in me a fighting spirit and a philosophy that I have to be the best in whatever I do. That spirit is still at work; I knew from my childhood that no one is going to do me any favors and I have to achieve all good things in life on my own.

“If I don't study hard, I won't get a good education, and without that I won't earn enough,” was my thinking right from my junior high days. I still follow my hard work philosophy in my job, and people around me consider me one of the most valuable employees.

I am well aware that saving money alone is not going to get me all the good things later in life. I need to work towards earning better income, which could give me a little leeway into having fun (material pleasure) at the moment as well as in the future. I continuously look for new opportunities both inside and outside my organization to increase my salary.

I still practice the tactics my parents taught me. Well, as much as I can anyhow. I take pride in declaring that I've never been in debt in my lifetime, and on my blog I teach others to remain debt-free by following a few simple money rules I learned in my childhood.

I'm not asking any of you to lead a life like I did, but with 15% poverty in this country, some of you might want to consider some of the tactics I grew up using: a life of controlled spending, hard work, doing things yourself, a good education, and reaching out to family and friends in case of need.

The original article can be found at Story: How My Upbringing Helped Me Avoid Debt and Build Wealth