Shortly after Jude Boudreaux arrived at Loyola University New Orleans as an undergraduate, he opened several credit cards. "I was surrounded by kids who were better off than me financially, and at the time, it was so easy to get credit cards," he says. He quickly rang up about $5,000 in debt after buying a computer and other items.
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Soon after graduation, reality hit. After working for a summer at a YMCA lodge, Boudreaux found a job in finance in Denver, but was laid off during the early 2001 tech-bubble bust. Meanwhile, his student loans were due and his credit card debt continued to pile up. "I threw up my hands and gave up, and moved back home to New Orleans," he says.
Boudreaux stopped paying some of his bills, which put them in default, which made it even harder for him to get a job in the finance industry, since employers often require candidates to disclose if they have any debts in collection. His credit was so bad that he couldn't find a bank that would allow him to open a checking account without his father's name on it. "Imagine how bad it is if people won't give you a place to put your money," he says. He decided against declaring bankruptcy, but simply stopped paying his debt, then about $5,000.
Today, Boudreaux, 33, has turned his life around. He owns a condo with his wife, pays his bills on time, budgets ruthlessly, and recently became a father. A certified financial planner, Boudreaux runs his own fee-only financial planning business in New Orleans, Upperline Financial. (Fee-only means that clients pay a set fee unrelated to the sale of any financial products, which avoids conflicts of interest.) Enough time has lapsed that his defaulted accounts have expired and are no longer negatively affecting his credit. He attributes his comeback to his wife, a sound budgeting approach, and lots of hard work.
Boudreaux recommends these five strategies to people trying to take control of their finances:
1. Find your financial opposite. "Fortunately, my wife had a different money story. She is much more conservative and into saving," says Boudreaux. That leads to a balance in their joint finances because he encourages her to spend where it's important, such as on travel, and she encourages him to save. While pairing up with a financial opposite can sometimes lead to more tension, Boudreaux says it doesn't have to, as long as each person communicates and has some freedom and control over their money.
2. Give yourself an allowance. That desire for freedom and control is one reason Boudreaux recommends that each person have an allowance they can spend however they want. Boudreaux, for example, likes to go to Starbucks, while his wife can't stand that habit. Meanwhile, his wife tends to shop online. They allocate a certain amount for each to spend, no questions asked, and that way, they each get what they want while avoiding arguments.
Boudreaux urges couples with one breadwinner and one stay-at-home spouse to take this approach as well, because "both people should have some money they can spend without being accountable."
3. Focus on "yes," not "no."Budgeting is such an unattractive process, says Boudreaux, but some form of it is necessary to stay in control of spending. That's why he puts a more positive spin on it. "It's easy to say 'no' when you have a bigger 'yes,' " he says, which means focusing on priorities while avoiding money wasters. For Boudreaux and his wife, traveling is a top priority. To afford trips, they skip restaurant meals. "I'm not depriving myself, but enabling myself to do what I really want," he explains.
Boudreaux says friends often say, "I wish we could travel like you," and he responds that they probably could if they cut out their weekly $200 restaurant bill, which adds up to over $10,000 a year. "What it takes is a shift in knowing what the bigger 'yes' is," Boudreaux says.
To stay focused, Boudreaux developed a vision book, which contains photos and images of his goals. They include paying off the condo, traveling to Italy, and visiting Japan one day. He looks at the book often to remind him why he's cutting back in other areas.
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4. Stay vigilant."I still think spending money is super cool," says Boudreaux, which means he has to keep himself in check. "I'm not cured. I'll probably always have to deal with this on some level."
5. Schedule weekly reinforcement. Boudreaux urges his clients to dedicate 15 minutes a week to conduct a financial review and focus on big goals, something he tries to do with his wife. He says everyone should know how much money it takes to run their household for 30 days and have a general overview of their recent and upcoming lifestyle spending. He calls that review session "our inoculation against impulse spending."
Sometimes he and his wife flip through their vision book and talk about what they are proud of, as well. Perhaps the most remarkable aspect of Boudreaux's comeback is that he managed to make it at all. Research suggests that people are heavily influenced by their upbringing and early life experiences when it comes to managing money, and people who run up debt and ruin their credit early in life often struggle with rebuilding it. Boudreaux's career in finance posed extra obstacles since financial firms are often reluctant to hire people with money problems of their own.
But today, Boudreaux says his struggles are an asset, since he's living proof to clients that it is possible to make a complete comeback. In his hometown of New Orleans, it's a message that resonates.