Right after college, I was hired as an engineer. It was pretty exciting. First – a “real” job! Not flipping burgers or washing dishes, as I did in high school. On my first day, I went to orientation and faced a whole series of unfamiliar decisions. Life insurance, health insurance, monthly or bi-monthly paychecks, tax exemptions, dental, pension, and this thing called a 401(k).

After a day of orientation and filling out forms, I was ready to hit the ground running! However, my $24,000 annual salary, which was pretty good back in the day, suddenly looked unrecognizable. After all the taxes and deductions my awesome $2,000/month dropped to less than $1,100/month?

A quick scan revealed the obvious “problem” – the 401(k). What was I thinking allocating 10% of my gross salary, $200 a month – I’d just get rid of this or change the allocation to something more modest.

Then I started to do the math. At the time, my employer matched my 401(k) contribution up to 6% of my income. Second, if I skipped the 401(k) all together, I had to pay almost 30% in total tax on the $200, which meant it would only boost my paycheck by $140. While $140 is real money, was it worth giving up $120 of free money from my company?

Final answer: No!

So, I sucked it up and left my 401(k) contribution at 10%. Besides, $1,100 a month was, after all, $1,100 a month more than I made in college. Fifteen months later I married my lovely wife of 36 years. We used the money she had saved working at a doctor’s office for $1.60/hour, among other jobs, to put a down payment on our first house.

At the time, interest rates were over 15% (yes, 15%). So, we bought what we thought we could afford, and got settled into our new life with our pile of wedding gifts and a long list of stuff we “needed” to get our new “perfect” life in shape. Together, we earned a gross income of around $40,000, which seemed like serious money to us.

First order of business, I needed to replace my wreck-on-wheels car. So, I did. Right after that some water staining started showing up on our living room ceiling. Not cool. My “expert” investigation found a completely rotted area of the roof – I literally put my hand through the rot into the sky. Not only did the shingles and 100 pounds of caulking need to be replaced, so did much of the underlying roof boards. Welcome to home ownership. And, no, our homeowner’s insurance did not cover this. Our wedding cash and then some went right out the door.

But this did not deter us from our buying spree. Soon after, we argued about whether to buy a ceiling fan or a piece of furniture. Solution? We bought both with a credit card, albeit against my wife’s better judgment.

At the end of that month, we discovered we couldn’t pay off the credit debt in full. I was not too concerned. I mean, we could pay this off soon enough, right? Nope. After several months of fighting a losing battle against 21% credit card interest rates, a timely gift from my father-in-law showed up and we finally paid it off. Lucky break! From that point on, we resolved to never carry another credit card balance ever again.

Soon after this, my wife looked at my paycheck: “What’s this 401(k) thing?” Oh, yeah, I had forgotten about that…We were 24 years old.

This is the moment of truth that we all face at some point – when life puts a financial squeeze on your savings and investment plans. For me and my wife, it fortunately happened in our first year of marriage. We argued about this. She rightly pointed out that I had just started night school to work on my MBA and she was planning to go to law school and we wanted to start a family. She held that we needed the money now and that whatever “unpredictable” future value it might deliver paled in comparison to another credit card debt debacle or having money for raising a child. She had a point: credit card interest was – and continues to be – mind-numbingly high, and we had many competing and important financial needs.

So I took out my statistics book from college – who knew it’d ever be of use again? – and used the compounding tables to show her the impact of 40 years of compounding and what it would mean for our retirement years. I said: “See – compound interest baby!!!” She was not impressed. “These are just some crazy numbers in a book. I’m talking about real life and what we need right now…” Rats, I thought this would be easier.

It took a while, but I convinced her, and we never stopped contributing to our 401(k).

So began our life together in Minnesota. A house, a new car, a mortgage, two good jobs, one credit card lesson learned, and a maxed out 401(k) in progress.

Admittedly, at the time, we had little idea on how to manage our finances. We just instinctively knew that credit card debt was bad, and investing in our 401(k)s, even if it meant delaying other purchases, living in a smaller house, driving the same cars longer, would be a good bet for our future.

On we went. We welcomed three kids, my wife went to law school, I got my MBA and we worked our butts off doing the stuff everyone does – paying the bills, trying to control our routine spending, overcoming “gotcha” expenses, replacing cars, dealing with broken this or that, raising kids, building our careers, and living. Pretty normal stuff.

Today we have a sizable balance in our 401(k)s that we’ve both contributed to over nearly 40 years of working. “Compound interest baby” really did work as advertised! My wife and I still laugh about that moment – that life-changing moment. Had we made a different decision back then when interest rates were through the roof and our expenses were limitless, we’d have “earned” a very different future going forward.

Our life story is not much different than most anyone else’s. We made choices at the time that we thought were right. Some were, and others were not. But in the end, we muddled through. In hindsight I see now that our current situation is far different than most everyone else. We have more than enough for a comfortable retirement.

Through the years I built a spreadsheet to manage our finances. In the process, my engineering brain kept asking: “How does this personal finance machine really work? How do all the pieces really fit together? What happens when I make this decision or that? How do I ensure I have enough cash flow to never have to carry a credit card balance again? How do I see all the moving parts together?”

It took time, but I started to put the pieces together, and applied these principles and methods to our finances. Some worked, others not so much. Over time, I created a system that captured the essential dynamics of how personal finances actually work. We used this operating model to manage our personal finances for years – the same model in Manufacturing Wealth: Taking Advantage of Your Personal Finance Machine. All told, it worked extremely well. We managed to stay out of credit card debt, have a great lifestyle, help our kids with college, and save enough for the retirement lifestyle we envisioned.

We’re not so special. I knew – and know – if we could do it, so too can others. That’s in part why I published “Manufacturing Wealth” and developed manufacturingwealth.com, so I could help people understand what their personal finance machine is, how it works, and how to harness it to attain real financial freedom.