The original story that sparked the idea for Budget Challenge came after a disastrous closing on a rental property. This was the second property Palmira and I had purchased. Going into this meeting, we were determined to have a different result than the first closing meeting, which was for our home, a few years earlier.
So, what happened at the first closing? A series of documents (probably the most significant we ever signed) were pushed in front of us, one after another, each opened to the signature page with someone hovering, pointing to the line that needed signing with one hand and handing us a pen in the other. The added pressure of many sets of eyes got the better of us and we started signing, signing, signing. Fortunately, there wasn’t anything unexpected hiding in the fine print.
So, at the second closing meeting we were determined to only sign what we understood. This meant reading the documents in full and asking questions where we needed clarification. Apparently, no body actually does this, and everyone in the room started showing visible frustration. But we weren’t caving this time. We did this until the last document was signed and while we accomplished our goal, we felt horrible for causing such bad feelings. Several people left the meeting in a huff, collecting their belongings and not saying goodbye.
The entire drive home and the rest of the night, we kept replaying the meeting, over and over, trying to see it from different angles, but it didn’t help. Still frustrated, a series of thoughts came: “How can we be expected to sign such important documents if we don’t understand them?” “This was our second time doing this, AND we both have MBA’s! What are we missing?” “Maybe nobody understands what they are signing?” “Maybe nobody EVER learns this stuff…” That last thought lingered, but as it trailed off in my mind, it reframed the entire way we should be teaching personal finance.
People only seem to learn this stuff by doing, and at that moment, the concept of teaching personal finance by allowing student to DO personal finance was born. Learning from mistakes in a simulation seemed infinitely better than learning from mistakes in real life. The next day I began to design a model in Excel that would later evolve into the first true personal finance simulation.