A few months ago, I talked about having to use our emergency fund to cover a large tax bill.
That experience was not fun. But it was way better than having to go into more debt!
We recently were able to fill our emergency fund, and it finally is looking like we are making financial progress!
It’s interesting to get to this point, as we have never been in such a strong financial position before. In fact, we haven’t seen or heard of other family members getting to this either. It’s as if we are breaking new ground for our whole family.
Does this mean we are going to take things easy? Absolutely not! We are excited to enter the next phase of our financial journey, and this year is going to be a big year for us.
Constantly Feeling Behind
When you are paying off debt, it seems like you aren’t making much progress. Seeing a negative number become less negative isn’t the most motivating thing you can see.
But if we didn’t work through that process, we would still have a negative net-worth. Credit card debt is easy to build up, but it’s incredibly hard to pay off because it feels like you are working backyards.
I never want to forget how it feels to have massive credit card debt. The negative consequences of debt affect our whole life, and the cost is not worth it. I want to avoid it as much as possible. I know not everyone who has debt ended up there the same way we did. But with our scenario, most of the debt came from overspending on things we didn’t need.
We still like to spend money, but our conversations are much more intentional than what they were before. Stuff doesn’t excite me as much as it did before. Sure, there are some video games I want that I might end up getting. But I’m doing my best in preventing myself about getting excited about expensive new purchases (like a new TV, car, etc.). What we have works great, and there is no reason we need to replace these things soon (hopefully).
Investing and Saving While in Debt is Hard
While paying off debt, the only thing I wanted to do financially was dump as much money towards our debt as possible. I wanted to get rid of our credit card balances ASAP!
Why would I want to save money or invest (even towards my 401k) when I had debt?
I was so caught up in our credit card debt burden, that nothing was going to persuade me in not throwing as much as we could towards paying them off.
Was this a smart move? Yes and no.
It was smart because it kept us motivated in paying down our debts as fast as possible. But it also had the following downsides:
- We had barely any cash margin, which meant unexpected expenses would add to our debt
- Not investing much into my 401k meant we missed out on some company matches (free money) and time where that money could have grown
- Being so hyper-focused on paying down debt made budgeting difficult at times
Reflecting on the Past
I wish I learned about financial independence earlier. We’ve lost around 15-years that could have added tremendously to our net-worth.
Instead, we were constantly in and out of debt the whole time.
If I were to re-live these moments, I would have taken a closer look at our spending habits early on. Sure, we probably still would have had to pay off credit cards. But we would have gotten to this spot much sooner, and have utilized most of the time that we lost.
I know some people are getting to this spot or working towards it, who are much older than their mid-30’s. It’s good to learn from our past, but we can’t let it hold us down and continue to make bad financial decisions. Otherwise, the credit card death cycle will continue to plague our life.
Breaking through the Clouds
Paying off massive debt feels like you are in a constant storm.
When you start to approach $0 balances, it is as if the sun starts shining through the clouds. All the hard work it took to get to this place begins to reveal itself.
Instead of wondering what we will do if a major catastrophe strikes our household, we now have an emergency fund we can access.
All of the money we were using to pay off debt is available to use towards other things, like expanding our salon. These funds open up many opportunities in figuring out how to use our money to build the future we want. We want to max out my 401k, max out our Roth IRA’s, and start investing in our after-tax investment account. All of these things will give us more options once we get the ball rolling.
In 5-years, we have the potential to be more well off than most of our extended family. In 10-years, we can start to think about when we want to slow down. If we are lucky, we might be at a spot before I turn 50 not to have to work for money to do what we want to do.
The Sky’s the Limit
We are still working on some priorities we want to knock out this year. Primarily replacing our roof and expanding the salon. Once those last two items are done, barring any unforeseen casualties, our net-worth should start to grow exponentially.
I’ve also been spending a ton of time working on a product that I will launch from Money Stir, that goes with the personal finance space. I don’t know if it will take off or not, but I’m hoping it gets some traction and people find it useful. It’s something I will use, and I’m excited to help other people with their finances!
We have lost a ton of time, but we are driven to do what we can and make up some of that time by increasing our income and being smart with our money.
There’s a lot of doom in the air about a possible bear market or recession looming. If it ends up happening this year or next year, that will put us in a strong position to make extra gains during the recovery. As I’ve touched on in my thoughts on whether we should pay off our mortgage early, this would be a great thing for most of our investments.
I even have some crypto I’ve been holding for a while. I bought at the worst possible time, but I’m holding out! If I can get to a spot where I make a decent amount of profit, I’ll sell those cryptos and invest in markets that aren’t so volatile and risky (but we will see).
It’s All About Increasing Our Chances
Are there any guarantees that we will be financially well off in 10-15 years? No. But the best we can do is make smart financial decisions, and increase our chances of generating more income.
Even if our income doesn’t grow dramatically, we should still end up in pretty good shape. I have a stable job that I love, and Andrea’s business is booming.
By working hard and risking our time and some capital, we increase our chances that something is going to take off. I’m hoping that Money Stir continues to grow and that the salon also expands. All we need is for one of these things to explode to change the outlook of the next ten years.
It’s different than playing the lottery, as we are actively building something. We don’t know if any of these things will take off, or how long it will take. But we are excited to see what the future has in store for us.
Not Letting Our Dreams Distract Us From the Present
Writing this article, the above is super motivating to keep pushing things forward.
But I need to continually remind myself that always living in the future is not healthy. We forget what we already have, and miss out on the life that is smacking us in the face.
As they say: “the grass is always greener from the other side”. It’s so easy to think that the future is the secret path to happiness. But what is the point if we are always miserable on the journey? Is the cost worth the destination?
That’s why this summer we have three small trips planned. In a few weeks, we are going on a short road trip to a nearby town. We will do some tubing down a river, go to a remarkable museum, and spend some quality family time together. Not only will I be able to suntan my love handles, but we will make great family memories.
And to top the year off, Andrea and I will be going to NYC as part of a work trip in December. This trip will give us some time away from the kids, and we’ll be able to experience big city life for a few days.
Through travel hacking, a big chunk of the expenses from these trips will be paid with credit card points and rewards. They all will still cost some money, but no crazy amounts.
I hope this post motivates you on your financial journey. Don’t forget about what matters most to you!
Chris is a financial blogger who loves to be transparent about money-related issues. He’s paid off massive amounts of credit card debt and is the blog author of Money Stir. His main focus on Money Stir is talking about how money relates to our relationships, personal development, and how to plan for the future we want. He’s been quoted on Market Watch, The Ladders, and other publications.