Before I begin, I want to state that this is not a sponsored post. I have received no recompense for the opinions stated below regarding any software, programs, or personalities.
They say, “Money can’t buy happiness.” Well, it’s more apt to state that money can’t buy love but the idea that money doesn’t contribute to happiness is rather specious. Sure, the poor and indebted can maintain happiness. Meditation and a focus on what is important in life contribute to this state; however, money can provide some sense of happiness for stability. Stability in a world of uncertainty is rare, so never having to fear bill collectors’ calls or that one could not afford proper medical treatment is a great weight off and this is what I attribute to happiness. It may not be jubilant joy but it is certainly a lack of worry and a certain sense of calm in a world sadly lacking both.
I spent the majority of my life running around with my (false) friend, DEBT. I don’t know why this is how I started my independent life. Perhaps my parents failed in some way to teach me properly about investing and saving when I was young, perhaps I was just built that way, but in my 20s, upon hearing a friend say that they were extremely uncomfortable if their bank account went below $5,000, I scoffed. I then had something around $20,000 in debt and nothing in savings. A shame, I know.
It wasn’t until the last few years (yes, really) that I learned my lesson. I also had a few instances of great luck disguised as great trauma. A car accident that led to a good settlement equaled one credit card gone. Another windfall in a similar vein equaled the other credit card gone. I haven’t had a car payment since 2002, even after having to replace the car that was totaled in my accident. It was around the time of the second windfall that I discovered Dave Ramsey.
While running with East Nasty, years ago I was introduced to Christy Wright. She then had a different last name but that changed when she married fellow East Nasty, Matt Wright. I didn’t know what Christy did for a living back then but over time, through Facebook, I saw that she was working with Dave Ramsey and speaking openly about living debt free and within one’s means. I had never heard of Ramsey before but decided to check out his website when I saw my fortunes changing.
While I do not agree with much of Ramsey’s philosophy on life, considering I’m an atheist/ agnostic/ humanist (I never know exactly where I fall in this spectrum of beliefs and it changes sometimes based on my mood), I saw merit in his financial advice. Live within your means and put away money as a cushion. Novel idea! If only I’d listened to my friend ten years ago…
So, I started with Ramsey’s Baby Steps. I didn’t pay for any of his budgeting software but did start working towards the $1,000 emergency fund and started looking at where every dollar went. Then Racer K and I became serious and then engaged and I suddenly started looking at life with dual income. Wow! What a difference that makes!
First, let me set you up with this. As I said, I’ve not had a car payment since 2002 and have driven my trusty old Toyotas to their ends. I’m also only on my THIRD car as an adult and only have the third because of the silly 21 year-old who destroyed my second in the car accident that turned my life upside down. Also, I have lived in the same house for over 6.5 years. This house was well within my means when I rented it and despite growing to a family of 2 with both of us owning enough stuff to fully furnish and care for a home of our own, we have stayed. My rent has never increased because I am an EXCELLENT tenant. My landlord has never had any issues with me. I repair items on my own, including painting patched holes, and I always alert him quickly to bigger items needing his attention, not to mention he never has to worry about the rent check. We also have a generally amiable relationship. So, we’ve had a nice break on rent because we didn’t upgrade (and for those in the know, in our neighborhood that could mean doubling our rent for not much more space). Further, we’ve gotten extra creative with how we use our space. Better to spend $150 on an awesome shelving unit (that holds something like a metric ton) than to pay $300+ per month for a bigger home.
So, as soon as I had my turn of fortunes, I immediately put the $1,000 emergency fund in two different accounts. $1,000 is great but $2,000 is better, especially when you consider that some car repairs and home repairs can run in the thousands. I paid off my credit cards. Then, we paid off K’s car. His car is still fairly new (less than 5 years old- I haven’t had a car that young since 2002 either), so we’ve discussed that unless we have a great turn of fortunes, like him getting a high paying job, he will be driving that long-term, much as I’ve done with mine for the last 13 years. So, we have virtually no debt. While I still have student loans, due to my public service I have no incentive to pay them off early since they will be forgiven in another 7 or 8 years, maybe less. I pay them based upon the Income Based repayment, so the payments are quite low. So, we are not going to waste our money paying extra on a bill that will resolve itself in time and well before it is paid off.
Being debt free, we started saving. Loads. We put around 13% of our income into savings. We paid for our entire wedding, small as it was, without a dime in debt. We paid for our honeymoon the same way. Now, we are buying me a car. I’m so excited to have my first new car and we intend to pay this off within the shortest period of time, though it will originally be financed since we have need of it for our move and so our family can grow. I don’t trust my 15 year old car with a new baby, even if we do not expect the new baby anytime soon (no, I’m not pregnant but we are planning ahead). Yes, we could be spending our money in crazy ways: new electronics, loads of new clothes, expensive races, etc. However, we have our sights set on the future and we’ve already started saving for a home once we get to Colorado. Saving, no matter how big or small will definitely change your financial horizons. We also tend to put every bonus or extra money we get into savings. It’s nice for when we want something nice, like currently planning on a night at Catbird Seat.
In the midst of all this and right after getting married, we looked for a software platform so we could share the finances. After crowd-sourcing information and doing some online research, I settled on You Need A Budget (YNAB). I LOVE this software!! One great thing is, you get a free 30 days to use the full edition of the software before you commit or pay. No trial version. The whole thing.
YNAB syncs across all our devices instantly but the best part of is, it teaches you and sets you up to start living off last month’s income. You heard me: last month’s income. Why last month instead of this month? When you live off the money you are receiving this month to pay your bills, you are depending on money you don’t have yet and it is effectively “hand to mouth” living. When you live off last month’s income, you already have all your money for your bills. If something happens this month, you can adjust and make a plan but you can rest easy for several weeks because this month is covered by last month’s money. It is so reassuring.
Here’s an example: my sister died this summer. I had to take a month off work to be with her before she passed and then to help my family (and myself) get through the hardest time. Now, one good thing is that I had a long time before my sister died to plan for the money I would need. I had estimated the amount necessary and planned and saved in advance. You don’t always get that when a family member passes away but sometimes, like this case, you do. So, all our bills were covered while we were in Florida for a month without a bit of stress and while we did have to adjust how much we saved that month, by October, we were completely back on track and none of our future plans were affected. Think about how you would survive if you didn’t work for a month… yes, my spouse still had his income and I still had another source of income, so we had an amazing buffer, but how would you survive if you faced a month without working?
Now that we are back on track and our honeymoon is pre-paid (yep, flights, all-inclusive resort, and ample spending money), we are saving for the down-payment on my new car and our move. No debt to speak of, except for financing the car, plus we already are saving for buying a house. Plus, I’m one month ahead for a number of our categories on YNAB. It isn’t all our bills yet. As you can imagine, it takes some time to get there though YNAB suggests it will take about 6 months to get there if you squeeze. And I’ve been squeezing. K has commented a few times that it seems we never have money to spend despite our incomes. My reply, we have money but we are getting ahead so down the road we can enjoy our money to its fullest and not have to worry again. We are foregoing some outings and purchases now so that the future will be rather lush. I think this is a great way to live, despite the fact that it took me so long to realize it!
My opinion is if you don’t want a software program, Dave Ramsey’s Baby Steps are a great introduction to getting out of debt and making your life better. He has a budget calculator online that you can use for free to plug in your income and see where your money “should” be going. One thing he taught me was to set some money aside for clothing. It was extremely helpful when I needed dresses for all our wedding events and has been even better as we start buying winter gear for Colorado. K has his brand new, awesome Marmot coat from Moosejaw (love this store!) and we were able to afford it without him getting something he didn’t quite want or something cheaper. Less expensive isn’t always worse, more expensive isn’t always better, but often you get what you pay for. This is definitely true of cold weather gear. Moosejaw has great sales too, so you aren’t always paying full price and who doesn’t like sales?
If you do want a great software budgeting program, I HIGHLY recommend YNAB. I’ve been telling all my friends about it. It takes a little getting used to, especially when you want to start getting ahead, but the learning curve is minimal. Once I got the hang of it, within the first 45 days or so, I was able to start maneuvering our money to work best for us and I started working by category to get ahead. I started with the smallest ones and I’m working up slowly on the bigger ones. The difference between our Netflix bill and our rent is pretty big, so you can imagine it’s easier to see those small bills get covered in advance and while doing so, put an extra $20-$100 in the other categories to take care of it all over time. Watching your money grow in the program brings a sense of pride and will bolster your commitment to keep going until you reach your goal! YNAB has been a life changer for us.
So, that’s my advice towards financial freedom. Plenty of experts would disagree with my new car plan. Well, I don’t have the luxury of waiting until I can buy my car in cash or buying something less expensive, as my car choice is the result of much research and based upon our plans for the future. If I will be driving it 10 or 15 years, it needs to be what we need as a family. Sometimes, you have to make a big leap to make something bigger happen. We happen to need a vehicle large enough to carry us and our two cats plus necessary items across country comfortable. We happen to need a V6 for living in the mountains. We happen to be moving in less than 200 days to a very different climate. However, with YNAB, coupled with some of what we learned with Ramsey’s Baby Steps, we are prepared for the future and it looks bright.
Perhaps, money can’t buy happiness… but it can buy peace of mind and that’s not nothing.
One thought on “The Road to Financial Freedom”