Mar 20, 2009

The Biggest Barrier to Financial Freedom is Ourselves

If personal finance was easy, everyone would be a millionaire.

Financial freedom, as I'm learning, is a relatively easy process. All you have to do is spend less than you earn, save as much as you can, and then make that saved money work for you. All the rest, how to get out of debt, how you keep track of your money, what kind of car you drive, are details that might slightly affect how fast you achieve financial peace. There's no huge secret, and there's no magical formula. Spend less than you earn. Save as much as you can. Make that money work for you. Three simple things, and yet each of those is so incredibly hard.

Why? We're fighting ourselves. We know we have to spend less money than we earn, but we're given credit cards, and told that we need to build a credit history. We know we should save as much as we can, but then on what shall we watch TLC? We know we have to make our saved money work for us, but hey, I worked hard for that money, I deserve to go on a vacation.

The reality is, we have nobody but ourselves to blame for our financial situation. When I was in high school, I hated going to school. I eagerly anticipated leaving high school behind and going to college. It didn't matter to me how much money college cost, I was going to college, and I was going the year that I graduated from high school. While I was in college, I continued to not care how much each semester cost. Once I started, I figured I might as well go to the end, even though each semester was about six thousand dollars. So after four years of college, I ended up with seventeen thousand dollars of student loan debt, and no plan on how I was going to pay that back.

Sure I can blame the fact that I made the decision to go to college when I was 17 and didn't know what I was doing, or how much college really costs. I could point out that I had never even held a job for longer than four months at that point, and that I had never had to pay rent before. I was financially ignorant, but ignorance does not pay back my loans.

Now that I'm slightly older and slightly wiser, I find myself continuing to make less than wise decisions. While I do feel as though I have a better understanding of my finances, and a clearer goal of where I want to go with my money, I still make decisions based on the short term, and rarely think too far into the future. I buy dinner out because I don't want to cook, not thinking that twenty dollars could go towards debt repayment. I buy a game for my PlayStation because it looks like fun and I want to entertain myself, not realizing that it could have been fifteen dollars towards our wedding fund. I'll buy a beer or two without considering that the next day I have to work with a bank account ten dollars smaller than it was the night before.

My solution? I trick myself into saving by putting automatic withdrawals on my bank account for payday, leaving me with less money to work with in the first place. My ability to justify lattes and pizza is greater than my desire to save for my retirement.

Becoming financially free is not going to be easy. If it was easy, it wouldn't be worth doing.

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