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.
Showing posts with label goals. Show all posts
Showing posts with label goals. Show all posts
Mar 11, 2009
What Kind of Money Do You Want?
My job allows me to see lots of different houses. I see old houses, overgrown with weeds, fallen trees, and the scrap metal from a couple of generations. I see freshly built duplexes, ancient apartments, and mansions that fill an entire city block. As I read meters, I always steal glances into the windows and lives of the houses I walk by. Some windows are boarded off, others have curtains closed. Some display the marble floors and nine square foot paintings that are professionally hung in the hallway. Others show me a library of books, and some smell like tomato soup, or curry. As I see the houses, I imagine myself living there. Which one would I want to own? Do I want the one that needs a gardener (or two) to maintain the lawn, or do I want the one that is close to being torn down?
It's the same question I have with money. What kind of money do I want? Do I want a limitless bank account, or am I okay with living paycheck to paycheck? Do I want finances that need constant attention? Do I want something that's ready to be torn down?
All I want from my money is the ability to live the life that I want without stress or strain. I see money as a means to an ends. I do not see the point in hoarding money, but I do see the benefit of saving for emergencies. I do not feel the need to buy the newest, or most expensive vehicle, but it would be nice to have a way to get around town. So what does my ideal look like?
Live the Life I Want
I'm lucky in the sense that I don't want an extravagant life. I don't want multiple vehicles, or a mansion. For now, I am content with taking the bus and renting. I do want to be able to eat as much as I want, of the food that I want. That doesn't mean I'm eating out every night, but once a week or so would be nice. I would also like to be able to come home and be entertained, whether that means watching television, playing a video game, or going out for an evening. Financially, I want to be debt free, with some money in the bank for emergencies and for the future.
Without Stress or Strain
I think that a significant amount of financial difficulty comes from either spending more money than one makes (and going into debt), or spending every single penny that is earned. It isn't fun to be constantly worried about whether or not I am going to be able to afford going out for dinner or if I should buy new jeans or not. Without stress means that I'm not worrying over every little purchase, and without strain means that there's a gap between my income and my expenses. I want to be able to spend my money on the things that are important to me without feeling guilty or panicked. If I want a new video game, if I feel as though it would be worth $60, then I should be able to purchase it without regret or remorse. That does not mean that I should be getting a new video game every week, and if I am feeling that desire, then I probably have larger issues. However, if I feel as though it is a justified expense, and I have room for it in my budget, then I should be free to spend my money on it.
I think most people have a similar desire. They want to be feel free financially. I think a lot of us 20 somethings feel very trapped by our finances. We grew up with our parents trying to teach us to be financially responsible, or not talking about money at all. They'd either give us a small allowance and then take some back right away, trying to teach us that it was savings, or taxes or some other such rubbish. Or perhaps they would just drop large chunks of cash in your direction, hoping to tide you over for awhile, hoping that you'd figure it out on your own. Our schools forced us to do math in a class that was not math class, figuring that by making us to work with taxes or budgets we'd be fine once we left high school and got real jobs. It didn't work, and it made managing money feel like work. So no wonder we're so lost financially.
We feel trapped, and at a loss. We feel as though debt is inevitable, that everybody is in debt from the minute they're born until they day they day. You grow up in debt to your parents, before being shipped off to a $10k/year college where you spend four years figuring out that you don't want to be involved in your major for the rest of your life. You take your $25k of debt and marry it to someone else's, putting yourself $50k in the hole. Then you get a car ($60k), some furniture ($65k), and start drinking because you just realized you have more debt than the two of you make in 18 months ($70k). Your interest payments take a quarter of each paycheck away, so you say, "screw it" and get yourself a mortgage so that at least your debt is acquiring property ($370k). You work hard for the next thirty years of your life, just in time to put your kids into college, retire without a savings plan, and die.
And every single day, there's a slightly heavier weight on your shoulders, as you slowly watch your money bleed away.
I don't want to feel trapped by my money. I want to feel free. Free to spend where I want to spend, without guilt, remorse, or fear. I think I can accomplish that, and I think you can too. I think that together, perhaps our generation can be the one that says "no more" to credit card payments and stupid debt. Maybe we can be debt free and living the life we want to live without stress or strain. Is that the kind of money you want?
It's the same question I have with money. What kind of money do I want? Do I want a limitless bank account, or am I okay with living paycheck to paycheck? Do I want finances that need constant attention? Do I want something that's ready to be torn down?
All I want from my money is the ability to live the life that I want without stress or strain. I see money as a means to an ends. I do not see the point in hoarding money, but I do see the benefit of saving for emergencies. I do not feel the need to buy the newest, or most expensive vehicle, but it would be nice to have a way to get around town. So what does my ideal look like?
Live the Life I Want
I'm lucky in the sense that I don't want an extravagant life. I don't want multiple vehicles, or a mansion. For now, I am content with taking the bus and renting. I do want to be able to eat as much as I want, of the food that I want. That doesn't mean I'm eating out every night, but once a week or so would be nice. I would also like to be able to come home and be entertained, whether that means watching television, playing a video game, or going out for an evening. Financially, I want to be debt free, with some money in the bank for emergencies and for the future.
Without Stress or Strain
I think that a significant amount of financial difficulty comes from either spending more money than one makes (and going into debt), or spending every single penny that is earned. It isn't fun to be constantly worried about whether or not I am going to be able to afford going out for dinner or if I should buy new jeans or not. Without stress means that I'm not worrying over every little purchase, and without strain means that there's a gap between my income and my expenses. I want to be able to spend my money on the things that are important to me without feeling guilty or panicked. If I want a new video game, if I feel as though it would be worth $60, then I should be able to purchase it without regret or remorse. That does not mean that I should be getting a new video game every week, and if I am feeling that desire, then I probably have larger issues. However, if I feel as though it is a justified expense, and I have room for it in my budget, then I should be free to spend my money on it.
I think most people have a similar desire. They want to be feel free financially. I think a lot of us 20 somethings feel very trapped by our finances. We grew up with our parents trying to teach us to be financially responsible, or not talking about money at all. They'd either give us a small allowance and then take some back right away, trying to teach us that it was savings, or taxes or some other such rubbish. Or perhaps they would just drop large chunks of cash in your direction, hoping to tide you over for awhile, hoping that you'd figure it out on your own. Our schools forced us to do math in a class that was not math class, figuring that by making us to work with taxes or budgets we'd be fine once we left high school and got real jobs. It didn't work, and it made managing money feel like work. So no wonder we're so lost financially.
We feel trapped, and at a loss. We feel as though debt is inevitable, that everybody is in debt from the minute they're born until they day they day. You grow up in debt to your parents, before being shipped off to a $10k/year college where you spend four years figuring out that you don't want to be involved in your major for the rest of your life. You take your $25k of debt and marry it to someone else's, putting yourself $50k in the hole. Then you get a car ($60k), some furniture ($65k), and start drinking because you just realized you have more debt than the two of you make in 18 months ($70k). Your interest payments take a quarter of each paycheck away, so you say, "screw it" and get yourself a mortgage so that at least your debt is acquiring property ($370k). You work hard for the next thirty years of your life, just in time to put your kids into college, retire without a savings plan, and die.
And every single day, there's a slightly heavier weight on your shoulders, as you slowly watch your money bleed away.
I don't want to feel trapped by my money. I want to feel free. Free to spend where I want to spend, without guilt, remorse, or fear. I think I can accomplish that, and I think you can too. I think that together, perhaps our generation can be the one that says "no more" to credit card payments and stupid debt. Maybe we can be debt free and living the life we want to live without stress or strain. Is that the kind of money you want?
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