As convenient or as good of an idea as taking out credit sounds, it is never a good idea. I suppose you can argue getting a mortgage is okay, and most of us, myself included, aren’t able to go out and buy a house with cash money.
Having had our fair share of debt over the years, like credit cards, student loans and car loans, I never realized what it was really like to be financially free until we were. Taking out student loans, getting car loans and using credit cards for vacations have become the norm in our society. And sadly, many of us go down that road not realizing how long those shackles will stay on us. We sure did.
When I was a teenager, I would ask my grandmother for advice on everything in life and money was no exception. She owned her own home and had paid it off well before my grandpa passed away. She was living off survivor benefits, social security, and her personal savings. All of this might sound like it was a lot, but it really wasn’t. But she was really good a managing her money and coming up with creative ways to save money and not worry about how she was going to pay her insurance, property taxes or monthly bills.
She grew up during the Great Depression and was one of nine children that her parents had. They were expected to do chores around the house. And when they were teenagers and able to work, they were expected to give their parents half of their income. Her parents didn’t want to take money from their children, but it was very difficult times, and people were barely scraping by.
For months my grandmother walked by a shoe store on her way home from work at night and saw a pair of shoes she loved. She couldn’t afford them, especially with her own expenses and giving half of what she made to her parents. One day when she got her paycheck, she decided to buy the shoes. When she went home, she was terrified about what her mother would say when she couldn’t give her half of her paycheck. When she got home, expecting the worst, her mother chuckled and said, “good for you. You’ve earned them.”
She learned a lot about delayed gratification, something I feel like we all struggle with in our society. My husband and I joke about the “Amazon elves” that deliver whatever we want overnight. But this applies to services like Uber Eats, DoorDash, Instacart, Shipt, etc. We can have many of the things we want, without having to wait long at all.
After years of working to pay off student loans, car loans and credit card debt, I will never, ever get back into debt. I didn’t realize what real financial freedom was until we were finally in a place where we didn’t have debt. Every now and again, we talk about buying a car to go overlanding in, and maybe we’ll get it at some point. But because my mindset has radically shifted when it comes to money, the only way I want to buy it is paying for it outright. And that would require a decent chunk of change that I’m not so sure I want to part with yet.
I’m grateful for the debt we had because it taught me that once you carry your own water, you will learn the value of every drop. Now I am much more selective in what we spend money on and really weigh out the consequences. We still have fun and buy things we want, but it’s always within reason and a budget.
Speaking of a budget, I recommend having a monthly budget, even if you don’t have debt to pay off. We like knowing where our money goes every month. If we don’t tell it where to go, it will be spent on things that we probably don’t need. We allocate for things we want to buy or if we want to do something, but it’s always in the budget as “monthly incidentals” or “cash reserves”.
The best financial advice I can give you, though, are three things:
1. If you currently have debt, pay it off as soon as humanly possible. Even if you are young and have a lot of time to pay off your student loans. Double or triple up on those payments if you can afford it each month. Do the same with car loans if you have them. We paid off our debt by prioritizing our smallest debts first. We paid the minimum on everything, with exception of the account with the lowest balance. If we couldn’t pay it off in full, we paid as much as we could each month. Any money saved on our budget in any other category for that month would go straight towards that month’s goal. Sometimes it took us months to pay off the lowest balance account, but that was our focus until it was paid. Once it was, on to the next one.
2. Strive to be able to live comfortably off of 50% of your monthly salary. I know that might sound impossible, and it might be right now. But strive to get to this place. If you can live comfortably with 50% of your net income each month, then you can allocate the other half for saving for a house, a car to buy outright, a trip you want to take, retirement, when the shit hits the fan and any charitable donations you want to make.
3. Become anti-fragile. Don’t be dependent on any one source for your income. In our changing economic times, it’s crazy to put all your eggs in one basket. Create a side hustle for yourself. If you are good at writing, try freelancing on sites like Fiverr or Upwork. If you do graphic design or know how to edit video or audio, you can make some decent money doing it for others. If you are crafty, open a store on Etsy. The important thing is to have multiple sources of income, even if it’s a small one, so you aren’t just dependent on one source.
