Foreclosures, bankruptcies, and negative bank accounts seem to be the norm these days. After all, that’s all we see on the news. There are quite a few people out there that just wish they were back to zero. Is this your goal – to be debt free?
If you are currently working your butt off to get rid of your student loans, your car loans, or maybe your credit cards, I would hope that you have a budget. If you want to have money left over at the end of the month to put toward these debts, you’ve learned that you need to allocate your funds appropriately. If you do not keep a record, then it’s quite common to be left with absolutely nothing at the end of the month.
So, over the course of the past few months, you have learned to budget and you may even be paying down your debt faster than you initially planned (if so, good for you!), but what is your ultimate goal? Do you plan on just getting debt free and that’s it? Or, do you have plans beyond debt freedom?
My wife and I began to pay down our debt in January, 2010 and by March, 2011, we were completely debt free! It was a wonderful feeling, but you might ask us what our goals have been since that debt-freedom date. Well, I’m not sure I could tell you, and that’s exactly the response that I hope you don’t have after reading this post.
Our Debt Freedom Day
My wife and I paid off the last of our debts with a $4,800 check and we were ecstatic! It was such a great feeling to know that we didn’t owe anyone in the world a single penny. No longer did we have to worry about our next payment – we could finally just live with ease and tranquility.
This warm and fuzzy feeling lasted a while, but now that we’re in the summer of 2012, it’s really quite faded. Since our debt-freedom date, we purchased a house (and technically brought debt on ourselves again, but a home mortgage is more acceptable than consumer debt I suppose…) and have built up approximately $30,000 in equity already, but I still don’t feel like we have accomplished much since that wonderful date just over a year ago.
So What Happened?
It’s been over a year, and yes, our net worth is much higher, but our bank account has not grown all that much and our assets are still not making money for us (like they do for the wealthy). So, what has been our problem for the last 14 months?
When I look back, the answer is simple. We stopped budgeting. Our food budget used to be $400 a month, but now we spend close to $700. We used to only allow ourselves to spend $25/month on gifts for ourselves, but now we freely purchase items as long as we can “justify” them through some twisted, one-sided reasoning. Our overall spending has probably increased by $600 each month, all because we no longer tell our money where to go.
Pay Attention and Budget
If I were you (meaning, if I could go back in time again…), I would be sure to have my sights set on that next thing after cleaning your slate of debts. Have an investment goal, or decide to save up a huge emergency fund, or perhaps you’d like to start a business. Whatever the case, never stop budgeting! If you’re not telling your money where to go each month, then you may as well just throw it in the trash, because it’s not going to invest itself. Make a plan and stick to it for life.
Do you have a plan for life? Will you be wealthy, or will you simply be debt free?