It’s been a long time since I wrote about the general state of my financial affairs. A few readers have written to express concern that I’ve lost my way. I haven’t. If anything, I’m more devoted to this stuff than ever.
But as I wrote earlier this year, I’ve entered a different stage of money management. During the first two stages of personal finance (debt elimination and establishing a foundation), things happened quickly. They did not seem quick at the time, but they were.
Now I’m in the third stage of personal finance. Progress is steady, but there’s not a lot of scenery. Have no fear: I’m still on the road to financial freedom.
Starting with quick wins
When I started paying down debt, I achieved a lot of quick wins. I’d pay off one debt, and then nix another a few months later. Back then, time seemed to drag — no question — but in retrospect, my progress was constantly visible. Even if I wasn’t writing the final check for my computer loan in a particular month, I could see that my debt snowball had reduced the balance by a significant amount.
When I made frugal changes to my life, I could see the results immediately. Cut my television bill? Fifty bucks a month in my pocket! Cancel the magazine subscriptions? More money for me! And as I gradually weaned myself from bookstores and comic shops, my positive cash flow grew faster than I imagined possible.
By giving up certain things I had thought were necessities, I was able to find more money to throw at my debt, which just accelerated the entire process. As I say, progress seemed slow when I started, but I was actually reaching new landmarks all of the time.
The third stage of personal finance
Today I’m in a different place. I no longer reach significant milestones every month. It’s more difficult to find new ways to be frugal. That doesn’t mean I’m not making smart choices, that I’m not making progress. I am! It just means that the landmarks are spaced farther apart. Here are some of the things I’ve done (or continue to do):
- I’ve eliminated my debt.
- I’ve amassed a $20,000 emergency fund.
- I’m maxing out my retirement plans. (And I’ve begun to invest outside them.)
- Kris and I have accelerated our mortgage payments.
- I was able to purchase a used Mini Cooper with cash.
- This year I will earn more than I’ve ever earned in my life.
- And still, Kris and I continue our frugal ways.
All of these things are fantastic. I’m ecstatic to have turned my financial life around. Earlier this evening, Kris said, “You’re not even the same man you were five years ago. You’re like the new and improved J.D. I like it.”
She’s right.
I feel like I’ve reached a sort of financial nirvana. I’m not financially independent — but that doesn’t matter. I’ll get there. Meanwhile, I no longer experience the guilt of overspending. Though I do make the occasional financial mistake, I’m no longer in danger of overdrafting my bank account. I don’t incur late fees. I have enough money to indulge myself.
This feels good. This is what it’s like in the third stage of personal finance.
The road ahead
My journey isn’t over. My financial engine is humming smoothly. I’m ripping down the highway of life on the road to financial independence. There aren’t many landmarks to share right now, but I know there are many ahead.
More than that, there are new paths to explore. I’m eager to discover (and to share) tips for those who have mastered the basics of personal finance. How does one buy municipal bonds? Is real estate a practical investment for the average joe? What’s the best way for me to use my money to help others? What can we do to optimize our financial systems? How can we boost our incomes while remaining frugal? How can we keep our psychological weaknesses in check?
And at the end of it all, there’s financial independence. Will I ever reach this goal? If you had asked me five years ago, I would have said “never”. Now, though, I’m more optimistic. It may not happen this year. And it may not happen next. But I think I’ll get there before traditional retirement age.
It’s not my goal to gloat or to brag or to have you write, “Great work!” My goal is to show what can be done through hard work and perseverance. It’s true that we’re all different and that we all start from different places. But I sincerely believe that given enough time, nearly everyone can get rich slowly.
I am doing it, and so can you. I’ll be here to help you find the way.
GRS is committed to helping our readers save and achieve your financial goals.Savings interest rates may be low, but that’s all the more reason to shop for the best rate.Find the highest savings interest rate from Ally Bank, Capital One 360, Everbank, and more.
This article is about Real-Life
Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.
Discover is a paid advertiser of this site. Reasonable efforts are made to maintain accurate information. See the Discover online credit card application for full terms and conditions on offers and rewards.
SEARCH FOR RECENT ARTICLES
JD: You should put this somewhere that’s visible to everyone visiting the site for the first time. It explains exactly where you’re coming from and the value you bring to your readers.
Awesome.
loading....
Nice post JD!
The road to financial independence is a long one and the journey never really ends . . . keep on, keepin’ on!
loading....
J.D. This is a great summary of where you currently are in your journey to get rich slowly! I’m currently in the same stage as you are and put frankly … it’s boring lol. Once you get going and start making the right moves it’s just a matter of continuing to do that for years and years!
-Gen Y Investor
loading....
I love the comment your wife made, J.D. That’s true success.
To some extent I agree with the idea that financial freedom is available to all who are willing to work for it. While that optimistic take is generally my own, I see dark clouds that could imperil that dream for many of us (including you and me).
If the U.S. economic system (or even the U.S. political system!) fails, all hopes of financial freedom for a long, long time go out the window. People were openly talking about our financial “crisis” a few months back and now that stocks have gone up a few points that concern has been pushed to a back burner. I see that as a terrible mistake.
I believe that the crisis remains very much with us and that we all should be doing what we can to bring it to an end. Not just because it’s the right thing to do. Because our own hopes for financial freedom are imperiled by it. We do not live on an island. Our fates are intertwined. We should care not only about what happens to us individually but about what happens to us as a people as well.
Rob
loading....
Way to go, J.D. You are at an awesome point with your finances.
Lovely photos, by the way.
loading....
Very nice and uplifting article. Congratulations on your achievement! I’ll share my own small victory here. My wife and I have been following Dave Ramsey’s plan for the past year with some modifications. We have a $5K emergency fund, have been writing monthly budgets and are actively paying down debt. As a result of the debt paydown, we have two paid-for cars and only have student loans left until we are out of the debt hole. This has let us effectively live off of one income while we put “extra” towards debt repayment.
Last Thursday, she was laid off from her job. Most people who heard about it immediately said “OH MY GOD THAT’S AWFUL”, likely because they have the credit card debt, the car payment(s) and the mortgage(s). But secretly, it’s not a bad thing for us at all. It’s turned into something that’s more of a blessing. She got severance payments and will receive unemployment payments, too. Our kids will be able to spend more time with her at home. She’s using the time to launch some side businesses she’s been wanting to do for a while. She’s going to look for employment that matches her schedule — not the other way around.
This is after only a year of putting the effort into it. Had we not been putting the effort into it, we’d be in a mess — with the debt being a significant stress generator. Instead, it’s an opportunity for many good things to happen, and a glimpse of the future for us and our kids.
So for those waiting on the sidelines, I say get going today! There are lots of methods out there — the Ramsey one, the balanced spending formula and so on. Give them a try for a few months and see how it works out — and change what you need to to make it work for you. Or scrap it entirely and try something else. But you’ll never know until you try!
loading....
One particular reason this stage of personal finance can feel so slow is that even when you’re doing the right things (contributing regularly to an IRA, 401k, etc.), your account values aren’t necessarily reflecting it.
A friend of mine once shared what I thought to be a great piece of advice: When you compare brokerage statements from one period to another, look at how many shares you’re accumulating, not dollars. As long as you have confidence that the shares will eventually increase in value (which you should if they’re diversified funds/etfs), then you don’t need to worry.
loading....
JD, I am a longtime reader and very occasional commenter. Your story has been inspiring to me. I have been half-heartedly trying to get out of debt for some time, but a recent breakup has accelerated the need to buckle down. It’s great to hear your successes as well as your tips and hints!
I currently have 70k in debt, 25 on credit cards, 45 on a truck (courtesy of my ex and a testament to the folly of co-signing). After we broke up , he was able to finance a new truck for himself at 0% and leave me with the co-owned one. Thankfully, I have been able to sell my house (albeit for less than I paid for it 5 years ago) and move in with a friend, enabling me to pay down debt at approx 1k/month above minimum. But 70 months seems like such a loooong time…..my daily dose of GRS helps me stick with it!
loading....
Wow, those are the best photos I’ve ever seen. I didn’t even need to read the post!
You’re right – the “third stage” is a lot slower. It sometimes feels like your actions don’t make much of a difference – once you have a pretty good EF then saving another $1k for it doesn’t change things much.
It can be tough to stay motivated without the easy wins.
loading....
JD – awesome post, and like was mentioned above, this is an example of the value of your journey and your story – you can walk along side everyone improving their finances. You may be a step ahead or behind, but in general, people can try and get in step with your cadence.
I’m in a very similar situation to you right now. It’s not as fun or exhilarating to see a debt go away or to have some other big win. Do you think there is value in trying to, dare I say, fabricate a “big win?”
We’ve tried it – setting goals of net worth and then celebrating when we get there – but it feels like setting your clock ahead 5 minutes so you’re not late somewhere. You always know what time it REALLY is.
I’d love to hear your thoughts on that one…
loading....
Hi JD,
This is really great to see your progress. Something I’d like to see on this site is your experiences with running your small business. I think it’s important for readers to realize that many of the most financially successful people out there own their own companies and know how to take advantage of tax structures because of it. While you would have to state VERY strongly that it would not be for those who are still working their way out of debt, I would be interested to hear more about your business side of things. Are you registered as an LLC yet? Have you separated out your business income and personal income? I think this might be a good direction to take next. The “Graduate Course” of GRS, if you will
~Chris Gammell
http://chrisgammell.com
loading....
I really like this post, especially when I compare it to a recent post from one of your fellow financial bloggers. He purposely decided to account for his personal worth in a way that artificially put himself in the red by not counting his house as an asset, but by counting the mortgage as a debt. To me, this was such a blatant misrepresentation of his wealth meant to reassure his readers that yes, he was just like them, struggling. This is not true.
I don’t want to be placated with fake platitudes. I am happy to read about success. I want to know that delayed gratification works and is worth it, and brings it own joys. It makes me happy that I am on the same road.
Enjoy your success, and thank you for sharing it with us honestly. Hopefully we all get to the same place ourselves.
loading....
J.D. I’m glad for you and I hope you continue to write with the same insight in this third stage. I have had quite a few blessings so I have never really been in the first two stages in any serious manner. Although your frugal advice keeps me on my financial toes, I’ve been trying to make headway in the third stage for almost two years. I look forward to your research into real estate and other avenues of income.
And I second Rob’s concern, it will be hard to be financially free with outrageous taxes, unstable contracts, and rapid inflation which all loom dangerously close to the horizon.
loading....
That’s really great progress so far. If you are looking for new topics to write about, I would highly suggest that you write about running your small business now. Have you registered as an LLC or as a sole proprietorship? Is your tax structure different? I have often heard that the most financially successful people own their own business, and I can see why that is so. There are many tax incentives out there that can promote owning a small business as opposed to being an employee. I think the only thing to watch for would be that you strongly stress that it’s a VERY advanced topic and that it shouldn’t be considered until personal finances are under control. Perhaps it could be the “Graduate Course” of GRS. Looking forward to seeing more progress from you!
loading....
Very inspiring, JD. I’m looking forward to seeing you tackle these new financial paths. I’m still in debt elimination phase and will probably be here for a few years (thanks grad and law school), but reading your experience reminds me it’s possible to become debt free.
Keep on keeping on my man.
loading....
This is true but unfortunately, a great many people in this country just want to accumulate more and more that is new and newer. I work with people who shop almost every work day(and probably for bigger things on the weekend), are paying huge interest on their credit cards and complain about money every day and the impossibility of ever getting out of debt- and these are all people who make good salaries by most standards. People wonder how I can retire and seem to think I will be living in poverty- but we have no debt- no mortgage, no loans,college paid for our kids and pay our credit cards off every month. It is not just the mortgage crisis or loss of jobs- people can be incredibly wasteful with spending on unnecessary stuff.
loading....
Thanks for the post JD. As a new subscriber to the feed, I knew very little about your financial journey and where the backdrop that your posts came from.
I’ve been actively following a debt elimination and savings plan, and always get encouraged by the successes of others.
loading....
A house is not a liquid asset and, well, everyone needs a place to live. Thus, when companies that cater to high net worth individuals search for clients, they don’t include the personal residence in the net worth calculation.
And a mortgage is a debt. It falls on the liability side of the balance sheet.
loading....
Great post! Congrats! It sounds like you are doing very well. Making good choices inspires confidence.
loading....
Great post – and it does bear acknowledging. In spite of there being little scenery, there is progress. And the fact that you are delving into other topics proves that. Talking about bonds and investing would be almost totally irrelevant if there were still debt elimination issues on the table. And everyday that you keep up with the habits that got you this far is an achievement – just not one that requires daily updates! Keep it up and thanks for sharing it all.
loading....
JD, it’s great to hear an update about your journey. I feel like we’re going slow in the payoff stage and I dream about getting to where you are now. I can’t even imagine it. I’m sure soon I will look back and be amazed that I ever felt this way.
The photos are lovely, I hope you can use them again and again and again
.
loading....
Congrats, JD! As someone who checks your blog daily, it’s always great to hear how you’re doing. Inspirational for all of us.
loading....
Heh. I’m enjoying the comments about the photos, though it’s an inside joke. A little background for those who don’t follow my twitter feed.
I have several sources for legal photos on GRS. One is commercially-licensed Flickr photos. Another is my own photos. And a third is photos I purchase iStockPhoto. These generally cost a buck for a low-res version like I use here.
Well, when I purchased these two photos, I didn’t pay attention to the cost. I just assumed they cost a buck like all of the photos I use. I was wrong. Each of the photos on this post cost 20 bucks a piece! Oops. That’s a mistake I won’t make again.
And it’s the reason some commenters are singling out the photos for praise.
loading....
JD,
I’m curious how you’ll define for yourself when you’ve reached “financial independence.” Do you envision a moment when you’ll be able to look at your finances and say, “Aha, I’m finally there”?
I’ve always thought of it as more of a journey than a destination – that no matter how much money or freedom I have, I’ll still want to seek improvement if for nothing more than personal satisfaction.
Is financial independence a continuum for you or is it an actual end point that you know you’ll reach and kick your feet back at?
Is all the hard work the journey or the destination?
loading....
Congrats JD! “I will earn more than I’ve ever earned in my life” and “We continue to live our frugal ways” is the Yin and Yang of it. The secret of long term wealth right there.
It’s so great to have a large community of readers to go on the journey together and keep each other honest.
I’m also curious to know what “financial independence” means to you? Mine is simply $3 million cash in the bank, excluding everything else so I can live off the interest income. Who knows when that will be, but hopefully not much past 42.
Your book deal alone could launch you past the millions in a heart beat!
Best
loading....
@#18 Ann: Liquid, not liquid, it really doesn’t matter. If half of his mortgage is paid off, he has equity in the home. That needs to be accounted for in order to get a fair assessment of his personal finances.
Pretending that money is not there is either dishonest or just plain stupid.
loading....
To echo others, the third stage can get a little, well, boring. When we were paying off debt, we had all of these mini successes. I was constantly learning something new about how to manage our money or how to be more frugal. It was a whole new world to me. But now that we’ve saved our EF and are debt-free, there aren’t as many milestones…it’s more about trucking along and sticking to the basics. And while it seemed to take forever to get here, in reality, it was only one year.
Of course I love where we are now…if I got laid-off tomorrow, I know we could live off of one salary for at least a year. We have options. I just have to look for ways to keep myself interested in our finances like I was when we were paying off debt.
loading....
@RB – Your comment reminds me of my parents. My mom said that when she was pregnant with me in 1966, she knew that she and my dad would be set for life just as soon he earned . . . $10,000 per year!!
Thinking about how we each define financial independence is interesting to me, too. How do we know we’ve achieved it? What does it feel like? Is it a set of conditions we’ve met, like able to live off the interest, or a hard number, like $10,000/year or $3 million in the bank? I think Tyler is asking the right questions that we each need to answer for ourselves.
@AD – One of the things that keeps us going is creating and reviewing a balance sheet monthly. It helps me track the real progress we make in reducing mortgage debt and increasing savings. I know I’ll breathe a little easier when we’ve got more saved than we owe on the house.
loading....
great article!
as for the photos, i’m really curious as to where the first photo was taken – anyone know? that photo makes me want to go there, wherever it is.
loading....
“A few readers have written to express concern that I’ve lost my way”
This is one of the keys, actually.
You have accountability to a swarming mass of people, which keeps you on track to Do The Right Thing.
This is huge. Why do so many single people struggle with their finances, even when they know better? They don’t have someone who will love them enough to hurt their feelings. Why do so many marriages struggle from money fights and money problems? Because both people aren’t on the same page to work together to overcome the problems.
loading....
I for one am currently hoping personal finance will some day become boring!
If the past year or so of snowballing is what “fun and excitement” are like, count me out!
loading....
Hi JD,
Am writing to you from Bangalore. Reached here via Trent’s site link. This post means a lot to me as I too am on the long & winding road to financial independence. I had to start late due to personal circumstances but better late than never, I feel. This post is very inspiring to me and I hope to write a similar one for my kids in my diary! Thank you very much!
Ravi
loading....
Thanks for the uplifting post J.D.!!! It has given me the strength to keep moving forward. I have been a quiet fan of yours for quite some time now, and this post has moved me enough to leave my first comment. I have been paying down debt for the last two years, eliminating all of our (my husband and I) credit card debt, and paid off one car. Once the second car is paid ($8k balance), we will only have student loan debt to tackle. We recently received a windfall of about $5k, and bought new furniture instead of applying it to the car loan. I felt HORRIBLE about this decision after making it, and became alarmed at how easy it was to start spending money again on “things” instead of concentrating on debt repayment. Your post has reminded me that it is possible to make mistakes along the way, as long as you learn from them and don’t forget the ultimate goal – financial freedom. Keep it coming J.D. – you do great work.
loading....
@Alexandra – Pretending that equity is the same as having money in the bank is one of the things that led so many people into foreclosure this last year. My home’s value (and therefore my equity) has fluctuated dramatically in the time I’ve owned it. I’ve never made or lost any money, though, because I haven’t sold it. Only when I sell will my equity turn into something of real value.
loading....
Long time lurker here, but my story has very much paralleled JD’s. Since Dec. 2004 we have paid off all debt except the mortgage. Now, most of our money goes into pre-determined savings (retirement, car repair, dream home, etc.), so there just isn’t much to do. I totally identify with the section where you describe how paying off debt seemed slow at the time, but there was always something happening. Now, there are just isn’t that much going on.
However, we are on track to pay off the house in the next six months… so I’m planning a mortgage burning party!
Anyway, I’m glad to hear about where you are now, it really resonates with those of us who have been reading a long time and are in similar positions.
loading....
@Tay (#33)
The beautiful thing about eliminating your debt is that then you can use your money to buy furniture — without feeling guilty. I’ve been wanting some nice furniture for years. I once almost bought the stuff on a credit card. I’m glad I didn’t. Now Kris and I are able to afford to purchase it with cash, something we’re in the process of doing. If I’d bought the furniture five years ago, I would have been in debt for months or years longer, and would have had to pay interest that entire time. Instead, the money has been earning interest for me as I’ve saved.
loading....
@Alexandra #26:
“Pretending that money is not there is either dishonest or just plain stupid.”
The house I live in sold for $633k in 2005, I paid $435k in 2006, and it has now declined in value to below $400k (based on comps sold in 2009). If the previous homeowner was still living there and counted his “wealth” as the difference between $633k (which was a correct value) and his current mortgage debt… I’d call THAT either dishonest or just plain stupid.
Counting some theoretical value of your house in your net worth is likely to lead to the “wealth effect”, which would potentially result in higher current spending levels – based on a flawed premise (because housing values can certainly fall much further than they have – although we homeowners can all pray they don’t).
Maybe counting equity as zero while simultaneously debiting the full mortgage from net worth, is a bit overdone (because surely the property would sell for some value even if the house burned down and turned out to be uninsured). Better to be conservative, so I support Ann’s view, if not “one of your fellow financial bloggers”.
loading....
I don’t think it’s a bad idea to consider your home in your net worth and your overall financial picture. I do it. It’s not too difficult to get a rough idea of its current value.
But I also think it’s very important to keep in mind that a house is illiquid, especially in markets like this. Keep it in mind as an asset, but don’t count on it as a certain source of money.
loading....
This is the best $40 blog post I’ve ever seen.
loading....
Another approach to looking at net worth is to calculate what I’ve heard called “invested net worth.” For that figure, you focus on only what you have invested. You ignore houses, cars, personal property, etc., and their associated debts (if any).
I’ve calculated both invested net worth and normal net worth for the last few years, and the differences between the two numbers are significant, but looking at both of them gives me a more complete picture of the whole thing.
@Mike #7 — Great suggestion for looking at shares rather than dollars. Thanks!
loading....
I can’t wait to be in the financial position you’re in. I’ll be debt free in 6 months or so, and then I can decide how to save and spend – it’ll be great. I can finally enjoy my 20s with a peace of mind vs. mindlessly spending and worrying about the future later on. I like these kinds of posts – they help keep me motivated.
loading....
Great inspiration. Good for you.
loading....
I enjoy seeing others success with debt as I stare at dollar signs. I have paid off the cars, credit cards, and student loans but still face the huge HELOC and house. Our struggle is to tackle debt, but still create a wonderful childhood for the kids. I don’t want to be so focused and miserly that we miss out on quality time with educational/fun family vacations, weekend getaways, and involvement in the community. We earn a great living but feel pressure to live like our coworkers with new cars, expensive vacations, and designer clothes. One coworked even complained about my 10 yr old 200K car. How could I drive such a thing, there is an image I should uphold. I do live like no one else… GRS helps to keep me grounded among like-minded savers.
loading....
I am in the first stage and sometimes the mileposts seem a lot further apart that they should. I found GRS in Novemer of ’07 and it has given me a lift when I thought that I would never dig out of what seemed to me to be a hopeless quagmire. I just have to keep plugging away and I will make it. I want to thank you for giving me a much needed boost from time to time.
loading....
Congrats, J.D., it’s great to hear you’ve been able to stick to the path you’ve chosen. I’m curious to see some actual numbers (“Our net worth is now $X, and we’ve determined our financial freedom goal is when we hit $Y”), but I understand not wanting to alienate some of your readers.
Still, if you track your net worth, I think it’d be encouraging for us to be able to see the graph, even with the numbers removed for privacy. It might be inspiring for others to see the dips and bumps in your progress, to know that the occassional setback is normal and doesn’t have to derail your progress.
loading....
What an inspiring post.
I also love the picture with the guy and the car. Very appropriate for your blog, JD. Worth the $20…without a doubt.
Keep up the good work. I also read here for inspiration. I’ve never been in the kind of debt that many of here have been in, but have still found myself being exposed to new ideas, adjusting attitudes about savings/spending, and constantly learning.
loading....
Paul in cAshburn Says: “If the previous homeowner was still living there and counted his “wealth” as the difference between $633k (which was a correct value) and his current mortgage debt… I’d call THAT either dishonest or just plain stupid.”
Yeah, I’d agree, that’s stupid. Your net worth needs to account for all your assets and debts TODAY. That means you need to see what your assets are worth at the present moment to get an accurate picture of your worth.
You can get a pretty accurate estimate of what your house would sell for if you sold it today by looking at comps in your area. If you want to, you can even bump that value down by a couple of tens of thousands of dollars, just to be ultra-conservative. Subtract closing costs, lawyers fees, etc. But that house is still an asset, and needs to be counted as such (unless of course you owe more than the house is worth, in which case you need to account for that as well).
Linear Girl Says: “Pretending that equity is the same as having money in the bank is one of the things that led so many people into foreclosure this last year. My home’s value (and therefore my equity) has fluctuated dramatically in the time I’ve owned it. I’ve never made or lost any money, though, because I haven’t sold it. Only when I sell will my equity turn into something of real value.”
If we all excluded things that fluctuated in value from our net worth, then no one could count their stock investments as part of their net worth, since the values fluctuate with the markets. In your example 401Ks, RRSPs – well those don’t count because tomorrow they might be worth something different than today! Huh?
In your example, everything is also worthless because they are not sold yet? I guess the same can be said for all our stocks – they cannot be counted as part of our wealth because we haven’t sold them?
Sorry, this just isn’t how it works. All investments need to be accounted for when estimating net worth. If you want to value your home conservatively, that is a good idea. But to pretend that tens, or hundreds of thousands of dollars of equity doesn’t exist? That’s just silly.
loading....
We are in stage three too, and while we are happy to in Stage 3 (very happy) it is not as exciting as when we were paying off $55,000 in debt in 2007 or when we saved $50,000 in 2008 (including buying a car with cash from those savings). Stage three is slow and steady and the goals, at least for us, are not as immediate. I hope you post more about stage three since I need help keeping my slow and steady progress moving forward.
As to whether or not to count primary home in asset category, I think it is a personal choice, yes the “value” goes up and down but that is true of many investments including stocks. We include our primary home value in our assets and we track the ups and downs (usually just adjust once a year when we receive our final assessment) just like we track the ups and downs of our 401ks and IRAs. When the stock market tanked we didn’t really lose money in that we didn’t sell those investments and when its up we don’t really gain money because again we are not selling.
loading....
39. – lol
Still feel like we are in the flailing around stage, the what next after not focusing on paying off debt?
My usual perception is that our progress this year has been stagnant/painfully slow. But my husband reminds me that compared to this time last year we have changed from being in about 3K in debt to having about 2.5K in the black (not including mortage OR equity in house, retirement funds). OTOH our finances were “stress-tested” by some unexpected events this past year, so even not being in the red at this point is a kind of success.
I feel I have learned alot about finances during the past 3 years. In some ways at this point I feel like it is healthier for me to trust our instincts, trust the process, and focus on other aspects of our lives instead.
ps- I also agree that one should in general include both mortage AND equity of one’s house. Yes one needs a place to live, but it doesn’t have to be that house. For example know of someone who a few years ago sold their California home and moved to my town, who literally could have bought a block’s worth of homes (they didn’t; bought a very nice house and put the other 500K in the bank).
loading....
Well, I appreciate this post as well. I was doing all the right things according to GRS… but I’m wondering if the path I’ve chosen will pay off. I’m 28 years old, one month ago I had zero debt, 12k emergency fund and was contributing 12% of my salary to a Roth 401k with 5% employer matching. Then, I decided to go to law school… I’m in week number two. It’s great, I am enjoying the learning process and look forward to inreased future opportunities, but I already owe ~$19k. So my net worth has flipped inverted in one semester’s worth of classes. I anticipate a student loan burden around $120,000 by the end of my four years going part-time. I’m keeping my job and working during this time to limit the loans I need to take out, but 120 is still a massive amount. Do you think I should continue putting 12% into my Roth 401K or pay more towards my debt now? I thought due to the market levels that I would keep contributing to retirement savings even as I take on loans but I’m not sure that’s the right move…
loading....