Life after debt: What it’s like in the third stage of personal finance

I paid off the last of my debt in 2007, quit my day job in 2008, and have been working to build wealth ever since. As I wrote early last year, I'm in the Third Stage of personal finance: I've paid off my debt, built a cash cushion in savings, and am maxing out my retirement accounts. And after doing all of these things, I have money left over to spend on comic books and travel. I'm a lucky man.

For the past year, GRS readers have been asking me to write more about the Third Stage of personal finance. What's it like there? What choices does a person face? What sorts of things does she do with her money?

Though I've wanted to respond to these requests, I haven't.

  • For one thing, I've felt like there isn't a whole lot to say. Mostly, the Third Stage of personal finance is like the earlier stages, but without the debt. I'm still pretty careful with my cash, but instead of saving to pay off past purchases, or saving my emergency fund, I'm now saving for other goals — like travel.
  • For another, I'm reluctant to talk about some of my spending. It's not that I think I'm making poor choices — I'm not — but that taken out of context, some of the numbers look shocking. It's very difficult to put yourself in another person's shoes, after all.

Today, though, I'm going to write a little bit about the Third Stage of personal finance. I'm even going to share some actual numbers. All I ask is that when you see these numbers, you understand that I'm making conscious decisions to spend this money, and I'm sacrificing other things in my life to make the purchases I describe.

The Cost of Fitness

Tonight was Guys' Night Out. Or Geek Night. Or, as my sister-in-law calls it, Dragon and Troll night. Every month, my band of geeky friends gets together for some sort of activity. It started out as a chance to play Dungeons and Dragons, but it's morphed into an ever-changing variety of events.

Tonight, for example, we headed into downtown Portland to watch the Portland Timbers take on the Minnesota Stars. The Timbers are the local pro soccer team, for which I bought a pair of season tickets last spring. (I paid $435 for two general admission tickets.) We geeks didn't watch the game from the stadium, though; instead, we headed next door to the Multnomah Athletic Club. One of our group is a member, and he signed us in so we could watch from the club's balcony, which overlooks the south end of the stadium.

The Multnomah Athletic Club is amazing. It's posh — it oozes wealth. It looks like the sort of place where you might have to wear a suit and tie just to jog on the treadmill. Everything is dark wood and brass and wall-to-wall carpeting. The attendants at the door are in suits and ties. It's not a very J.D. place.

“Wow,” I said to Josh as we waited for the game to start. “This place must be expensive.”

“I knew somebody was going to bring that up,” he said. “It is expensive, but my parents have been members for almost forty years. It only cost them $700 back then.”

“$700 for what?” I asked. “Per month?”

“No, $700 for the initiation fee,” Josh said. “I think the fee is getting close to $10,000 per family now.”

$10,000?!?!?” I asked. “Just to join?”

“Yeah,” said Josh. “And there's a waiting list to get in. Plus, once you do join, dues are about $200 a month.”

My mind boggled. I was about to say, “That's outrageous!” when I realized: I'm paying $200 a month for my gym, too.

Whenever I talk about Crossfit and the amazing things it's done for my health, I always leave out the cost. Yes, I've lost 30 pounds. Yes, I've dropped from a size 38 to a size 32. Yes, I'm stronger than I've ever been in my life. But this progress has come with a cost: $200 a month, to be precise. You know what? It's a cost I'm happy to pay, and one I plan to continue paying. If this system is working — and it is — then it's worth every penny. If I'm not fit, nothing else matters. (But again, taken out of context, this expense would look ludicrous.)

So, I admitted to Josh that I was paying just as much as he was for a gym membership. (But without any initiation fee, of course.) We stopped chatting as the match began.

The Cost of Fun

We watched the Timbers and Stars play to a 2-2 draw in front of a large crowd. As the game wound down, I used my binoculars to spy my seats for next year. In 2011, the Portland Timbers will join Major League Soccer, and last month I spent $1410 to purchase a pair of tickets on the mid-field line. I'm eager for the season to start, and the current season isn't even over!

Walking back to my car after the game, I thought about that expense: $1410 for a pair of season tickets for a soccer club. A couple of years ago, I would have thought that was insane. I wouldn't have been able to view it as a justifiable expense, no matter how much I had in savings, no matter what sorts of sacrifices I made in other parts of my life. I would have condemned it as lifestyle inflation.

Maybe it is lifestyle inflation. But it's also an example of conscious spending. I love soccer, and I can afford the tickets. I'm meeting all of my financial obligations. When you've paid off your debt, saved for emergencies, and set aside money for retirement, whatever's left over is yours to do with as you please, right? In my case, that means that if I want to buy Portland Timbers tickets, I can. I have no regrets.

These are the sorts of things I think about in the Third Stage of personal finance.

The Cost of Travel

There are still financial dilemmas in the Third Stage. Being here doesn't mean I can afford everything I want. In fact, I'm always picking and choosing. (It's just that the things I'm choosing between are sometimes more expensive than before.)

For example, Kris and I just learned about an opportunity to travel to Africa in February. Our college has put together a package tour for alumni that includes visits to South Africa, Botswana, Zimbabwe, and Namibia. It's a 19-day tour and it costs $5600 per person.


I've been begging Kris to go to South Africa for a l-o-n-g time. I've wanted to visit ever since I read Cry, the Beloved Country. (Jolie Guillebeau doesn't help by always reminding me that South Africa is her favorite place she's ever visited.) Kris has always steadfastly refused to consider a trip to South Africa — until now. She actually wants to go on this tour, and so do I.

The problem is that even though we're in the Third Stage of personal finance, $5600 (per person!) is a lot of money for a trip. Especially considering we've already shelled out a lot for our upcoming journey to France and Italy.

Can we afford to take on the expense of traveling to South Africa in February? And if we can, is it something we really want to do? As I drove home from the game tonight, I thought about it.

First, I considered how to come up with the cash. We've already funded our trip to Europe, so that's not an issue. I just need to figure out how to come up with $5600 by February. (Because Kris and I keep separate finances, she has to come up with her own $5600. That's not really going to be a problem, though. Remember: She's always been the responsible one, and she has tons of money in savings.)

I considered my options:

  • Last week, I canceled my Cycle Oregon registration. Cycle Oregon is a week-long bicycle tour of the state, and I've always wanted to do it. But after riding 100 miles in one day last month, I realized I have zero desire to bike 500 miles in one week. I'll be getting back about $750, which I could immediately set aside to save for Africa.
  • I could save up some of the money by going on a comic fast. I give myself a monthly comic-book budget, and if I were to reduce this to zero (or something near zero) for six months, I could accumulate a few hundred dollars.
  • I could borrow from my Mini Cooper fund. Yes, I bought a used Mini last year, but since then, I've been saving for an eventual replacement. The car is running great at the moment, so it's probably safe to pull some money from this account.
  • Similarly, I could borrow from my tax account. I'm not sure I've mentioned it before, but I have a separate savings account in which I save for taxes due in April. (Because I'm self-employed, I'm responsible for setting this money aside myself.) I could borrow a few months of contributions from this account, and then double my savings efforts in the spring.
  • And most drastically, I could conceivably borrow from my emergency fund. It sits at $20,000 now, which is more than ample for most short-term needs. If I drew it down to $14,000 or $16,000 or $18,000, odds are I'd be able to replenish it without a problem.

Plus, I could make sacrifices in other areas of my life: I could eat out less often, I could make better use of the public library, and so on. At its heart, this is the same sort of decision I used to make, but on a different scale. Instead of trying to scrounge up $500 per person to spend a week in Victoria, B.C., I'm now trying to find $5,000 per person to spend three weeks in Africa.

Again, is this lifestyle inflation? If so, is it wrong? And do Kris and I really want to spend this much money on a three-week vacation? I don't know, and I'm not sure how to find an answer.

Life in the Third Stage

These are the sorts of things I think about in the Third Stage of personal finance. Yes, we're still growing and canning our own food, still looking for cheap entertainment, still shopping at thrift stores, and still asking for discounts whenever possible. Now, though, these aren't techniques to help me get out of debt. Instead, they're the steps that allow me to spend $200 a month for Crossfit, $1410 for soccer season tickets — and maybe $5600 to travel to Africa.

I'd love to hear from other folks who have reached this stage. What sorts of things do you spend on? Do you sometimes think, “Man, ten years ago, I would have thought this was outrageous?” Do you still make sacrifices in order to buy the things you want? Do you still practice frugality? If you're in the Third Stage of personal finance, what's life like for you? (And if you're not there, do you find this sort of spending inspiring? Or is it intimidating? Infuriating?)

Note: As I was making my final edits to this article, I realized it's a sort of follow-up to June's post about the rewards of frugality and thrift, in which I described some other things I've been spending on recently.

Portland Timbers fan photo by Jenny Cestnik.

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