My Financial Evolution: Discovering What’s Right for Me
“I don't know what they want from me. It's like the more money we come across, the more problems we see.”
— Notorious B.I.G.
For a while, just like Notorious B.I.G., I battled the stresses of lifestyle inflation, though on a much smaller scale. I was making more money than ever, yet more nervous about finances as well. I was more knowledgeable and more empowered with money than ever, but somehow still felt like catastrophe was right around the corner.
I sat down to look at the financial infrastructure I'd set up and my heart sank. I thought I had it all together: automated savings and bill pays, targeted accounts, investments. Everything. But it all suddenly felt so wrong. My liberal arts degree couldn't help but cry out, “Tim, this doesn't express you.”
The Penniless Year I Felt Rich
I spent a year paying off my student loans, devoting almost all of my disposable income to this project. I was inspired. My quality of life went through the roof because my Sunday walks through the nearby forest were freeing — mostly because they were free. In fact, I walked everywhere. Every book I got out of the library was a victory as I smugly checked the retail price on the back. At the end of every month, I tallied my savings and felt like I ruled the world.
I was dead broke. Man, it felt good.
Devouring Financial Advice
Repaying my loans was a huge step forward, and I was ready for my new financial outlook. I read everything I could about personal finance. It was all so persuasive. I started doing everything.
- I put together a budget.
- I set up investment accounts.
- I automated anything I could. (I even automated 1% of my paycheck to go to a targeted savings account, a puppy fund, in case I ever decided to get a puppy!)
- I got credit cards for the rewards.
- Then I read something that made me cut up all my cards.
- Then, weeks later, reading more about hidden perks, I called to get my cards sent to me again. I automated those and then froze them in my freezer.
I was being a good finance soldier, following the advice of experts.
In the personal finance books, the authors' voices are strong and convincing. They seem to have all the answers even if they constantly contradict each other and, often enough, themselves.
The Story I Bought
As many personal finance gurus recommended, I set up auto-withdrawals into my savings accounts. Outside of my retirement account, I had targeted savings for all of the following:
- Grad school
- Future home
- Future kids' college fund.
- Puppy fund
I was 23 years old, single, and didn't know if I was going to stay in France or move back to the States. I didn't know if I wanted to go to grad school or even what I would study. Yet still, I continued contributing because that seemed like what I was supposed to do. Never mind that I hated the idea of owning a car. I just thought it was the adult thing to do. As I acquired wealth, things like buying a car, or even a house, became more tangible, and because of that, they were causing me stress. Mo' money, and — in this case — mo' information caused me to create my own problems.
I bought into the story that you graduate college, get a job, work hard, get married, buy a house, have kids, send them to college, and, eventually, retire. This trajectory was so heavily ingrained in me that I couldn't shake it.
The road to wealth is paved with goals is one of J.D.'s tenets. I had goals set based on the idea that there's one right way to live. It was cathartic watching my automated system run its little gears to all the separate accounts. I got so much satisfaction from checking my accounts and seeing all the little numbers rise, but then a few hours later, I'd worry if I was putting away enough, or if I was putting too much somewhere, or not enough into my retirement fund. So what did I do? I read more…
I saw all the charts about what saving for retirement looked like if you started young versus if you started a decade or two later. I thought I could exponentially increase my future wealth if I just put more away now. But what about my short-term goals?
I was a mess. I thought about money all the time. I was a few years into my personal finance adventure and already felt like I was having a midlife crisis. I was over-thinking. I needed to take a step back.
My Actual Goals
I wanted to find the excitement I had while repaying my student loans again. I wanted goals that made sense and were important to me. I didn't know if I wanted to own a house, much less what city to put it in. A car seemed like a terrible idea for me. And Chairman Meow, who entered my life for free when my girlfriend's co-worker found him in a box, converted me from my dogs-only mentality. Grad school… shrug …maybe someday. Future kids' college fund? It all just seemed too far away!
But more money shouldn't lead to any of these problems. It should enhance my already happy lifestyle.
Here's my step back: I took away my targeted savings accounts and contented myself with having one account marked “savings” and one marked “Istanbul”. That's enough for me.
Savings gets a chunk because there will be more concrete goals in the future and I'll have a huge jump start on them. I really wanted to do everything right and have a leg up, but as I find out more and more, just as there are different developmental stages of our emotional lives, there are different stages of our financial lives. There are no shoulds or shouldn'ts. And maybe being debt-free and stashing some money toward the future, whatever it may hold, is just right for me — right now.
Have you found yourself in a trap of over thinking your finances? What have you done to simplify and make your system of saving more appropriate for you?