This guest post from George is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes.
Back in 2007, I was in a financial funk. I was doing all the “right” things — track our spending down to the penny, max out our retirement accounts, aggressively pay down our mortgage — but I didn't feel good about it. My wife and I had great jobs with above-average salaries, but with a high savings rate and extra mortgage payments we didn't have much cash for fun. Our budget was so tight that we felt guilty whenever we spent extra cash on indulgences, even small ones. My wife griped that she didn't have any money to spend on clothes — and when my wife complains, I know there's a problem!
Four years ago, in a question to the GRS “Ask the Readers” column, I wrote that “I [was] starting to feel like I [was] sacrificing too much in the present so that I [could] can save for the future.”
Finding Financial Balance
Fast-forward to 2011 and things sure have changed! Instead of a toddler and a fetus, we have a daughter in elementary school and a rambunctious four-year old son. We've achieved financial balance, but not how you might expect.
We're investing more than ever and have increased our mortgage prepayments, but we're also spending more on the fun stuff. Just today we spent $100 for a family admission to the local waterslide park (plus $7 for the locker rental!) — a total indulgence, but everybody had a blast! We're also spending more on restaurant meals, fancy coffees, and a bottle of wine to share once a week — all things that we didn't do at all just a few years ago.
To summarize: We're saving more, we've accelerated our mortgage payments, and we're spending more — all at the same time! But how?
The Key to Comfort
The math simply wouldn't add up, of course, if it weren't for one thing: increased income. My wife and I are both paid according to a salary grid, so our pay goes up with each additional year of experience. Combined with promotions, this has had a big impact on our disposable income.
- In 2007, our take-home pay was $3300 every two weeks.
- In 2008 that increased to $3500.
- In 2009, it jumped to $3700.
- In 2010 I received a promotion which gave me a huge bump in salary. Now we're bringing home over $4500 biweekly — roughly 35% more than four years ago.
Seniority, hard work, and some luck really can pay off in due time. And so, I hope it's clear, can increased income. J.D. writes a lot about making more money, and maybe he's right.
My wife and I are still working toward our long-term goals, but we've come to realize that it's okay to spend some money to have fun today, even though it might delay future prosperity. It does feel like we've “won” the personal finance game somehow. We've struck the balance between investing for tomorrow and spending for today. Our needs are all covered, but we're indulging in some of our wants too. We're not millionaires (yet), but we'll get there eventually.
The next step in our journey will be to pay off our mortgage, which should happen next year — before our 35th birthdays! At that point we'll have a big chunk of cash flow freed up, and we'll need to decide what to do with it once the house is paid off.
Any suggestions from the GRS community?