The road to financial freedom takes a toll.
It takes time, perseverance and determination (not to mention a total alignment with your partner). It doesn’t help that there are tools everywhere and the easy solutions never work.
In 21 months I went from having $17,000 in the bank to $52,000 in debt and then back to holding $20,000. I was 22.
This is my story and we hope it gives you strength.
At the end of this article, I’m giving away a guide to the top four money tools that we used in our financial journey (one of them is completely free), so make sure to read all the way to the end.
Today, I have a guest post from Kevin Shryock, he is a financial coach, motivational speaker and founder of InSpiritFinancial.com. His mission is to empower and challenge you with inspirational instruction, so that you can be proactive and take control of your life and your money. Let me know if you would like to guest post on RFI.
I knew nothing about money.
Maybe nothing is an understatement. In high school I had a checking account and worked many jobs in college. But when it came to mortgages, mutual funds and retirement accounts, I was lost.
But I was thrifty.
To save money, I started my engineering degree atthe local community college. I worked four jobs, gave myself a $2 per day allowance, rode a bike and stashed up as much cash as possible for when I finally transferred.
If you’d like a full breakdown of how I earned $22,000 while still attending college, click here.
When I left for university, my parents generously provided me with a college fund to cover the last two years of tuition ($23,500 per year). With a conscious attention to spending, I kept my living expenses low and graduated with my bank account still nicely padded from my first two years of work.
I graduated from college with an engineering degree but very little knowledge about personal finance. Newly graduated, with a job lined up and a steady girlfriend, I did the least sensible thing I could with all that hard-earned money; I bought a beautiful new Scion FR-S sports car (her name is Zoey, by the way).
Without thinking twice, I wrote the check and walked away with $20,000 of car debt hanging around my once financially blissful life.
Soon, that joyful new car payment and my girlfriend’s student loans, car loans and credit debt began to weigh on us.Money had lost its fun. I knew that our lack of financial knowledge and our many sources of debt would form a rocky foundation for our relationship.
So what does an engi-nerd do best? Research.
I decided that the best strategy to being rich was to do what the rich people did. I found simple strategies like budgeting, getting out of debt, staying out of debt, living below your means and build and emergency fund.
And so it began.
All of the debt we had added up to a whopping $52,000! We cut our spending and began budgeting for the first time in our lives. Our first attempts were hard and caused many fights. Date nights went from restaurant outings to Redbox rentals. We even had to pass on a few family events to save on the plane tickets. But we stuck with our plan. After 10 painfully cheap months, we were able to pay off every single one of those ridiculous debts.
The biggest battle had been won, but the war wasn’t quite over. All my research had shown that a true financial foundation needed an emergency fund. So we kept up our thrifty lifestyle for 7 more months.
Finally, at the end of the 16th months, we crossed the threshold from crisis to peace. We could let our foot up off the gas and begin to enjoy all of the income we’d worked so hard to free up. We were debt free with $20,000 (6-months of our living expenses) in the bank, reserved just for emergencies.
We increased our entertainment money and had some truly fabulous date nights. At one of which, Ieven proposed to Becca. I can’t tell you how awesome it was to buy the ring with cold, hard cash.
We’ve started saving for a house. We’re not eager to go back into debt, so we’re planning on writing as big a check as possible come moving day. We plan to find a modest home around $100k. At our current rent, we plan to have it paid off 7 years after we buy it; just in time for Becca’s 35th birthday.
Source-CalcXml.com; Assumed $80k mortgage, 3.5% APR, $1,120 payment
Although we’re young, we’re always looking ahead to the next challenge. It’s almost like playing a game now. Because we’ve started so early, we’re going to have more than enough at retirement. So, we’ve decided to try and retire early by putting some of our savings into side investments. If all goes according to plan, with no house payment, no debt and a healthy nest egg ($1.4M), we could retire as early as my 47th birthday. But if we choose to work the whole way, a whopping $6.5M could be waiting for us in our golden years.
We started early, and it’s already paying off. But to anyone we talk with, we encourage them that it’s possible for them too. You just need to set the dream and take the small sacrifices required to get there.
If you want to know the top four tools I used when getting out of debt, I’m giving them away for free. Just click here to visit my site and choose the guide you want.
As the Chinese proverb goes, “The best time to plant a tree was 20 years ago. The second best time is now.”