Have you ever avoided going to the doctor about an ache or pain simply because you were afraid of what the diagnosis might be?
That happens with finances too. In fact, that was totally me three years ago.
While my husband was in law school, I knew our debt was mounting, but I purposely avoided ever calculating the total. I figured that since there was nothing I could do about it, there was no sense in stressing over it.
I worried about the number, but when I finally saw what we owed, it was worse than I ever imagined.
We owed over $130,000.
On the outside we may have looked financially healthy. We owned a modest home. We avoided extravagant spending. We drove a normal used car. We looked fine, but inside we felt sick. Like many physical health issues, not all financial health problems are obvious. In fact, 57% of Americans report that they are struggling financially, including many that you might not guess.
Financial health starts with awareness.
I hadn’t realized it, but by actively opening our eyes to the details of our debt, I was taking a big step toward financial health.
We crunched the numbers to see how much interest we would pay on the normal student loan repayment schedule. That eye-opening experience motivated us to make a plan to pay them off much more quickly.
Awareness also involves keeping tabs on your account balances and being conscious of spending.
Financial health is composed of day-to-day decisions and habits.
I once heard that every food choice we make either contributes to good health or works to destroy it.
Similarly, each financial choice we make takes us closer to or further from our financial goals. Day-to-day decisions add up to create habits.
Over the past three years we have dedicated ourselves to paying student debt quickly. Along the way, we have developed healthy habits of budgeting and frugal living. Each time we exercise the willpower to delay gratification, we become stronger.
Financial health means looking toward the future.
My doctor frequently reminds me that to be healthy at 65 requires good diet and exercise choices at 35.
Financially, we also have to look past today and plan for the future. The specifics of planning for future financial health look different for each person or family, but usually include building an emergency fund, saving for retirement or children’s education, paying off debt, and increasing income.
During this time of focused debt payoff, our plans for the future have been limited–we chose to build momentum toward payoff instead of retirement. To cover the basics, we still built an emergency fund and saved until we were living on last month’s income. Partway through, we began making modest monthly payments into a college savings plan for each child, and signed up for matched retirement contributions when available. With our debt soon to be paid off, we’ll begin looking further into the future to work on our long-term financial health.
Financial health is a way of life, not a destination.
Financial health has more to do with the direction you’re headed than where you are. Financial health isn’t a destination, it’s a set of habits and a way of life.
Thankfully our bill of financial health is much cleaner than it was three years ago. Everything isn’t perfect, but we know what we’re doing, we have a solid plan, and we’re heading in the right direction.
And it feels so good!
How about you?
- What does financial health mean to you?
So true about it being the day-to-day decisions. Like any habit, good money management is about a way of life. I feel like having just come out of a rough couple of years not worrying too much about the day to day and being able to actually think about the future and plan ahead is a luxury.
Yes! Once you’ve been living day-to-day, paycheck-to-paycheck, it really does feel luxurious to be able to think about and plan for the future! I’m glad things are looking up for you!
The last 15 months have been difficult for me. I lost my job of 12 years after a protracted dispute with management. My job carried with it quite a bit of risk – ultimately I could be held liable, in civil and criminal court, for anything that went wrong with the programs I oversaw; and the programs I oversaw involved many vulnerable people, so the risk was quite high. Management wanted me to assume the same level of risk, but they wanted to remove from me the time and assets I needed to manage that risk. (They wanted me to do all of my existing time, and be a full-time receptionist. Anyone who has worked as a receptionist knows it’s a full-time job in and of itself!) I refused to assume that level of risk without being able to effectively manage it; so after more than a decade of being a very good and loyal employee, I was forced to quit.
That’s what being financially healthy means to me: It means being in a place where I had the freedom to leave; where I wasn’t so reliant on a pay check that I had to open myself up to the very real risk of losing everything we’ve worked so hard to get, just because we needed the money in the short-term. My boss didn’t understand that we were in that place. He knew that I made much less than he makes; he made the assumption that we needed my pay check to survive. We didn’t; in fact we’d been saving my income and living off my husband’s (or vice-versa, since we were on the same income).
Walking away was hard; but since then the blessings have poured in. My husband and I have both been able to follow our dreams – him by starting a new business, me by going to grad school. I’ve been there through several medical emergencies with the in-laws, and I’ve been able to spend more time with our children. We were only able to make this very big life change because we are debt-free and live frugally.
I love this Becca! What a great example of how living frugally and debt-free gives you real freedom. Good for you for not letting them put you in that position. I bet your boss was surprised that you could walk away like that. I’m so glad you’ve seen blessings pour in and that you’re both following your dreams now! Thanks for sharing your story. I always enjoy your input!