Thanks to Shannon at The Heavy Purse for inviting me to be a part of the 2015 Financial Literacy Awareness Carnival! Financial Literacy is an incredibly important topic and I feel honored to be a part of this event. Thanks so much Shannon! And now read on to hear about our journey to getting financially real with ourselves.
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I think that many of us here in the personal finance world have experienced moments when we really had to “get real” with ourselves from a financial perspective. Here at Casa Frugal, we’ve found that getting financially real with ourselves has been quite the journey. Rather than one specific moment in time when we “got real,” I think it’s been more of an ongoing process over the course of the last three years or so. There have actually been a series of moments that have led us to where we are today.
Getting Financially Real
Here’s how it was: we woke up one day three years ago and asked ourselves how the heck we had let ourselves become so comfortable with such a high level of debt. The amount was really staggering; we owed way more than a year’s income if you took into account both our mortgages (primary residence and a rental property) and student loans.
At that moment, looking at our debt, it felt insurmountable. It just really felt like we would NEVER be free of debt. That was, I think, one of the first moments in our marriage when we really woke up and realized that our debt was a major problem. That was our first baby step toward “getting real” financially.
But in order to make progress on our debt, not only did we have to accept that we had a problem, we also had to DO something about it. So when we moved to a new state in 2012, we purposefully chose to downsize and purchase a smaller and cheaper house.
I have to admit, it felt really weird to be downsizing at a time when we were relatively young (30s) and on the brink of having children. Especially since most of our friends have similar jobs and incomes as we have and they all have much nicer homes! But when we moved we felt strongly that a lower cost of living was going to be a central piece of our debt payoff journey. In a smaller cheaper house, not only are all of our fixed expenses lower, but we also benefit from letting our neighbors save us money (since the Joneses in less fancy neighborhoods have much less fancy stuff). 🙂
Add a Mouth to Feed
I think the second moment in our financial journey that helped us to get financially real with ourselves was when we brought our daughter home from the hospital. That’s when it really dawned on us that there are three of us now! If we screw up our finances now, not only are we running the risk of being on the streets eating dog food in our old age, but we also put our daughter’s future at risk. That is the absolute last thing we want to do.
Getting Financially Real About Our Dreams
And most recently, we had a major financial reality check when we had to come to the difficult decision for my hubby to not take a job that he really wanted in a place that we really want to move to. Unfortunately the job involved a 25% decrease in pay, and in the end we came to the conclusion that at this point in time it is just not financially realistic for us to expect to take a 25% income decrease and still realize our dreams of paying off our debt and financing another adoption within the next few years. It was one of the hardest decisions we’ve ever had to make, but we ended up choosing to stay where we are and annihilate our debt.
Kicking My Butt into Action
It was this last experience that really lit a fire under me the most. I mean, we’ve been working toward debt freedom since 2012 (and we have successfully slashed nearly half of our debt in the last three years), but nothing has inspired us to get out of debt quite like our recent experience of looking at something we really wanted and having to turn it down… all (well, mostly) because of debt.
In the last few weeks, I’ve been upping my game on side hustles for sure. But most importantly, I’ve decided to go back to work on at least a part-time basis. Being a stay-at home mom for these last few months has been AWESOME, and I wouldn’t trade these last few months for the world. However, right now I think setting our finances straight by dumping our debt once and for all is our biggest priority. We are unbelievably motivated right now- after all, the next time an opportunity like the one that we just turned down comes around, we want to be able to jump on it!
Financial Reality Check
I think that sometimes, it’s the most painful experiences in life that you later look back on as a financial reality check. Although our recent experience of having to turn down a great opportunity because of debt was painful, I know that others out there likely have much more painful stories of financial struggle to share. Since we are all human, most of us have made our fair share of mistakes, both financial and otherwise.
I truly think that the most important thing about financial mistakes is how we choose to deal with them. We can’t do anything about our past- what’s happened has happened. But we can all choose to work toward a better tomorrow for ourselves. We can choose to increase our financial literacy by reading books, magazines, and blogs. We can choose to take steps like saving money, throwing extra money at debt, having insurance, etc. It is taking actions like these that really encompasses what “getting financially real” means to me.
Have you experienced one or more life events that caused you to have to get financially real with yourself? In what way did that change you and your financial priorities?
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