Have you ever noticed that when your income increases, so does your desire for stuff?
I remember being a young A1C (Airman First Class- two stripes) in the USAF, making $12K per year, and living pretty well with my now-ex-husband and our baby (okay, to be fair, with housing, food, and clothing allowances I was really making closer to $15K).
Fast forward 15 years, and I am a single mom with a BS in Accounting, a MBA, a salaried position making $40K per year and having to take a second job because I cannot make ends meet.
The worst part was that I had worked so hard to get rid of the debt after my divorce! I scrimped and saved and deprived.
What happened?
Well, like so many of us, over the years I bought a house, earned my degrees, upgraded to a bigger house, spent a lot of money on cars and car repairs, bought a couple horses, acquired a couple dogs, had medical and veterinary bills, went on a few vacations, splurged on gifts (although nothing outrageous), and made some poor financial decisions…
The result was having less disposable income at $40K than at $15K.
But I also learned a valuable lesson.
I went back to the old-fashioned envelope and budgeting system I used to get out of $30K in debt after my divorce (which allowed me to buy a house 1.5 years later- on $12K per year), I spent a lot of time researching and learning about money and investing, and I used that second job to learn a LOT about home repair, especially plumbing, which saved me a TON of money on home repair bills. And, by maxing out the opportunities for retirement and the employee stock purchase program, I walked away with much more than just the paycheck.
And, soon thereafter I traded both jobs for one job that drew on all of my experiences and paid $30K more annually.
Most importantly, I did NOT fall back on those former bad habits that kept me broke at a higher tax bracket.
I did NOT splurge on things I did not need.
I maintained and followed my budget.
I paid off old credit card debt.
I made strategic purchases and was strategic with debt and credit.
And I enjoyed life. I went to Mardi Gras for a long weekend and I booked a room for my Mom, sisters, and Morgan on the corner of Bourbon and Toulouse with a balcony overlooking Bourbon to celebrate her 21st birthday. We had a girls’ week in France, Monaco, Italy, and Geneva, Switzerland. I traveled the Antebellum Trail in Georgia. I went to Quebec more times than I can count. Vacations in Myrtle Beach, Charleston, Ocean City, Gatlinburg/Severville/Pigeon Forge, Switzerland, Romania… And lots of trips to visit family in North Carolina, Connecticut, and Indiana. (did I mention I LOVE to travel and explore? lol)
See the difference?
Most people cannot wait for their next raise so they can celebrate with a bigger television, newer car, bigger house, or some other material treat.
Or, they follow the latest financial fad for the single-minded goal of “debt-free at all costs” that will never lead to financial freedom, only deprivation and lack.
But, if you want to get ahead and break free from the paycheck-to-paycheck lifestyle or even become financially free you have to change your mindset. You have to stop caring about what people will think. You have to figure out what is really important to YOU!
So what is your end goal? Do you know what you have to do to get from where you are now to where you want to be?