I don’t fit in with society when it comes to the personal finances of today. As a personal finance writer who often writes of first person financial experiences, I’m finding that people really don’t want to hear from someone who isn’t getting pounded by debt or isn’t heavily invested in the stock market. As they say, “Misery loves company”, and I’m afraid I’m poor company when it comes to bad financial news. And my experiences related to the downsides of personal finance are largely limited to my home sale during the housing market implosion, which has largely come and gone.
Therefore, I’m finding that for the following reasons, I’m becoming financially obsolete in today’s high-debt, consumer impulse-driven economy in which immediate gratification rules the day and there’s little thought of the future financial impact of such spending.
Mortgage free living
Getting to be mortgage free wasn’t easy, but we managed in less time than many people take to pay off a vehicle. We did this in several steps. First off, we put a larger downpayment on our first home than the standard 20 percent, opting for 40 percent down instead. Second, we took on a 15-year rather than a 30-year mortgage. Third, we made extra payments both on our own and through a bi-weekly mortgage payment plan. And after three years – once we’d built plenty of equity – we downsized to a much smaller, much more affordable home that we could purchase outright.
Consumer debt free
I cut up my credit cards long ago. While my wife still has one, and I have a debit card (which I rarely use), we tend only to use credit when we fill up our vehicle with gas or have to make a certain type of purchase online (airfare, hotel stays, etc.). This means that our card balance remains low and that we pay it off at the end of each billing cycle. This keeps us consumer-debt free since we have no other cards that we’re temped to use for the sake of convenience or otherwise and that snowball together at the end of the month to combine for a total that we can’t pay off, leaving us owning more than we can afford.
Emergency fund and monthly budget reserve
You never know when debt issues may raise their ugly heads though. A health issue or injury, job loss, vehicle or home repair, birth of a child or other major expense can sometimes come along unexpectedly or in greater amounts than planned. To combat such occurrences, we’ve done several things. Like many people, our family has put in place an emergency fund. This fund tends to remain around $5,000 and helps us cover many costs that come along in greater amounts. However, we’ve taken our efforts to remain debt free a step further.
We’ve built a smaller reserve amount into each of our monthly budgets. While this amount tends only to be in the $200 range, it covers a variety of unexpected smaller costs that tend to crop up, and it keeps us from having to constantly dip into our larger emergency fund.
In these ways, we sometimes feel like we don’t fit in with our peers because we don’t have debt and aren’t leveraged to the hilt. When everyone is talking about their debt issues, using credit cards, high vehicle payments, etc. we don’t have much to contribute. While it’s a good problem to have, it also sometimes leaves us feeling like social outcasts.
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The author is not a licensed financial professional. This article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.