As a young professional I was earning a respectable income and living a pretty good life. I was a homeowner, while others rented, and traveled frequently with friends to beautiful beaches and foreign destinations. I was also successfully balancing a car loan, two student loans, and three credit cards funding my “good life”. While I didn’t have everything I wanted, I was living comfortably in debt, paying the minimum amounts each month – living paycheck to paycheck.
Preparing for a night on the town, I jumped in the car with friends and came across an ATM receipt in the passenger seat where the checking account balance just exceeded $15,000. I was in awe that someone had that kind of cash at their disposal. At that time, my checking account balance rarely exceeded one paycheck (with the exceptions being that once a year tax refund or that third monthly paycheck that sneaks in twice a year). That one ATM receipt shifted my perspective of money management, not based on the balance alone, but also because that receipt belonged to my peer – someone I never perceived to be in a better financial position.
I was always told to live beneath my means, but this was the first time I was able to visually connect its practical application. The idea of having thousands of dollars in MY bank account now seemed more attainable. I was intrigued, inspired and motivated to understand and experience that kind of cash cushion – that kind of financial freedom. With this new perspective, the very next day, I took a long hard look at my financial life.
I looked first at my spending habits and saw a lot of waste. I cut luxury expenses like magazine subscriptions and switched from everyday brand name products to their generics. I sought savings at every turn, including lowering rates on recurring bills like auto insurance and cellphone coverage. Finally, I began to take every extra dime from those savings to aggressively reduce my consumer debt. Consistency was the key. With the exception of my mortgage, within 22 months, I was debt free and in a position to save and invest more of my income.
I soon defined financial freedom as the ability to comfortably meet my needs, the choice to enjoy luxuries guilt-free and the option to give generously to causes I felt passionate about or to individuals in need without the expectation of repayment. Today, I am achieving these milestones, living debt-free, and pushing toward greater levels of financial freedom which include sharing lessons learned with plans to pass on the wealth I’m building to future generations.
I want to hear from you. What’s your definition of financial freedom? Are you there yet?
Great story about finding the receipt. Reminds me of the “Millionaire Next Door” books. We are debt free including the house. We are striving to build savings that could readily cover a new car, new roof, etc without depleting us. We wish to remain debt-free.