The day should have been filled with joy. In the same weekend, our offer on the house we wanted to buy was accepted, my favorite NFL team kicked an NFL record-tying field goal as time was expiring to win the game, and my 33rd birthday was being celebrated! However, joy is not what I felt. What I felt was anxiety stemming from the fear of spending money.
Is this normal?
Buying the Next House
For six years, my wife and I spent most evenings looking through houses on the market. The desire to buy a house (without feeling trapped in debt) was one of our biggest drivers to get to a better financial situation.
We started looking when we said we would after we realized our student loan debt was paid off (We paid off our $200,000 in 19 months). Naturally, we found a house that was perfect almost immediately. Part of me was ecstatic. But my frugal nature that’s been formed over the past two years was in a pure state of fear.
What are we about to do? This could be a huge mistake!
This led me to the realization that I have found a new cause for fear that I didn’t know I had… the fear of spending money. And, right now, there are a multitude of reasons to have this fear with everything that is going on in our world.
The Fear of Spending Money
Looking at the math it is quite obvious that the two main drivers of early financial success are living well below your paycheck, which allows for a high annual savings rate.
My wife and I have paid off $150,000 over the first 15 months while we ballooned our investment accounts to over $115,000. We did this by living on ~20-30% of our gross income. The rest was put towards destroying debt, giving to charity, and investing in our retirement accounts.
In my first Journey to Wealth Manifesto, I said, “I will live like a resident (not buy a house) until I have paid off my student loans.“
However, at the point we started looking, we still had $50,000 in refinanced student loans remaining. Am I a hypocrite? After all, I run a website that teaches people not to inflate their lifestyles in order to get to financial independence!
A Reality Check
It’s important to write down our goals. Otherwise, it makes it pretty tough to achieve them. It’s hard to know where you are going if you don’t know the destination.
However, life is constantly in flux. That doesn’t change our goals, though! We wrote them down for a reason.
So, what were my other goals that I posted a year ago in My Journey to Wealth Manifesto? (And have I achieved them?)
- $100,000 in assets by July 1st, 2018 (Done)
- Positive Net Worth by July 1st, 2019 (Done… six months early)
- Out of Student Loan Debt by July 1st, 2019 (check… five months early!)
- Millionaire by age 40 (We are on track to reach this early, too)
When I looked at our list and all of the things we were accomplishing, I realized that we might be able to buy the house a little early if we came across the right one. Otherwise, the plan was to keep trekking along til the loans were gone.
Thus, my goal changed a few months back to start looking for the next house when we got our student loans down to $50,000. This number was chosen because we have $30,000 of equity in our current house.
Given the money from our home sale, I realized that even if we bought the next house, our first mortgage payment was not due until after the loans were gone.
Essentially, we would be able to buy the house at this point AND reach our financial goals at the same time.
There are a couple of reasons to share our decision to buy a house.
First, I want The Physician Philosopher blog to be transparent in tracking our progress towards our goals. Showing others that we can balance the joys of living now with our goals of reaching financial independence is important.
Second, our decision is a real life example of the balance I preach. We bought the house we wanted for six years a little earlier than anticipated. We still achieved our financial goals at the same time!
While we made a decision to buy the house before our loans were officially paid off, we didn’t do that in the face of failing to reach our goals. We sat down, did the math, and realized we could buy the house and still be student loan debt free in two years.
After learning the art of frugality, it is common to experience the fear of spending money. But sometimes, this fear is unnecessary. This doesn’t mean that we sacrificed our emergency fund (which we still keep at 4x our basic monthly living expenses).
It’s important to strike a balance between the future goals we set and living today. If you can meet your financial goals and a change is within those parameters, there is nothing wrong with making a change. In fact, I encourage you to spend lavishly as long as you are track to meet your goals.
That does not give permission to change goals simply to spend more money. That message will never change on this site.
So, take your time. Write your manifesto and your personal investor’s statement. Then, set your mind to achieving those goals. Finally, don’t forget to be flexible along the way.
Do you struggle with spending money now that you’ve learned about frugality?
Do you have the fear of spending money? Leave a comment below.