My Journey towards Financial Freedom

This is part one of a series on what I know about money. I’m calling it “Baby Steps to Financial Freedom.” (Just for the record, I make no claims of expertise! Just a bit of personal experience…)

You might wonder what a series on financial freedom has to do with wellness. Here’s my train of thought:

• Stress is a top contributor to a weakened immune system and resulting illness.
• Money (or a lack thereof, whether real or perceived) is a top stressor.
• Hence, good money management can greatly reduce stress, thus reducing risk of illness.
• Like other areas of conscious living, responsible money management is about 20% head knowledge and 80% behavior.

I always sort of played at money management, but my journey towards financial freedom began in earnest my senior year of college.

As you may already know from reading elsewhere on my blog, I graduated from college in 2003, and, two days later, embarked on a four-month hike on the Appalachian Trail. Saving for this adventure required more hard work, determination, discipline and delayed gratification than anything I’d ever done before. The hard work was probably one of the best lessons I learned from the whole experience—and there were many.

Shortly after ending my hike, I headed to Norway (the 5^th most expensive country in the world) to volunteer for a year at a health center, where I received a $100 a month stipend. By setting a few goals for myself, I managed to return home with about $200. I saw my loyal massage clients for two weeks that November, then spent six weeks driving around the country reconnecting with various family and friends after my year overseas.

Unfortunately, I didn’t receive payment (reimbursement from my clients’ health insurance company) as soon as I anticipated for my two weeks of work, so I used my credit card to pay for my road trip and accidentally ended up with a carryover balance for the first time in my life. I also owed my parents money for my car—a loan they graciously put on hold while I was overseas. When I heard about Financial Peace University in February of 2005, I had $4800 in debt. I may have had $1000 in the bank, but I didn’t really know, and my records from back then are sketchy!

Eagerly, I signed up for the seminar and ate up everything Dave Ramsey teaches. I’d tried for several years to live on a budget, but it never lasted more than a month or two before I got tired of keeping track of what I spent, my irregular income fluctuated too much, or some unexpected expense blew my good intentions out of the water. (Usually a car repair or something I really, really wanted!) Somehow though, Ramsey’s simple budgeting technique made sense and was easy to keep up. Or maybe I was just in a better state of mind to absorb that kind of information than I had been in the past. Plus I find him highly entertaining. Whatever it was, I learned to not only expect the unexpected, but to plan for it.

More than four and a half years later, I’m still on a budget.

Now, if the word “budget” feels like a straitjacket to you, let me tell you about the freedom it’s given me.

Growing up, my family was by no means rich, but we were plenty comfortable. Still I somehow always had this feeling that, “We can’t afford for me to go on a ski trip…” “A leather jacket is too expensive…” “A formal dress you only wear once costs too much… Find something more practical.” Don’t get me wrong, I don’t feel deprived when I look back on my childhood. But that “too expensive” feeling carried over into my early adult life.

Until—I met Dave Ramsey.

Julie Andrews said, “Some people regard discipline as a chore. For me, it is a kind of order that sets me free to fly.” It didn’t take many months of budgeting to notice that, thanks to the thoroughness of Ramsey’s zero-based budget, I felt like I had more money! I budgeted for gifts, and I actually had money to buy birthday gifts for friends. I budgeted for cosmetics, and sometimes I had extra to blow on a new lipstick or fingernail polish. I budgeted for clothes and shoes (though this budget still never seems big enough), and could buy things I needed and wanted without guilt. I budgeted for things I wanted in my apartment and got to actually decorate it cute. I budgeted for entertainment, and had money to do fun things without feeling guilty. I budgeted for car repairs, and when I needed to have some work done on my car I had the money instead of a crisis—what a concept!

I learned that if I wanted a big-ticket item, I just had to plan for it and save for awhile. Sure, on my just-getting-started-self-employed income it might take a long time to save up for something, but nothing is ever too expensive if you just plan for it! This was the most freeing concept and remains my favorite thing about being responsible with my money. As long as I stay on top of my finances, I never have that miserable self-pity hanging over my head, “I can’t afford that…”

That’s not to say I always get to spend as much as I want on clothes or shoes or decorating the house, or want to wait that long to buy things, so I’ll admit that every now and then I’ve rebelled against the discipline of budgeting. Have I stayed within my self-imposed spending guidelines perfectly for every one of the last 56 months? Certainly not. But I get back on track pretty quick.

Within the first ten months of living on a budget, I increased my net worth from $3400 to nearly $11,000, and soon paid off my debt. That may not sound impressive to you, especially considering that I was building up almost from ground zero. But I’m proud of it, because I know what my spending habits were like before Dave Ramsey. Oh, I always paid my bills on time, but beyond that I pretty much spent whatever extra I had.

When I got married last April, I was still 100% debt-free. Now, although my husband and I have debt (a mortgage and his old student loans), we’re budgeting, and already our net worth has increased by about $2000 in the first six months.

Many more stories, most of them far more impressive than mine, come out of Financial Peace University. I highly recommend the seminar; enrolling in it was the best hundred bucks I’ve ever spent.

Other posts in this series:

• Dave Ramsey’s Seven Baby Steps
• How to Make a Budget That Works

Stay tuned over the next few weeks for upcoming posts in this series:

• How to Do a Debt Snowball
• Myths About Debt: Why It’s Not a Wealth-Building Tool
• The Necessary Components of Every Financial Plan
• How to Calculate Your Net Worth
• Extra Wealth: This is What It’s All About!

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