After I made my final debt repayment in May 2013, it took a couple months for me to decide what my first big savings goal would be. I knew I wanted an Emergency Fund, but I wasn’t immediately confident I would be able to save five figures. Up until that point, the most I’d managed to save (and eventually spent) was somewhere in the $3,000 range, so $10,000 seemed like a stretch. It took 17 months, but I finally topped it up to $10,000 in November 2014.
For the past two months, I’ve found myself back in that state of limbo re: deciding what my next savings goal should be. I’ve been standoffish about the topic of saving a down payment and buying a home, for years, which I can see now is probably because it has never been tangible. It’s still not within my reach, nor is it at the forefront of my thoughts, but I think I’m finally ready to at least start talking about (and saving for) it… here goes.
If you’ve been following my posts since the summer, you know I’m partway through a yearlong shopping ban, in an attempt to live off less of my income and save more money. The idea was sparked by a conversation with a friend who told me she saved 20% of her income each month and, therefore, felt she could spend the other 80% on whatever she wanted. The comment was one I’d heard and read dozens of times before, yet it took her saying it for me to finally have the aha! moment and ask: do you actually need 80% of your income, or could you live off less and save more?
I don’t blame her for thinking that saving 20% was enough. Heck, I’d thought the same way for an entire year, up until that point. My budgets were literally written around the fact that I would first save 20% of my income and then allocate the other 80% to everything else. Now that I’ve reworked my monthly budget and have seen how much I can actually save each month (a lot more than 20% when I don’t travel), I’ve finally realized something: we’ve been doing it backwards, all this time.
When I look back at all the various stages my finances have been in over the past four years, I see one troubling and recurring theme: I am constantly dissatisfied with whatever situation I’m in. Of course, this made sense when I realized I was maxed out; that was my financial rock bottom – the worst situation to be in. But even as I was digging myself out of debt, all I could feel was the weight of the bad situation I’d first put myself in. I couldn’t “see” or really celebrate the milestones: $10,000 paid off, $17,000 paid off, $25,000 paid off, etc. Instead, I was always mad at myself for living in denial as long as I did. I was mad at my debt for forcing me to miss out on fun opportunities. And I felt stupid. I was a smart person. Why had I done this to myself?