After three weeks back in Syracuse, NY, I’ve returned back to Florida, and I must say I love the weather here. As nice as it was back in NY, we really don’t hold a candle to Florida. Anyway enough of that.
I have been assessing my current financial situation and reflecting on the recent market activities and I am a little torn on what to do. I currently have 3500 in cash in my Roth IRA from this year’s contribution. I didn’t contribute the maximum, due to the recent loss of my job, though I probably could have. I like to play it safe and keep that cushion. I have available credit, other than my parents that I could really draw upon in case of emergency — and I like it that way. Cash is king in my life, except for the largest of purchases; tuition, mortgage, etc.
I have $2,500 remaining in my checking account, and another 1100 from my last paycheck. I also collect $250 a week from unemployment. This gives me a grand total of $4,600 by the end of april. After bills and the like I’ll be down to roughly $3600. If I live an extremely meager lifestyle, I should be able to sustain solely on my unemployment checks and keep around $3,000 in my checking account. The choice I have to make is whether I want to continue this lifestyle, unemployed and living in the sunshine and doing as I please, or go back to work and make money again.
Ideally, I could do both. To those that are, you live my dream.
This (past) weekend was an expensive one. I spent about $120 on “entertainment”, most of which was food and drinks while out meeting new people. I can tell already that it is going to be difficult to remain within my budgeted spending money without a significant amount of sacrifice. It is important when making these sacrifices that you don’t negatively impact your standard of living to the point where you are no longer comfortable or happy with your life or the spending choices you are making.
There has to be a balance between frugality and happiness. Once your frugal ways begin to take toll on your overall happiness it is time to reevaluate your situation and realign your spending habits with your priorities. At the same stroke, you must be willing to forgo a many of the frivolous things you’ll see others spending on.
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The first step in becoming financially independent is changing your spending habits. It is an almost too simple concept. If you spend less money, you need less money to live. This has a two-fold benefit for you.
First, by spending less, you can allocate more of your income toward expanding your wealth base. This is done by pursuing various investment opportunities and building your retirement fund. Putting more of your money into investments sooner rather than later is extremely important because of the effects that compounding interest. The earlier you start putting away sizable chunks of money, the more your money will grow. The old adage is true, it takes money to make money. The more you put in, and the earlier you put it in, the more you get out, and it is a lot more.
Second, If you need less money to live, then you’ll need less money to jump off the treadmill and out of the rat race. This means the amount of money you need to save to reach your retirement goal just became a lot less.
As for me, I plan to live high on the hog when I get out, but I can still apply many of the principles I’ve learned along the way, so that when I get there, I will be able to manage my personal finances well enough to last me well after my eventual death and have a sizable estate left to keep providing for my family after I’m gone, and giving my children all the opportunities I had, plus a big head start to pursue their dreams and live their life independently.
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