Financially Free

When I think about the times I felt financially free, it was when I was making less money than I do now. It’s sort of ironic how that works out. Years ago, after I had graduated from college, I was working two jobs and making just enough money to cover my expenses. I never worried about money because I was employed and didn’t ever feel like I was going to be let go at any time. I felt financially free in some ways. I didn’t have an emergency fund, but I always had some money in case I needed new tires or some other emergency popped up. I wasn’t in debt, and that was the key to my financial freedom. I didn’t owe anyone any money. I was living below or at my means.

Then, my lifestyle changed. My husband and I started our own business (he was actually my boyfriend at this time) and that sunk us into our initial debt. We were stressed about money most days, always trying to figure out how to make more and keep up with our expenses. For many years we felt strapped down to our debt. Slowly, we paid it off or let it expire off our credit reports. We were young and figured we would have time for the negative items to fall off and be forgotten.

Once this started happening, I again felt more freedom. We didn’t acquire any new debt, we were living below our means and even had a savings account started. Our small business was bringing in just enough money to cover our costs and we didn’t have to work 80 hours a week to make this happen. We felt financially free, we were even working on improving our credit. We were able to purchase a new car at a decent APR and didn’t stress out about the payments. We felt excited and  happy most days about our new path.

Then, our lifestyle changed. (There’s a pattern evolving here!) We decided we wanted to move out of our 2-bedroom apartment in a shady neighborhood, and into a rental house in a slightly better community. I had figured out that we could afford $400 more in rent and an additional $200 more in utlities. We had enough in our savings account for the deposit, and chose a fixer-upper of a rental house. At the time, my husband liked the idea of the landlord living 2-hours north of us, rarely visiting, and being able to fix the house up to our liking. I originally didn’t factor in the cost of fixing up a rental.

A month into living in our rental house, our small graphic and web design business was picking up new clients. I was subbing full-time and didn’t have much left over time to help my husband. We decided to hire a part-time employee. Another $1,600 a month that I hadn’t factored into our inital lifestyle change. Luckily, our business was able to keep up with the cost of having a part/full-time employee, and later that year we gave him a raise.

Slowly, our financial freedom began to wane. I was becoming stressed out due to all of these added expenses that I hadn’t originally factored into our move. Our business slowed down over the summer months and I stopped working because school was out. We took on a line of credit to get us through the first summer with our employee. We didn’t want to let him go since he had only been with us a few months and was working out quite well.

A few years have passed, and this year, my husband and I decided we are tried of feeling so stressed out about money. We started saving towards a down payment on a house. We’ve also started paying off our debt and trying to get back to that financial freedom we once had. Meaning, not oweing anyone any money. We’ve reduced our employee’s hours, so the stress of trying to pay him his salary is slightly relieved. We have also stopped improving the rental house. We realized it is silly to put in our hard-earned money towards something we don’t own. The house is in slightly better condition than when we moved in. The two rooms we spend the most time in have new carpet, paint, and window treatments, thanks to us.

What I’ve learned, looking back, is that the key to financial freedom is not having any debt and living below your means. My husband and I are planning on purchasing a house within the next year, another lifestyle change. However, this time, we will be doing so without having any other debt to pay off. We are also restucturing his business so it is something he can manage on his own and not have to pay someone a full-time salary. Hopefully these tactics will allow us to feel financial freedom even with another lifestyle change.