Growing up in a middle-class household I never realized what it was like to live in poverty. If there were expenses needed for school or activities they were always provided to me. There was never a question of whether we could afford certain things, it always appeared that we had the money.

Years later I learned that my parents barely made it by. They mostly lived off of one salary and had to provide for four boys, three of which went to a very expensive private school for college.

It was not until my father started to show signs of dementia did we discover that some of my student loans were not paid off after more than twenty years. This made me realize how fortunate I was that my parents were able to provide for me and were the initial spark that started me on the journey to be debt-free and building a sustainable budget.

Spending On One Salary

When we first moved to South Carolina, we lived off of one salary. Although at the time the problems were not the spending, but the medical expenses. What became a small crisis grew into a much larger problem, primarily because we did not adjust our spending.

There were other extenuating circumstances that led to our financial downfall but it was a series of mistakes that started the cycle downward. It started with trying to sell our house and not working with a good realtor to make sure it was being shown. That is a whole different story that I am sure I will write about at some point.

Without adjusting our spending and getting control of our finances we started to increase our credit card debt. Over the years the debt was becoming overwhelming and ultimately led to us to declare bankruptcy. If we go back and analyze our spending, we may have been able to avoid some of the issues that led us to that problem.

My Financial Mistakes

I wrote once before about the financial mistakes we had made:

1. Trading in our car that already had an upside down loan for a more expensive truck.
2. Not tracking my spending and having no budget
3. Cashing in my 401(k) to continue paying my mortgage
4. Putting medical bills on credit cards
5. Continuing to eat out for a daily lunch

There were other mistakes but these were largely the ones that led to our financial problems. Each mistake compounded to where we were so overextended there was no way we could recover.

When the reality of the situation hit, friends tried to help by turning us onto Dave Ramsey. Although by that time it was too late. When we sat down to build the budget we realized that we had no way to continue paying debt even with the second job that I was working in the evenings.

Our budget was out of control. By this time we had already shifted our spending. No more eating out, going to cheaper places for groceries, no trips of any kind other than to see my parents. We cut down on gifts and other extracurricular activities but it never seemed to be enough.

Declaring Bankruptcy

After a year of struggling, we sought out debt counseling. The day we showed him our budget he told us the only way out was bankruptcy. So we declared and a year later, after the dust settled, we began spending again.

This time we had a budget but it did not analyze all of our spendings. While we were not able to have credit cards we still were not saving any of our paychecks. In fact, the only time we ever really saved any money was when we had to plan for something major. The next major life-changing event was our move to Colorado.

The bankruptcy had given us the option to start over, but yet we did not take advantage of what it offered us. My method of budgeting was a modified check register in excel. I still use today, however, I modified it to track spending habits and develop an accurate budget.

Continuing To Spend

Even when we moved to Colorado and went back to one income, we still did not adjust our spending. We lived paycheck to paycheck and paid no attention to our future. The company I worked for at the time required us to use our own credit cards to pay for travel and they would reimburse us after the fact.

I had to request an advance because what credit cards I was able to have were always maxed out. I remember looking at my debt and thinking it was not too bad since we only were able to have a certain amount. But being close to the max on all the cards that I carried was a terrible decision.

I would pay slightly more than the minimum each month but I never did see the numbers go down. The cycle of debt was something that I was used to. Everyone has credit card debt, I am no different than most people. As long as I was able to pay the bill at the end of the month I did not care how much it was.

Saving Goals

When my daughter wanted to take a trip to Japan with her class, we went back into savings mode. Taking a hard look at our spending we were able to put money aside for the trip and built up pretty good savings. A few months before the trip my daughter had an anxiety attack and decided she could not go.

Had we planned and saved I could have traveled with her and given her a chance at a great experience. But like always we were back in debt and did not have the ability to save enough for two. I felt like I had a grasp of my finances but really I was only lying to myself.

At some point, I made the decision to leave the job I had for over ten years without much of a pay increase to pursue new opportunities. This led me to increase my income substantially in just a few years. The problem was that even with the increase in income, I just adjusted my spending up.

More Income – More Spending

We moved into a new nicer apartment. I bought a new car. We started taking more trips. We continued to spend on things that most would consider frivolous, new furniture for the new apartment, a new expensive bed, new skis, and a ski pass. These purchases all kept increasing our debt.

I wanted to enjoy life. The purchases were justified because they made us feel good. I needed to pursue my hobbies. All excuses I made. While I agree that you need to enjoy life, you still have to leave within your means. I could have planned to purchase new ski equipment or buying a ski pass. I could have saved for these purchases.

This year my life changed. I realized that as I approach fifty I need to be more aware of my spending and consider my retirement. I also wanted to truly enjoy my life. I was able to travel to southeast Asia before the pandemic hit and realized things that I have been missing.

By changing my spending and paying off debt I knew I had to plan for these trips instead of putting them on credit. By paying off my debt we are able to add more to retirement, increasing our savings, and build an account to use for our hobbies.

Pyschological Benefits

No longer am I going to allow us to utilize debt the same way as before. I have fully taken advantage of the work from home to not only analyze my spending and pay off debt but to put money into savings. Our decrease in commuting costs, and not needing new clothing has allowed us to put more into savings.

The psychological effects of this have been incredible. I am now motivated by personal finance and keep track of every penny spent so I can develop a plan for the future.

I have increased my savings on both retirement accounts and my emergency fund. My debt is almost down to zero. I did make the decision to pursue my MBA, however, my company will pay nearly seventy percent of the costs, and the rest I will pay from savings devoted primarily to education.

Doubling My Salary

My salary has also increased and nearly doubled since 2015. I may even look to purchase a house in the next year, of course, I will plan and evaluate my entire financial outlook before making this decision. I have also spent more time studying investing and the markets and even opened a few accounts.

I will not allow myself to fall into the spending habit that got me into this mess ever again. Recently I have been aware of the possibility of my spouse being furloughed from her job. Years ago I would be panicking right now, but having a plan and an emergency fund I no longer worry.

My biggest concern is having enough for retirement since I had to essentially start over. After meeting with my advisor and having him indicate I was easily on track to retire with a fairly sustainable income I am relaxing a bit on that worry. My next plan is to increase that so I am extremely comfortable in retirement.

I no longer fear that I will work until I die.