We were fully living up our newlywed life in style. We both have decent jobs as a teacher and a police officer. We do not make an extravagant amount of money but we have everything we could possibly need and just about everything we could possibly want. Of course I still have a list of things I want for the house: new furniture to replace our mismatched college furniture, new landscaping for the front yard, minor redecorating inside (paint, wall decor, rugs, etc…). We both love to travel. Coming back from our 3 week European honeymoon, we were already dreaming of our next big vacation. We want to go South America, Tokyo, Spain, Egypt, Ireland, Australia… The list could go on and on. We are of the mindset that we are only young once and we should take advantage of the opportunity to travel before we start a family and have responsibilities that would make it hard to travel.
We decided that traveling was more important to us than furniture. Yes, our home could look more put together if we had a nice set of matching living furniture. Yes, I would love to have a nice bedroom set – I have had my eye on a Tempur-Pedic bed for years now. But when push comes to shove, we would still rather have experiences and memories than stuff.
The only problem is that we have no savings. We have been spending every penny that we bring home on all these new toys. Not to mention we are putting my husband through college which is not cheap. I knew that it was important for us to live within our means which technically we were. We were able to make all our payments and with the exception of a few months, we paid our credit card in full each month. We did have a Best Buy card that we were making minimum payments on but I justified that because we had 3 years before they would start charging interest and I had a plan to get it paid off before then. We felt like we were doing okay. We didn’t have student loan debt, we were cash flowing my husband’s college tuition, and we were current on all our bills. We were also expecting a good chunk of change back from the IRS when we filed our taxes.
In deciding what to do with our tax refund, we were considering a few options: 7 day trip to Costa Rica (something I REALLY wanted to do!), pay off our Best Buy credit card, or start an IRA for retirement. I have always been a little concerned that I needed to put something back for retirement in addition to what is taken from my paycheck and put into Teacher Retirement System. I have intended to get that started for the past 5 years but just never did it. On a whim I decided to make an appointment with a financial planner to see what we needed to do for retirement. When he asked me about our current short-term savings goals, I was a little taken by surprise. I was also a little embarrassed to report that we had no short-term savings goals, and really we had no savings to our name. We were in a spending pattern that was getting a little out of control.
We were advised to begin a 3 – 6 month emergency savings fund before we started a retirement fund. So that started us on the path to changing the way we handled our money. I already owned the Dave Ramsey – Total Money Makeover book but had not read it. When we got home, I pulled the book out of a drawer and started reading. I couldn’t put it down. I knew something had to change but I was still reluctant to give up the dream vacation to Costa Rica – we could afford it if we used our tax refund. It may be our last chance to travel internationally before we start a family. We should just do it! I had the angel on one shoulder reminding me that at some point I needed to be an adult and start saving and on the other shoulder I had the little devil reminding me that I’m only young once and if I don’t seize this opportunity, I may not get another chance anytime soon. It was the battle of childish immediate gratification vs. adult delayed gratification.
Ultimately, we decided that the best thing to do was to delay our dream vacation and begin saving. I was sad to give up on all the excitement that spending was bringing to our lives but I knew that I could get just as excited about saving so I made the conscious decision to change the way I thought about money.