People ask every day how to get started with the pursuit of FI. Everyone’s beginning will look a bit different, but this is what mine looks like.
I’m not a finance professional, investor, or trust fund baby, I’m a regular person with a full-time job and very regular bills to pay. To give a clearer picture of exactly where we’re starting from on this journey, let’s take a closer look into who I am and what my finances look like.
I’m in my early thirties, I’ve been married for four and a half years, Mrs. CD and I have two children ages 3 and 3 months, plus another from a previous relationship. We just moved to Florida last summer and bought a house. Thankfully neither of us has any student debt, but we do have a mortgage and some credit cards hanging around, plus a car loan. I’m active-duty military, currently bringing in around $55,000 per year take-home. Pretty average so far, right?
There are some extra speed bumps on that road though… Mrs. CD hasn’t been able to find a job for several years due to a combination of a low-demand skill set, two pregnancies, two interstate moves, and the prohibitive costs of full-time childcare for two very small children.
That beautiful brand-new house we bought when we moved? We used a zero-down mortgage because we had zero liquidity in our savings when we moved, so by the time we move again in a couple of years we’ll have accumulated minimal equity in the property. Plus its 38 miles away from where I work, and it’s costing me about $368 every month just to drive myself back and forth every day (and that’s with a COMPLETELY PAID OFF ten-year-old car!); because of the equity situation we can’t afford to move closer to cut down on my commute and it’s WAY too far to ride a bike.
That extra kid I brought along with me when Mrs. CD and I got married? I’m paying almost $900 a month in child support for him; worth every penny but that money stings on a single income.
We’ve managed to get our credit card debt down to less than $2,000 from a peak of over $15,000, but it’s taken a couple of years and a part-time night job to get there. Not to mention that $11,500 car loan we took out at 8% over five years, through which we financed a (then) nine-year-old luxury SUV that seems to need an extra $1200 of work every time we take it in for an oil change.
Starting to sound familiar? That’s because there are millions of people in this country that make the exact same financial mistakes we have on a daily basis. But I don’t trot all this out to make excuses, quite the opposite in fact.
We all have doubts, worries, and fears that stop us from making positive changes. I have, however, become a firm believer in the idea that with enough information, discipline, and good old-fashioned elbow grease, none of that will stop me from achieving Financial Independence. I’ve learned from every single one of those mistakes, and every lesson I implement will put me closer to the finish line.
The journey of a thousand miles begins with a single step. Any positive change you or I make is a step in the right direction, no matter how far away from our goals we are.
What were some of your worst financial mistakes? What steps have you taken to fix them?