In my 20s, I was more focused on working, building my career, and starting to build my finances while at the same time paying off my student loans. It was a time of growth in which I was focused not only on building a financial safety net, but understanding my own personal finances and the subject of personal finance itself.
As I moved into my 30s though, and felt more secure and self-assured regarding my finances and financial decisions, I began to do certain things to help me delve even deeper into my personal finances and better understand my money.
Month-over-month Net Asset Tracking
In my 20s, I was more concerned with just trying to gather assets to actually have to track. This included contributing to my employer-sponsored 401(k), contributing to a company stock purchase plan, paying off liabilities such as my student loans of $8,000, and putting a little away into savings for my rainy day emergency fund.
As I got older and did things like pay off those student loans, buy a home, and build my retirement account, I found that tracking my progress in these areas helped me to determine how my assets were performing and view the progress I was making with them. This was beneficial in helping me learn how best to handle these items. For example, by watching my retirement account plummet month-over-month from over $35,000 to just over $19,000 in less than a year during the financial crisis helped me to make the decision to reevaluate my retirement portfolio, moving much of my retirement savings into a more secure income fund once it had recovered some of its value.
Thankfully, I spent my 20s tracking my expenses, which taught me much about how and where I spend. In my 30s though, I was able to take my expense tracking a step further, breaking it down into more focused categories such as utilities, home expenses, vacations, and similar areas. By narrowing my focus in these expense categories, I was able to find further savings by doing things gauging consumption in utilities, cutting nearly 10% (over $400) off this expense in just one year. When it came to our home, I was able to cut several thousand dollars in interest costs from our mortgage by recognizing the savings from making additional payments toward principal.
In my 20s, it was about building - building assets, building accounts, buying a home, adding furnishings to that home, and collecting material possessions. In my 30s though, I've realized how restrictive and costly such possessions can be. Therefore, I've made a move to start downsizing, and in the process, saving time, trouble and money.
I've reduced the number of accounts we have, the number of credit cards we have, the size of the home we live in, and the amount of stuff we possess…or that possesses us, depending on your point of view. By downsizing, not only have we made over $1,000 from resale efforts in the last few years, but we've managed to eliminate the need for a mortgage by moving from a larger, more expensive home, to a smaller, less costly condominium, which will save us tens of thousands of dollars in mortgage interest over time and creates a living situation in which we recognize a significantly reduced cost of living.
Pay off Debt and Remain Debt Free
When your finances are a jumble of bills, accounts, and debt, it can be hard to understand exactly where things stand when you're trying to balance assets against liabilities. Therefore, once my wife and I were able to pay off our student loans in our 20s, and eventually rid ourselves of a mortgage in our 30s, we've been able to focus upon remaining debt free.
By being rid of debt in our 30s, we can put our attention toward maintaining and better understanding our assets, focusing on them rather than having to work toward handling and riding ourselves of debt. We've therefore limited ourselves to one credit card that we pay off in full each month and one debit card in order to help keep the temptation of debt at bay.
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