Welcome to the Real World! Now What Do I Do?

Welcome to the Real World! Now What Do I Do?

After graduating from college and entering the world of full-time work, I was faced with more responsibilities and more decisions than I was expecting. While in college, I had big ideas about how fast I could pay off my student debt, establish an emergency fund, buy another car, save for retirement, and start saving to buy a house.  Below were my “big idea” goals:

  • Goal 1: Put all additional money after expenses toward student loans. Get out of student loan debt in 5 years or less.

  • Goal 2: Establish an emergency fund of $1,000 (I wanted to follow Dave Ramsey’s plan).

  • Goal 3: Buy a second vehicle with cash.

  • Goal 4: Save 10% income towards retirement.

  • Goal 5: If there is anything left, save it for a down payment on a house.

Soon after getting married and receiving our first paychecks, I started to realize we likely were not going to be able to pursue every goal effectively at the same time. I quickly learned that $1,000 in an emergency fund, while having only one car that got both my wife and I to work every day, was not enough. Within the first 6 months of our marriage, we had an unexpected $1,200 car repair, requiring us to use our emergency fund and then some.

Based on our income and the size of my minimum monthly student loan payments, the amount of money we had to save at the end of each month was a lot less than I expected. After doing some calculations, my wife and I determined that buying a decent vehicle with all cash was going to take us two to three years for which to save. Saving to pay all cash for a vehicle would also mean not putting additional money towards student debt. Personally, I also over-estimated our ability to live as frugally as I thought we could. During our first year of marriage, we attended or participated in 10 weddings, ate out more than probably we should have, and traveled to see family and friends more frequently than I thought we would. This all came with a higher than expected price tag. The frustration I began to feel towards our life and finances began to increase. Looking back, most of this was due to these 3 things:

1.      My unrealistic expectations

2.      My impatience with how long reaching my goals was going to take

3.      Not knowing where to start

It didn’t take long for some of the goals on my unreasonable list to start to fall off. Saving for a house was definitely out of the question and so was saving for retirement right away. Even with narrowing down our goals to three, I still felt they needed to be adjusted. After lots of conversations, frustrations, and letting go of expectations, we re-prioritized our goals and decided to pursue them by focusing on one at a time.

  • Goal 1: Establish an emergency fund of at least $2,500.

  • Goal 2: Buy a second vehicle with a down payment of at least 25% and finance the rest.

  • Goal 3: Put an additional $70 per month towards our student loan payments and make additional payments when we can.

The biggest problem was deciding what to prioritize with the limited resources we had available to us. Most of us have limits financially and will not be able to do everything we want to do as fast as we want to do it. Learning diligence, patience, and trust in God to provide is required. Each family’s situation is unique, which can make choosing a path to take overwhelming. Here is what I learned….there isn’t necessarily a right answer that works for everyone. There are definitely better answers and better paths to take, but even those paths can change. The most important thing you can do financially, regardless of your age or life circumstance, is to do something intentionally and consistently that helps you reach your goals. What that “something” is depends on the priorities and needs of each person and their family. When something is overwhelming, including finances, the hardest part is deciding where to start. There were points during our first year where I felt paralyzed by not knowing what to do, and sometimes our finances were easier to ignore than to think about. But the best decision we have made financially was deciding together what our priorities were and creating a realistic strategy to pursue them, despite feeling overwhelmed.

For us, getting a second car quickly became our number one priority. By purchasing a second car, we each got back about 3 hours per weekday of time at home. This was well worth the investment, even if I couldn’t pay cash for the whole amount. After getting the second car, our priorities changed, and we were able to further build up our emergency fund and make more payments towards our student loans. I learned that we are much better at going after one or two goals with focus then trying to accomplish five goals at once. 

Fast forward three years and life looks much different. With God’s provision, the help of family and friends, and some intentional decisions, we are in a much better place financially than I could have hoped for. We recently were able to purchase our first home, and we have started saving for retirement. Life is always in flux, and our goals have changed more times than I can count in three years. I have learned to expect the unpredictability that comes with life and finances. It has never been perfect and has often been messy. Even when life is not what you expect, the following advice will serve your well:

  • Evaluating where you are currently
  • Focusing on your priorities
  • Being intentional about reaching your goals

If we take these steps to the best of our ability, while trusting in God, the frustration of being overwhelmed can turn into excitement for where you are, and where you are going.