The key to finances is having options. If you buy a new car every couple of years, go on really expensive vacations, and otherwise live at or above your means, you’re not leaving yourself many options. If, on the other hand, you save aggressively you will have many options when opportunity arises.
Deciding to change
In 2006 I decided to change my career from television to financial planning. I had the option, the ability, to spend the $5,000 for tuition and an additional $2,000 for networking by traveling to financial planning conferences. I saved aggressively in anticipation of the transition knowing that I’d be leaving behind a good salary to start over.
But what does it mean to save aggressively. Well in 2006, the year I decided to go back to school, Julie and I saved 31.71% of our gross, not net, income. In 2007 the middle year of this transition we saved 42.18% of our gross income. And in 2008, the year I passed the CFP® exam, we saved 34.2% of our gross income. Another important aspect of finances is tracking your money. Without tracking my finances I couldn’t tell you with such specifics how much I saved each year.
A New New Course
In 2009, having no luck finding the right fit in financial planning (another option I had was to be picky with my choice of employer), I decided not to pursue this plan any further. What then was I going to do with the money I had saved?
Two things happened that year. First I wanted to renovate a rental property I own on the Jersey Shore. That plan was also abandoned when the local zoning laws were too much to deal with. Once again I had a large amount of savings with no plan for it.
That’s when a friend mentioned that her sister owned a rental property in our favorite part of California, The Coachella Valley. That’s when we decided, just after the real estate market had crashed and was continuing its slide, to buy an investment property. The years of saving meant we could explore other options and this one has turned out pretty good. Our savings in 2009 were just 0.47%! That’s less than 1% but it was because we had saved that we had the option for an investment with the possibility of a big return. This investment is part of a long term plan that we are able to add to every few years because we save when we need to and spend when it’s wise.
Maybe we could have had a little more fun and a little more things but It comes down to sacrificing in the short term for long term gains.
Posted in General, Money and tagged invest, investing, options, planning, save, savings by AJ with no comments yet.