WHAT IS FINANCIAL PEACE?
Financial peace can look different for everyone because if you haven’t figured it out yet – we are all different.
Financial peace is financial security which can look like: freedom from payments, not living paycheck to paycheck, having an emergency fund, having a retirement plan, and having achievable financial goals.
When you achieve financial peace, you have nothing limiting or stopping you from living the life you dream of.
That’s the true definition of financial peace.
So instead of giving examples like I normally do, I will tell you about my financial peace journey.
Hopefully, this will help you see what financial peace looks like, and get you excited to achieve your own financial peace!
Remember, financial peace is not just a destination it is a way of life.
MY JOURNEY
HOW WE GOT STARTED
In September of 2018, my husband proposed, and I was close to $60,000 in debt (including my home).
Thankfully, we had to attend premarital counseling which brought up the subject of finances. For one of our assignments, we had to figure out how we were going to structure our finances once we were married.
This was a very hard conversation for me. I always thought finances were SUPER private – even between spouses.
I truly thought that I was the only one that needed to know my financial situation, and I thought it was wrong when married couples combined finances.
My husband thought the exact opposite. Which I felt was a complete invasion of my privacy. He started asking me questions like what’s in your bank account, how much do you make, how much debt do you have, and so on…
And I completely shut down.
I won’t get too off the subject into my marriage, but my husband is genuinely awesome. He saw me shutting down and decided to switch gears. He instead shared his financial information rather than asking me mine.
Fast forward, we decided to start the Dave Ramsey Financial Peace University. Yes, we got on board with the baby steps and still follow them today.
For those of you that aren’t familiar with the baby steps. Here’s how they work, and what we did:
- Baby Step #1 is to save $1,000 for your starter emergency fund
- Boom, perfect. We both already had that.
- Keep in mind we are still engaged at this point, not married yet. So, our finances are not combined, but we were working on this as a team. Therefore, I had to save $1,000 and my fiancé had to save $1,000.
- Baby Step #2 is to pay off all debt (except the house) using the debt snowball. The debt snowball is paying off your debt from smallest to largest. To get more details on paying off debt, click here!
- We included my house in baby step #2 since the loan was less than $50k.
- Sixteen months and a wedding later, all of our debt, including the house, was paid off!
- Baby Step #3 is to save a fully funded emergency fund, which is 3-6 months of expenses.
- We knocked this out shortly after paying off the house. When we were paying off debt, we were living on 32% of our income.
- We kept living on 32% until we built our emergency fund.
- After fully funding our emergency fund, we rewarded ourselves with an increase in our cash budget spending and our monthly vehicle transfer. I’ll explain this transfer in more detail later. This increased us to living on 43% of our income.
- Baby Step #4 is to invest 15% of your household income in retirement.
- We had already been investing through our jobs during all the baby steps, but only around 7% of our household income.
- We increased this percentage to 15% through our employers and IRA’s.
- Baby Step #5 is to save for children’s college funds.
- This is currently not applicable to us.
- Baby Step #6 is to pay off your home early.
- We already did that in Baby Step #2! ☺
- Baby Step #7 is to build wealth and give.
- This is where we are currently at!
Man, I can’t emphasize enough the weight off of your shoulders when you pay off your debt.
It’s like you’ve been carrying this bookbag of bricks around for so long, that you’ve just accepted the weight. Then someone comes along and asks, “Why are you carrying that heavy book bag?”
And you’re like, “Well I’ve always had it, and I’m always going to have it. Plus, it’s really not that heavy.”
Then that someone shows you how to get rid of it…
Once it’s gone, you can’t believe you’ve been carrying that bookbag around for SO long, and that you were planning on carrying it around for the rest of your life.
You don’t realize how great financial peace is until you get there, because you don’t understand how heavy the weight of debt is until you get rid of it.
HOW WE SET OURSELVES UP FOR SUCCESS
Once we got all the debt taken care of, we really started looking at our financial goals and where we wanted to be in life.
My husband has had a goal to build a shouse (shed house) since before we were ever together.
We also have the goal of never getting into consumer debt again.
So, we decided to set up goals and accounts to get us there. And this is what we did –
We built our emergency fund of six months of expenses in a savings account on its own. Of course, there is a great amount of financial peace that comes from this account. But to be honest, I sometimes forget about this account. We don’t want to use it at all. This is why we’ve set ourselves up, so we don’t have to dip into our emergency fund with the following accounts.
Next, we made a “vehicle” checking account, where we transfer our monthly “vehicle payment”. This is to build up the account for fuel, vehicle repairs and maintenance, self-insurance for vehicle accidents, and cash for vehicle upgrades.
The financial peace that comes from the vehicle account alone is awesome.
I don’t know about you, but I always grew up playing the $20 fuel game. Where you only have $20 to put in for gas, and you try to get the pump to stop right at $20. So, to be able to fill up my tank every time and not think twice about the amount, still gets me excited.
Also, knowing there is a checking account for vehicle repairs is so peaceful!
If something went wrong with my vehicle before, it ruined my whole week. Because I was never prepared, and it’d set me back financially. Now I actually treat my vehicle with respect by taking care of it. I get the oil changed regularly instead of pushing it and get new tires when I need them.
That alone is a great feeling.
We also have our regular joint savings. Which consists of Christmas savings, random annual payments (take a look at How to Build a Monthly Budget if you don’t know what this is!), and our baby fund.
For those of you that know us, we are NOT pregnant. Just prepared!
Finally, we have a “Construction” savings for our shouse!
I know that you’re probably thinking we are crazy for having all these separate accounts. But separating these accounts prevents you from dipping into them!
It also adds to our peace of mind, knowing that we have allocated funds for each specific situation.
OUR FINANCIAL PEACE
Now that you have the background, at this point, my husband and I are feeling pretty good about our financial situation.
We were living on 43% of our monthly income and saving the rest for our goals. We’ve already experienced a significant amount of financial peace. We both had decent-paying jobs and life is great, right?
Hmm, think again…
Life decided to get in our way. A baby decided to come sooner than we planned. And left way sooner than we wanted.
And no one prepares you for the cost of a miscarriage. Even when you have good health insurance.
If we never got our finances in order, that devastating event could have haunted us financially for way longer than it did.
Instead, we paid for everything in one payment. The only setback was not putting anything in savings that month.
Financial peace is more than getting what you want out of life.
It’s being prepared for the unexpected so that you can recover faster, mentally and financially, than you normally would.
If I had to make medical payments for the next several months, like I’m sure a lot of people out there have to do, that would be the worst feeling in the world. Because when I got that medical bill, it literally made me sick. Not because of the financial setback, but because of the reminder of what happened.
I know people go through that all the time, and it is awful.
Being prepared for those situations gives yourself financial peace in the midst of something terrible, and that is just one of the great things about financial peace.
And it’s something that people don’t often talk about. Normally, we only discuss the sunshine of financial peace and not the rain.
Now I’m a private person. No one except our family knew about our miscarriage. And now I’m telling the world, which is something I’m still NOT comfortable with.
But if it helps you see what financial peace really looks like and why you need it in your life. Then I’ll gladly tell you my story to help you get there.
ON TO THE SUNSHINE
Now that the rain is out of the way, let’s look at the sunshine.
You already know I’m a private person, and I’m also NOT a risk-taker. I enjoyed my steady income, and I loved the work that I did.
One of our long-term goals was for me to be able to work for myself and to raise our kids. My husband travels a lot, so we wanted to set myself up with flexibility for our future family and travel lifestyle.
After our rain, we decided we needed a little sunshine.
So, my husband and I reviewed our budget and cut our monthly income in half.
We don’t have any payments, we have savings, and we can live on one income. So why not take the risk? I mean, there’s really no risk involved.
Now I’m working for myself and doing what I love helping people and businesses with their finances and taxes.
And I also decided to take another risk by starting this blog. A blog really isn’t fitting for a private person. But I love helping others more than I do being reserved.
This is the best way for me to reach out to as many people as possible about how to budget, fix finances and share tax tips. In hopes that you can also find financial peace just like we have.
So, I took the risk.
And I never would have if it wasn’t for the financial peace and freedom that my husband and I have.
So, if you have a dream that you’re too scared to pursue, then getting your finances in order may be that extra push that you need to follow your dream.
Because you deserve to be happy, and you deserve to live a life that you love.
Don’t let anything hold you back, especially money. Take control of your finances so that you can have financial peace in the sunshine and in the rain.
So, what does financial peace look like for you?
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