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Free From Broke recently posted about his personal finance “tipping points”, and is holding a contest and asking readers to describe their own personal finance “tipping point”. He describes two financial “tipping points”, the first when you admit the situation you are in and resolve to do something about your finances, and the second when everything finally comes together and you see the end of your debt in sight. Since I haven’t quite reached the second point yet, I will talk about the first.
For me, the “eureka” moment came right after the Christmas holidays this past year. We made it through all of the Christmas shopping and extra spending OK. After paying off bills and realizing, although we didn’t add to our debt, we had made little to no progress on improving our finances over the last year, I really started thinking about our financial past a well as our financial future. We had basically been in “see-saw” mode over the last few years. We would run up some credit card debt, pay it down, and run it up again. We would build up savings, only to spend it down on things we though we needed. Assessing where we were at the beginning of this year, I realized the following:
Basically,we were not making any progress!!
Why Not?
- Lack of goals.
- Lack of focus.
- Lack of communication between myself and my wife.
- Lack of commitment to change our situation.
Things had to change, and after finding and reading lots of information on debt reduction and personal finance, as well as discovering several great personal finance blogs, I really started to focus on the things we needed to do :
- Start an emergency fund
- Pay off credit card debt
- Pay off other debt
- Save for a house
- Increase retirement savings
Basically execute a plan to live the life we wanted to, starting right then.
We are now making progress towards are goals, and the feeling is 180 degrees different than the one you have when you are not making any progress towards ill-defined or non-existent goals regarding your finances. Until you make a conscious decision to improve things, chances are they will never improve much. Carrying credit card debt and making only the minimum payments can keep you in debt almost forever.
Image by tyger_lyllie
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Excellent post RC!
You are dead on with your points. I’ve gone through it myself over the past 4 years and there is a light at the end of the tunnel. Debt is like an addiction – the hardest step to take when getting out from under it is the first, but it’s the most important as well!
~Joe.
@Joe:
Thanks for visiting and the feedback, your point is right on!
Great article!