I have had many acquaintances tell me that I seem to have everything figured out financially at a young age. If only they knew the truth. As I enter my late 30s, I find myself dealing with my biggest financial regret on a daily basis. While I know that I have many working years in front of me, I also know that my children will be going to college in the future, and I will want to retire someday. In some ways, I follow the right path financially. I have a 401(k), save regularly for retirement and have even started to invest in real estate, buying and renting out two investment properties. In other ways, I have strayed down the wrong financial path.
My Financial Regret
In the process of raising kids, living on one income, trying to enjoy life, starting up my real estate investment effort, and trying to maintain the family home, I have built up substantial amounts of debt. Between the mortgages, car payments and credit cards I have nearly $850,000 in debt. Needless to say our family’s net worth, which is our assets (houses, cars, etc.) minus our liabilities (debts), is a very large negative number.
What I Would do Differently if I Could do It All Again
For starters, I wouldn’t have opened the big home equity line of credit for all those home improvement projects. I would have paid off my credit cards instead of just transferring balances, and I wouldn’t have bought and traded in so many cars. I think we have owned about 15 different cars in the past 10 years, I have sort of lost count. Basically, I would have had our family do a better of living within our means.
I am beginning to address the issue. I am working on paying down the mortgage and should no longer be underwater on the house within one to two years. My wife and I are keeping our existing cars, resisting the urge to get a new vehicle every year. And, of course, we are working to pay down our credit card debt, holding off on those impulse purchases and putting any extra money each month toward the outstanding balances.
How to Avoid My Predicament
Educate yourself as much as you can about your finances, investing and learning to not only spend your money wisely, but to put it to work wisely. There are many financially successful people in this world. The best thing you can do is to learn from these successful people and try to emulate their approach as best you can. Here are my tips:
- Minimize your use of credit cards and pay them off as fast as you can
- Buy a house you can afford — both today and in the future
- Do not ignore your financial problems — they will only get worse if you do
Most of all, have a plan for what you want to do and where you want to be financially next month, next year and for the next 10 years. With this plan, you can ask yourself with each financial decision you make, “does this fit my plan?” If so, proceed and enjoy. If not, reassess the decision and make the best choice.