Look At The Big Picture

The other night my wife and I were discussing our finances and I commented to her that sometimes it really feels like we are living paycheck to paycheck.

This is frustrating to me because I have a well paying job and we do pretty well with living a frugal lifestyle.

Take A Step Back
As I explained this to my wife, she suggested that I take a step back and look at the big picture over the last 5-7 years or so to get a feel for how we are doing. Her thought was that I get so consumed with the day to day things that I lose track of the progress that we have made.

Tonight I sat down to review my records over the last few years to get a feel for our situation. The key components that I tabulated were our balances in the retirement accounts and savings accounts as well as the large purchases we have made while not incurring any debt.

Eye Opening Experience
As I reviewed our accounts and balances, I had an eye opening experience and realized that my wife was right on the money with her suggestion.

Over the last 5 years, we have seen our retirement and savings accounts grow by a healthy six figure sum. In the last few years we have been contributing the maximum to an IRA for each of us and also contributing the maximum to my 401k account. The steady contributions and the use of index funds has resulted in a solid foundation for our retirement nest-egg.

In addition to the increase in savings, we have paid for quite a few large ticket items without incurring any debt. As we stand today, our only debt is our mortgage and a modest balance on my American Express card which is the result of using a 0% balance transfer to stash the money in my savings account.

We have 3 vehicles that we own without any loans: 2002 Harley Softail, 2003 Chevy Trailblazer and 2006 Scion tC. As much as I know and understand that buying new cars is a financial mistake, we bought all three of these vehicles brand new as we preferred to buy something new and keep it long-term. While buying used makes more sense in the long run, we just felt more comfortable with buying new and in the end the important thing is what is doing what makes you feel the best.

During these last few years we have also paid off the remainder of my student loans and have continued to chip away at our mortgage.

Paycheck to Paycheck
As I completed this exercise of reviewing our progress, I realized that the reason I sometimes feel like we live paycheck to paycheck is simply because we have a well-tuned budget in place that directs all of our income to the intended purposes.

We are saving the maximum in our retirement accounts and have a well funded emergency savings account. There are funds being set aside for our children’s college education and we have been able to save for large ticket items such that we do not incur any debt.

Our budget does allow for a fair amount of freedom as well, although some months that freedom is a little more plentiful than other months. The important thing is that we have planned out our goals for retirement and have been working the plan for quite a few years. At times it may feel like we are just getting by but when I take a step back and look at the big picture, I’m more than happy with the progress that we have made.