Wednesday, January 14, 2009

How Saving has Enabled Us

“Save your money, and one day it will save you” -old African proverb

Moneymonk shared the above in her Friday quote post last week. I liked the quote and considered how it might apply to our experience. While we have not been "saved", our savings has enabled a lot of what we like to do. It's one of the reasons that I made paying myself first a part of our financial strategies. To me, it's the only saving strategy you'll ever need.

Here are some of the ways that I feel savings has enabled us:

  • Accepted early retirement opportunity. I have always been a believer in having a liquid emergency fund, e.g. cash, money market fund or laddered CDs. The amount grew from one month, to six months and then to several years. When an opportunity to retire early occurred, our emergency fund was able to cover about seven years of expenses. Having this much made early retirement an easier decision.

  • Debt free lifestyle. We lived pretty much debt free, with the exception of our home mortgage and credit card balances, which are paid off every month. Not having any debt has helped us maintain our lifestyle during this economic recession. In hindsight, I wished we had paid off our mortgage :-)

  • Funds for major expenses. We have been able to pay for large purchases with cash, enabling us to often negotiate additional discounts. We have paid for our last two cars, our furniture and major home repairs with cash. In addition, when we adopted, we were able to cover all the expenses from our savings.

  • At this point, we have been fortunate not to have any major unexpected expenses. However, our plan is still to keep 3-5 years in liquid investments, in case an emergency should ever happen.

    For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

    This is not financial advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC

    1 comment:

    Anonymous said...

    To me living debt free has been a number one priority. There was a lot of peer-pressure on me when friends and family were taking out mortgages to buy a house and I was happy to rent. In hindsight, I am much better off.