After a year or so at home, my car was completely paid off, and I pledged to drive it into the ground. Well, I ended up owning it for seven years before the events of getting married and having my first child necessitated a family-friendly (used) minivan. However, I still learned an important lesson from the whole ordeal. When I finally sold it, I was shocked to learn that it was only worth $2,500. I couldn’t believe it! I cringed at the thought of all I had given up for that car. After all, I had just spent several years of my life living like a pauper to own a car that lost 90 percent of its value in seven years. And, for what? The unfortunate truth is that I did it for no reason at all, except perhaps the opportunity to learn a lesson that I may never have learned otherwise.
What I learned from being broke
Being broke gave me an entirely different perspective on cash flow, debt and my own financial well-being. I learned that there was a big difference between looking like you have money and actually having money. I also learned about living within my means and the real-life consequences of unplanned purchases. And most importantly, I became willing to do anything and everything to make sure that I was never broke again. Once I was out of debt, I pledged to never let that happen again. I promised to rise above my situation and start with a clean slate. And I did.
Of course, things haven’t gone perfectly since then. As I’ve written about many times before, my husband and I took the concept of lifestyle inflation to a whole new level in the early years of our marriage. Fortunately, we’ve reigned things in over the past few year years, and we’re now building wealth like never before. We’re debt-free aside from a small mortgage and we’re hell-bent on staying that way for eternity. And even though I’ve strayed several times since becoming an adult, some of the lessons from that part of my life have stuck with me. Here’s what I learned from being broke:
- Don’t rely on one income stream. I was never going to get ahead while relying on one full-time job for my entire livelihood. In fact, I never really started making progress against my debt until I started picking up cleaning jobs on the side. Sure, cleaning houses wasn’t much fun. But the truth is, the extra income that it brought in completely altered my financial situation over the course of a few years. Now that I’m older, I still strive to have several streams of income coming in. I started a profitable blog with my husband and have secured a multitude of part-time jobs that create a full-time living. I’ve also diversified my investments as much as possible including the acquisition of rental properties. I’ve learned that having one “job” means that you’re only one step away from not having a job at all.
- Only you can solve your problems. As I look back, I realize that I would probably be much better off if I had filed bankruptcy and taken the car back to the dealership. I could’ve easily bought an old beater to drive around. It would’ve taken time, but I would have eventually restored my credit rating back to its former glory. Although that sounds tempting, I know that I wouldn’t be where I am now if I had chosen that path.
- Live below your means. In retrospect, I now realize that spending half of my income on transportation is absolutely ridiculous. What was I thinking? Unfortunately, I wasn’t.Amazingly, I never once crunched the numbers to see what the real cost of buying that vehicle would be. Now that I’ve been broke, I realize how important it is to live below my means. And now that I make more money, I choose to live much further below my means that I really need to.
The truth about being broke is that it can be exhausting and demoralizing. And although that part of my life caused a lot of heartache and embarrassment, I’m so glad that I was able to learn all of those lessons firsthand. Now that I’m on the other side, I use those experiences as motivation to continue my quest for financial independence and security. And now when someone calls to ask me to dinner, I have a choice.And when I say no, it’s not because I don’t have ten dollars in my bank account or because I’m saving to pay my electric bill. It’s because I’ve been broke and I want to make sure that I’m never broke again.
Have you ever been flat broke? If so, what did you learn from it?
Holly Johnson is a wife, mother of two and frugal lifestyle enthusiast. On top of writing and running her own blog, Club Thrifty, she also works in a mortuary with her husband and is the queen commander of her household.
- 15 jobs that are safe from the robot takeover
- 10 things to know about corporate inversions
- 10 jobs you can get right now
- It's about time the government recognize the...
- Summit County sees credit card breach after...
- 6 financial moves to prevent sleepless nights
- 3 ways insurers can still avoid covering the...
- Cantwell targets small business loan gender gap
- 10 things to know about corporate... 27
- 3 ways insurers can still avoid... 12
- California push to avert higher gas... 10
- Mimicking the airlines, hotels get... 9
- Burger King in talks to buy Tim Hortons 8
- It's about time the government... 6
- Cantwell targets small business loan... 3
- Dave Ramsey says: Government unlikely... 3