Ah, 2022 – the year I made the decision to get into rental properties. I hope I look back on that with fondness and not regret. Late in the year, the idea of financial freedom began to tickle at me. I wish I had known at the beginning of 2022, everything that I have learned in the last six months.
I have mentioned before in My Current Sources of Income, that I worked quite a bit of overtime last year. Yet somehow I found myself without the extra $25,000 I was supposed to have in my bank account. What happened to that money? I took a deep dive into my finances to find out. What did I discover? I spent that money frivolously. Each check had so much extra cash coming in, I had little thought for my spending habits.
By August, I had decided I wanted to pursue real estate for passive income, but prior to that, my savings were very limited.
Some of my biggest downfalls were:
- A gym membership I wasn’t using
- Ordering food with coworkers on all of my overtime shifts
- Spending at the bar
- Mindless shopping
Nothing was off limits. I won’t bore you with the number of ridiculous spontaneous purchases I made. The point is, my mindset wasn’t in the right place to save money.
I did not, however, blow through all $25,000. Over the last 6 months, I:
- Bought $7,000 in CDs (certificates of deposit)
- Paid an extra $4,000 on my house
- Added about $8,000 to a savings account for my future property business
I am sad to say, I blew through most of the rest of those earnings. For those doing the math, that’s $6,000! It’s incredible how easily you can spend when you’re not paying attention.
Prior to COVID, I was a stickler with my budget. Both of my jobs are in emergency industries, and I found myself working excessive hours after COVID hit. As my paychecks grew and it became apparent the extra earning opportunities were not going away, I stopped paying attention to my budget and just spent as I pleased. My credit card payments were over $1,000 every month (I always pay the full amount), and I couldn’t even tell you most of what I bought.
Now that I have a goal of achieving financial freedom, I am trying to get back to budgeting. It. Is. Hard. I know how to budget; I did it for years! But, just two years without following a budget, and I am struggling to get back to it. I thought I would just be able to jump back in, but after a couple of months, I have found myself going over budget in most categories. It is going to take some work to get back into the habit, but I know the hard work will pay off.
Perhaps calling 2022 a financial mistake is a bit extreme. I did not know I wanted to be financially free at the time, so I made my choices based on how I was living, and boy did I enjoy myself. I didn’t save $25,000 like I could have, but I have learned a lot in the last year. I know more now than I did then. Instead of lamenting on the amount I did not save, I am going to spend 2023 trying to see how much I can save, while still maintaining most of my lifestyle. I am going to evaluate all of my accounts, cut back on items I believe are unnecessary, and keep spending on items I enjoy. We will see where I am in 2024!
