Guest Post: What Happens When You Have Too Much Money?

 

The hardest part was coming to terms with the fact that we even had a debt problem. You see, for so many years of our lives we were managing our finances well. Expenses were under control, no credit card debt, no lines of credit whatsoever, money in savings, RSPs growing, manageable mortgage, and so on. Our finances were on auto-pilot and things worked very well.

In fact I remember 9 years ago when I wanted a new giant screen TV – I set aside the money from my income until I had enough and then I bought it with cash ($4K). Later I wanted to redecorate my master bedroom. I set a budget for myself, made a list of what I wanted, visited stores to compare products and prices, and eventually purchased all of the items I wanted, with cash ($500).

Then we decided to buy a brand new house and we managed to put together a $90,000 down payment on our new house. But owning a new house is expensive. We had this huge backyard that we needed to landscape, and landscaping in our city is super expensive. We reduced the cost of our landscaping project by 50% and again we paid cash.

I know, you’re probably thinking, why did you keep spending? Because at that point everything was paid for and we still had a very nice savings account. That, along with 2 nice pay cheques, made us feel like we could afford our lifestyle. I am not saying we were millionaires, but we were comfortable.

But the more money we had access to the worse we became at managing it well.
And I know we were not alone.

From what I’ve read about others, and from people I have spoken to, that is quite a common occurrence.

Actually I remember a friend from Australia telling me that when she and her husband made hundreds of thousands of dollars per year their money flowed in and out of their hands like water, and she never gave her finances a second thought.

But then she left him, took her kids and moved here and she barely had a dime to her name.

All of a sudden she needed to watch every dollar she spent and it was so stressful for her.  For 20 years or so money was just there. She bought what she needed and what she wanted, without hesitation. But then her life changed and although she managed to find a job and a place to live here, her life definitely was not as cushy as she had become accustom to.

Things Change

Our lives changed as well. We changed careers due to major health issues that were a direct result of those high stress careers. However, I can’t pinpoint the exact moment that we let our finances get out of control, but at some point during the past 6 years we started spending before saving.

And once you start spending before saving, it is difficult to stop.

First we got caught up in the buy now spend later programs. Then we started putting more on our credit cards then we could pay off each month. Then we opened lines of credit.

All huge money management mistakes, right?

Up until the beginning of 2012 we would ignore our debt and figure that it would just magically sort itself out.  Other days we would cry ourselves to sleep thinking about all these dreadful things that would happen to us because we didn’t have any more money.

But then we finally decided that we couldn’t continue living like that.

Now We Are a Work in Progress

Now we are working towards reducing our debt and increasing our savings. We started this journey 17 months ago, and I’ll admit, some days are easier than others.

Some days I think: “I wish this was over and done with and that we could go back to the way things were”. But there is the lesson! We can NEVER go back to the way things were, right? And perhaps if getting out of debt was quick and easy, in a few years we would be in debt all over again because we wouldn’t have learned the lesson.

Tracking Our Spending

We now have a monthly spending plan that tracks every dollar we spend. We found ways to reduce our utility bills from $350 a month to $275 a month. We sold our house for a nice profit and put that money towards our debt. As well, we instantly began saving an additional $750 a month once we moved. Our van is paid in full and we happily share one vehicle. We share one old cell phone between the two of us and it is only for emergencies.

As well, by living in a rental home we are not tempted to spend money on the house, inside or out. And when things break down, like the washing machine last month, or the hot water tank last year, the property owner pays, not us. It is so much easier to stay on track when you do not have to spend money on things like that.

Do We Really Need It?

We do not go shopping unless we are going to buy something that we need right now. And even then, we question ourselves as to whether or not it is a necessity.

Struggling With Goals and Priorities

I’ve learned during the last 17 months that one of the key ingredients to managing your money well is to determine what your priorities and goals are. Recently Shannon Ryan wrote a post for my blog titled “Without Purpose, Money is Just Paper”, and while I understand her point, it is almost as if we find that we can’t see past our debt.

A number of times I’ve asked my husband about his goals and his priorities and he struggles with it, and I do as well. Our short term goal is to pay off our debts. But what are our long term goals and priorities?

Reducing Debt, Increasing Savings

While we are paying off our debt each month we are also putting money into our savings account. Rebuilding our savings account feels great.

When it comes to paying off our debt and rebuilding our finances we definitely are a work in progress. But the way I look at it is that if we had continued down the path that we were on prior to, who knows how bad our finances would be today.

Sicorra AvatarBio: 
I’m Sicorra.  Connect with me on Twitter: @TacklingOurDebt and please visit me at Tackling Our Debt where I blog about ways to pay off debt, live a frugal lifestyle as well as ways to make more money.

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19 Comments
  1. Great post! Thanks for sharing your story. It’s a good reminder of how quickly situations can change. Glad you’re making the turnaround.

  2. What a wonderfully inspiring post, Sicorra. As you know, we are in a similar situation, having plenty to spend, then being in denial and still spending, now digging our way out. It’s so great to hear the progress you’ve made and watch as you better your financial situation. Thanks for inspiring us. :-)

  3. Debt is definitely something that can sneak up on you and overtake you when you’re not looking. It seems so innocuous at first. A little debt piles up, but nothing significant or even terribly worrisome. But suddenly you’re hip deep in debt and without a life preserver. I agree that it can be hard to get out of debt and set other goals at the same time. I would also say that getting out of debt can be the goal or purpose of your money. For every dollar you save, and every time you choose in favor of your goal instead of buying whatever catches your fancy, but isn’t needed – you’re honoring the purpose of your money and another step closer to living debt-free. And that’s a pretty fabulous purpose for money in my opinion.

    • I love this comment Shannon and how you talk about honoring a persons goals instead of buying whatever catches your fancy. It gets me to thinking about any goal we set for ourself, whether we head for the end game or satisfy a whimsy.

    • Thanks Shannon! Yes, getting out of debt is the goal right now. I never understood years ago how debt can hold you back from doing so many things. One of the biggest changes I have tried to make is to stop stressing about it. Yes, it is there and yes we will pay it off, but I can’t let it keep consuming my mind on a daily basis or let it ruin my days. My husband still gets upset and I keep telling him to start thinking more positive and focus on earning more instead of focusing on the debt. As I said, it is all a work in progress.

  4. Thanks for publishing this guest post, Heather. I can absolutely relate, having also learned the ‘cruise control’ lesson the hard way.

    Sicorra, what a great plan for pulling up the bootstraps and getting it right again. I love that you’re willing to share such personal details in order to help others–and it will help. :)

    • Thanks Kelli, I really appreciate your support! Changing our habits hasn’t been easy but being in control of our finances is definitely a lot less stressful. :-)

  5. Hi Sicorra! Wow! You had me going at the beginning of the post. I’m like “Daaaang!” But things sometimes are too good to be true, no? It’s interesting how you turned your “negative” into a “positive” again. You’ve come a long way gf! Keep it up!

  6. It’s awesome to see how far you’ve come!! Saving up for a goal is hard, but it’s kind of addicting once you do it over and over again!

    • It is, isn’t it! I love coming up with different ways to not only save for a goal, but the research in finding different and less expensive ways to achieve it!

    • Thanks Cat! Yes, we did the saving up routine years ago and we are working on managing things that way again. I hope “saving before spending” becomes addictive as you mentioned.

  7. Heather, thank you very much for publishing my guest post today. I am so happy we connected and I really appreciate your support and enjoy getting to know you better :-)

    • You are so very welcome! It was wonderful to get to know you as well. I am so appreciative of the time and energy you took to connect :) Thank you!

  8. I know about the great feeling you get rebuilding your savings. We are on our way and I love it. It gives me a sense of security after literally living on a prayer a couple years ago :)

    I can definitely relate to your story Sicorra. About 10 years ago we were on cruise control too so it was a major wake-up call when our financial situation changed.

    I really hope folks reads your story and takes your advice before they fall into that spending cycle. Have a great day ladies!

    • Oh man Corina, I know to well the whole living on a prayer thing. The stress was completely overwhelming at times.

      I like the term “cruise control”. You and I and I bet many people have been there at some point in their lives.

      Falling into the spending cycle was so easy. Maybe it was that old term my mother use to say “is that money burning a whole in your pocket?”. Yup, it sure did !!

  9. As 20somethings we certainly do not have a lot of excess cash and a large majority of our cash inflows go towards bills (think student loans, mortgage, gas, food, etc.). I can easily see how once our income increases we would end up spending it, especially with a house where we have so many dreams of upgrades (new floors, new bathroom, new kitchen…heck even the basement we have a vision!). I’m grateful for you sharing this story as I KNOW a goal should be to build up a cash reserve, and it’s something I want to pursue. It will become more difficult once the income IS there, though, but I hope by thinking and being intentional about it now that we will follow through in the future.

    • What a great comment! It’s so easy to spend money on those extras, remodeling (which I love to do too!). Ive found that many of my extravagant purchases when I had money were certainly ego driven … I worked so hard I deserved x,y,or z … I think being intentional as you said also means keeping emotions and ego in check too, at least that was part of the “getting out of debt” journey for me.

    • I think you and your wife are good at managing your money, and will be in a better position to do your home upgrades on a steady basis as your money allows you to. For better or for worse, having to manage your student loan debt has taught you some very important money skills. Something I didn’t have to deal with. Plus you are already in a position where you are making additional income from your tenant and your side hustle. Those are 2 important sources of back-up income that I didn’t pursue back then either. I know you guys will do very well DC!

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