Making Mistakes on the FI Journey: Catherine's Story

Your best teacher is your last mistake.

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I came from the Ramit Sethi school of "I will Teach You To Be Rich" and Suze Orman's "Young, Fabulous and Broke". I knew I was supposed to save money, save for retirement, optimize my earnings and I did just that early on. I just didn't truly understand why until I was laid off a few years ago. The concept of retiring early didn't sink in for me though until very recently. 

I've always thought of myself as a performer. As the oldest child, I was the first to  do everything. I followed all of the rules. When I was laid off a few months after joining a new company, I was, to be honest, slightly relieved. I didn't panic. I knew my savings were intact and I had a cushion. I was not completely independent, but I had enough to feel secure and still contribute to the family expenses. 

Early on, I made some good moves, but also some bad mistakes. I got caught up in a little bit of Lifestyle Inflation. While I was saving, I was also going into credit card debt. So here I was, at around 26, automatically contributing to my 401K and my IRA and my other savings account. The kicker was that because everything was getting taken out before it hit my checking account, I didn't have much left to play with. Now, all of the personal financial gurus will tell you that this was the right move, "Pay Yourself First" and use what's leftover to live. Well, I wanted to live a different lifestyle. I worked in NYC, I wanted to go out, have drinks, eat at fancy restaurants, etc. Clearly, a lifestyle that should not have been, but I made it happen through credit cards (and not even the good credit cards.) So I went into around $10,000 of credit card debt. It was painful seeing that balance.

Fast forward a few months later. My car (which I had painstakingly paid off 4 months in advance) was totaled in a freak accident. It caught fire, but thankfully I was OK. That accident netted me a payout for my car which I immediately put to use to pay off the credit card debt, finish off my student loans and essentially reset my debt line. Interestingly enough, I was keeping the car even though I really didn't need it. I had needed it for job post college, but after a few years, I got antsy and found a job in NYC.  It sat 95% of the time on street parking occasionally getting a street cleaning ticket. With my car gone, I was also able to get rid of the insurance, gas and other maintenance expenses. In a strange way, losing my car was one of the best things to ever happen to me in my journey to Financial Independence. It triggered a lot of actions for me and put things into perspective. 

My goal with sharing this story is to show that financial mistakes happen. We may not start out where we want. We may experience a setback here and there, but we don't have to let it stop us from continuing on our journey.