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Intro to the Third Stage

We have been in the third stage over a year now. Even though we are more financially set than at any time in our lives, I find it to be very challenging.

The first (learning the basics, paying off debt) and second stages (saving an emergency fund) are comparatively easier, in my opinion. Those stages are more about simple number crunching and tactics, whereas the third stage poses bigger questions and focuses on long-term strategy, which we’ll talk more about later.

When paying off debt, a simple amortization schedule will give you a quick, definitive answer how long it will take. Heck, credit card statements are now required to inform you a) how long it will take to pay off the balance only paying the minimum payment and b) how much you will have to pay monthly to pay the balance in three years.

Same goes with saving an emergency fund, the physical process is not hard. Just figure out your monthly expenses, multiply by the number of months you want and there’s your goal. After that, it is simply a matter of buckling down and putting the money away. It might take months or years, but the concept is simple.

The third stage is more complex and vague. It is the culmination of everything learned in stages 1 and 2, put in practice. There are many variables at play. From largely uncontrollable issues like the economy and inflation to more personal issues like employment and finding balance, it is like a big puzzle. There are trade-offs with most decisions in life and this stage is no different.

Some issues I’ve wrestled with recently, and will discuss more in future posts are:

  • a drop from dual income to one when our second child was born
  • how to invest for retirement
  • the ever increasing cost of health insurance
  • how much is enough
  • work issues – being an employee vs. being my own boss
  • what goals do I set now that debt and savings are checked off the list?

Quite frankly, some of these things are scary. But when I get stressed, I remember the foundation we have in place – no debt (except our mortgage), 6 month emergency savings, frugal, simple lifestyle – and it reminds me how fortunate I am to have figured out in my 20s that the lifestyle I was leading was unsustainable.