Are You Better Off Than You Were In The Past?

316/365 Looking into the futureEvery once in a while I see a great post on another blog that poses a question and I figure the best place to answer it would be here for you to read. This week, the question comes from Michelle at Making Sense of Cents. She asks are you better off than before? Are you spending more than in the past? Below is my answer. I’d love to read your answer either on your own blog or in the comments down below.

Are We Better Off Today Than In The Past?

I’d definitely say we’re better off today than I have been in the past. While we’re facing a temporary decrease in income due to Tori being on short term disability, once she gets back to work our income will be at an all time high for us! Of course, we don’t have a long track record since we’re both just a few years out of college, but our income has increased every year.

I’ve changed jobs a couple of times, with an increase in income with each move. I scored an even bigger increase by moving from a high cost of living area in a major US city to a lower cost of living area of the country so I’d say that is a double win as far as being better off today than I was in the past.

We just recently rented out our townhouse and became landlords. Carrying two houses adds some costs, but we were lucky and will have positive cash flow on our rental property/previous residence which turns into a net positive as long as we can keep it rented out. We did end up moving into a larger house for the long haul, but we knew our first house was going to turn into a rental one day so we took advantage of the lower housing prices and the near all time low interest rates.

I’d say the fact that we were able to put 20% down on two houses in the past couple of years is a pretty big feat too! We live on much less than we earn and that allowed us to save up a ton of cash to be able to buy our houses.

Are We Spending More Than In The Past?

Our spending has gone back and forth from month to month depending on what’s going on, but I’d say that overall we’re spending about the same or a little bit more than we have in the past. Our largest expense has been housing and that has changed pretty much every year. I went from sharing a 3 bedroom apartment with 2 roommates in an expensive city to renting a four bedroom house by myself in a low cost of living area for just $200 more a month. Then we bought our townhouse which was dirt cheap compared to our previous housing situations and finally we moved into our long term home which cost a little more, but was well worth it.

Our other spending categories haven’t changed too much. We did upgrade to smartphones from our previous dumbphones, but other than that there haven’t been many major changes to our expenses. We both still own the same cars we did a couple of years ago and have no plans to upgrade them anytime soon.

We’ve been keeping a tight grip on our normal expenses because we’re working hard to pay down Tori’s student loan debt. Tori has made some great progress so far by herself. After we get married we’ll be combining finances which will allow us to destroy the debt even faster. We have taken on a bit of mortgage debt, but it was well below what we were qualified for. I even paid off my 0.9% car loan early! I’d say we’re doing better in terms of our debt too!

Overall Impression – We’re Doing Better Today

Our expenses are just a little bit higher than before, but they are up less than our income has increased. Our assets have grown by leaps and bounds while we’ve destroyed our car loan and some of Tori’s student debt. We did take on a couple mortgages, but at extremely low fixed interest rates at payments we can easily afford. We’re definitely doing better today than we have been in the past.

Now it’s your turn! Let me know how you’re doing compared to the past in the comments below! Or, if you have one, you can write up a post on your own blog. If you link to this post it should list a ping-back in the comments so others can read your response!

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About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.

Comments

  1. That is great! Congrats Lance! Isn’t it wonderful when you can find savings, either in your budget or – in your case – by moving? You give yourself a fast and automatic raise!

  2. Sounds like you have had a great few years! We just marked 4 years married, and in that time we’ve made some big progress in our finances, too! Here’s hoping for many more great years together!

  3. Love this post! We are definitely doing better as well. Crazy how life can change in a couple of years.

  4. Dude, you’re rockin! Definitely doing better and better each year, and each financial move you make seems to be working out well. Nice work!

  5. Are we better off today. Absolutely! Financially, my home value and net worth is up. My job is secure and my wife’s is too. Life overall is pretty good.

  6. I’m doing better than before and have had some substantial pay raises. The biggest issue was taking care of my bills. Now that I’ve done that I am finding that I have a lot more money to take care of my dreams/life in general.

  7. Suzanne says:

    It’s a worthwhile exercise to determine if you’re better off today than in the past. It helps to assess your goals, vision, and future capabilities. Two factors that have helped me: no credit card debt and being a “super saver.”

  8. This is a question I struggle to answer.

    I make less now than I did 5 years ago. My monthly expenses are lower now too. My car is paid off. I use Netflix instead of cable. I use a free VoIP service instead of a cell phone. My car insurance and homeowner’s insurance is cheaper. My car loan paid and my mortgage significantly less than it was I’m paying less in interest than I was before. My current home’s property taxes are significantly less than they were on my previous home. As a ratio of income to expenses, I’m better off than I was in the past. But it seems only part of the picture.

    My car is only a year old, but it’s not going to last forever. While I’m not making a payment I’m still accruing an expense of sorts – the need to eventually replace it. The cable, the VoIP, the insurance, the property taxes are all less – but for them I have less too.

    When the mortgage is paid the house will cost me only $125/month in property taxes plus maintenance. The house being small and well insulated it affords me inexpensive utilities as well. I’m dumping what is for me a lot of money into purchasing it, the payoff being cheap living expenses down the road – two years from now, four years from purchase. Even then there is a trade off though. It’s a small, older, house with a small yard. It ain’t pretty!

    There are “better offs” I lack completely – assets. A substantial savings that could cover expenses for years on end. Income producing investment(s). A retirement that provides pension and medical insurance.

    I don’t know if I’m all that better off. I do know at the end of the day I have very little and in two years it will be cheap to keep a roof over my head, an asset of sorts I guess.

    • An after thought. I always have after thoughts!

      I’ve intentionally sought having less for the very purpose of having the cheap living expenses and I don’t regret it. It’s just when faced with the question of whether I’m really better off it forces me to acknowledge the sacrifices; Acknowledge what I don’t have.

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