By: Dividend Sensei
My life’s ambition is to help as many people achieve financial independence as possible. That means being able to retire comfortably, as early as possible, in order to live life on your terms, not those of your boss. I recently came across an inspiring article that highlighted a married couple whose financial situation mirrors that of millions of Americans, including, up until recently, my own. Let’s take a look at the story of Al and Lesia Riddick, and how their experiences can serve as a great guidepost to our own journies to financial independence and the retirement of our dreams.
From $150,000 In Debt To $1.5 Million Nest Egg
In 2002 the Riddick’s got married and started their new life together with $150,000 in debt including: a mortgage, student loans, and car payments. The Cincinnati couple decided to devote themselves to becoming debt free, and by 2007 had paid off all of their debt. This was very fortunate because in 2010 Al lost his job of 16 years, thanks to the aftershocks of the Great Recession. Fortunately as he told Nerdwallet, “When you lose a 16-year job but you have no debt whatsoever, it allows more options in life. Option A was to get another job, and option B was to follow my passion and purpose to help other people become more financially fit, so that’s what I did.”
Thanks to being debt free Al was able to start his own business, Game Time Budgeting, a company focused on teaching others how to become financially independent. He later wrote a book, “The Uncommon Millionaire”. So how did this couple go from $150,000 in debt to a networth of $1.5 million today? By following a three step process that we can, and should, all strive to emulate.
Step 1: Control Your Expenses And Enjoy Life While Living Beneath Your Means
Budgeting is no fun but it’s essential if you want to become debt free, financially independent, and achieve the retirement of your dreams. The first step is to think of your household like a business, which means getting a handle on your cash flow. In the case of the Riddick’s they don’t live like paupers, but are just very disciplined with prioritizing what expenses matter to them. For example they don’t attempt to “keep up with the Jones” by impressing their friends with conspicuous consumption.
According to Lesia: “Some of our friends think we’re kind of weird, but we don’t think we’re weird. … Sometimes people expect you to live in a bigger home and drive big fancy cars that cost a lot of money, but we just choose to live a different lifestyle. At the end of the day, it’s really all about choice…A lot of times people say, ‘You’re still driving that old Toyota?’ … I’m like, “This is why we can go on vacation, because we choose not to spend money on cars.” … I love couponing. We go to the matinee for movies. So we find other things we save on, but a lot of that money goes to our vacations. That’s what we like to prioritize.”
In fact thanks to their ability to economize in all aspects of their lives except for their passion of travel, the Riddick’s are able to take not one, not two, but three international trips per year. The key is knowing yourself, your spouse, and what your most important priorities are. Better yet, as Mrs. Riddick explains, neither she now her husband feel trapped by their disciplined budgeting: “We also have our own allowances. … So that allows for the spontaneous spending. … It’s your personal money. You always get the same amount every month. So you can have fun as well.”
We all like eating out, going to the movies, and enjoying life in general. The secret to the Riddicks’ success is they managed to find a way to enjoy life to the fullest while being as efficient with their money as possible. In other words they made sure to stretch their dollars to the max, thus allowing them to still live well, without having to spend above their means. Or to put another way, they set themselves up for long-term sustainability, where they can each spend a certain amount to make themselves happy, yet had the peace of mind knowing that becoming debt free and financially independent is just a matter of time.