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What To Do During the "What's Next?" Stage of Finance

When I first started writing for Get Rich Slowly, I'd just become interested in my finances. While I've always been frugal, I started to realize there was much more to personal finance than finding ways to save money.

Here's where I was, financially, at that time:

  • I was rebuilding my recently depleted emergency fund.

  • I had just started to earn more.

  • I was working hard for my money, but I had no idea how to make my money work for me. I still didn't feel in control.

  • My boyfriend/partner was in debt. Sometimes, we fought about money. We keep our finances separate, but there are some goals for which both of us need to be on the same financial page.

A couple of years later, a lot has changed. Writing for this site has taught me a lot about money, and my finances have greatly improved as a result. I've now built a healthy emergency fund, started investing, and learned how to manage my income as a freelancer more effectively. For his part, my boyfriend has gotten out of debt, built an emergency fund, and is now researching index funds on his own. We ended up on the same financial page; all is well.

I'm lucky enough to be in the beginning of what J.D. calls the Third Stage of Personal Finance. My major financial goals have been met, and I'm now happily saving away -- for what, I'm not sure.

Reaching the Third Stage

How did I get here? It was the boring, straightforward stuff:

  • Cutting back on my expenses and living frugally

  • Finding ways to earn more

  • Investing

  • Avoiding debt

But I was also lucky. I was lucky enough to be offered a great job that helped me reach my goals. And when I lost that job, I was lucky enough to have colleagues that helped me find other work.

The role of luck

I don't ignore the role of luck in my life, but I do think luck is meaningless if you don't take some kind of action. I would never have been offered that job if I didn't a) bug my friend about it, b) have previous experience and c) do the required work.

Also, if I wasn't in the right financial mindset, I could have just as easily squandered that money by inflating my lifestyle. In writing this piece, I asked my boyfriend if it was okay to talk about his experience getting out of debt and building an emergency fund.

"Sure. But I didn't build anything. I just got lucky," he said, referring to a hefty windfall he got earlier this year.

"What are you talking about? You work your ass off. You negotiated your salary and you've been saving like crazy!"

That was true, he said, but that windfall really helped get him started. "That's when things turned around," he told me.

But the thing is, if that windfall had come just a few years earlier, it would have been blown. In fact, when it came, he briefly considered using it as a down payment on a car -- a really unnecessary expense right now. But, because he's become committed to getting his finances in order, he decided to use the windfall to reach his money goals instead and he allocated the money to an emergency fund.

Luck definitely plays a role in our success; but most of the time, it still requires at least some action on our part.

Life in the Third Stage

One night, while visiting my parents, we went grocery shopping. My Dad happened upon some tiki torches, which he'd been looking to buy. "How much are they?" I asked. "I'm not sure," he said, putting them in the cart.

Later, when we had a discussion about money, my Dad brought this up, saying this is what he loves most about being in the Third Stage. "I don't have to fret over small purchases and decisions," he told me. "If I want to buy something for the backyard, I can do it. And I don't have to worry about whether or not I can swing it this month."

My parents have come a long way. Back in the day, even an extra dollar spent would have hurt us, much less whatever he spent on those torches.

I feel more in control of my finances these days. When I was repaying my student loan, I felt in control of my debt, but I didn't really feel in control of my finances. And when I got out of debt, moved to California (where I was barely making ends meet) and depleted my emergency fund, I definitely didn't feel in control of my finances.

But now, I do. I'm not yet financially independent. But I feel like my money is working for me, instead of the other way around. Control and freedom are probably the best things about being in this stage.

But What's Next?

I'm complaining about a damn good problem here, but the third stage is kind of boring. Right now, I don't have any clear goals, aside from working toward financial independence. I've plateaued.

And there's nothing wrong with sitting back and saving, but I'm a goal-oriented person. I like having tasks; I like striving for things. In the Second Stage, it was all about paying off debt, cutting back, building my funds and working to max retirement. It was challenging, and the answer to "what's next?" came naturally.

The Third Stage is a little more stable, and the goals are a little less obvious. Here's what's next, for me, in the third stage:

  • Work on "multiple streams of income"

J.D. has written about this before, and so have many personal finance writers. My goal as a freelancer has been to diversify my client base. But I'd also like to find other, non-work-related ways to earn extra income.

  • Educate myself

Trying to find other sources of income means learning about how to do it. I want to learn how other people earn passive income and invest wisely in other endeavors.

  • Continue to save

J.D. wrote a great piece about starting an opportunity fund. This way, if some kind of investment opportunity should arise, I'd be prepared for it. I love this idea.

And I'm continuing to save for my future goals too, even though I'm not sure what they are. I don't know what I want to do with my life in the next few years. Maybe start a family? Maybe move to another country? I really don't know. But whatever it is, it will probably require money. So I want to be prepared to say "yes" to whatever sounds great at that time.

I also opened an SEP-IRA. As a self-employed person, this helps me sock away even more for retirement.

  • Give back

For me, being grateful for what I have makes me want to help others. In this stage, I've been looking for ways to give back, whether it's time or money.

Plotwise, the Third Stage of finance isn't terribly exciting. Control and freedom are wonderful feelings; but, as far as action, there aren't many highs or lows in this stage. At least that's what I've found so far.

And that's kind of awesome, really. For once, I don't have to worry about money. I don't have to be scared that I'm not going to be able to make ends meet. Comfort is good. I'm immensely grateful for it.

But at the same time, I don't want to get too comfortable. I don't want to forget that there's still work to be done. I want to keep my eye on the ultimate goal: financial independence.

What are you doing (or, what do you plan to do) during this stage of finance?

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