Financial well-being is a deeply personal journey. It is shaped by individual choices, priorities, and circumstances. Family upbringing influences it but this can manifest in very different ways. Two siblings, with seemingly opposite approaches to debt, can illustrate how diverse financial paths can lead to happiness and fulfillment.
That’s exactly the case for my sister and I. We approach debt entirely differently through unique reactions to our childhood experiences with money. Below I’ll share with you the contrasting financial lives of us two sisters and explore the pros and cons of each approach. The key takeaway? There is no one-size-fits-all answer when it comes to managing finances. What works for one person may not work for another.
The Savvy Saver: Debt-Averse and Grounded
Meet my debt-averse sister. She believes wholeheartedly in living a life free from financial burdens. Her approach to financial freedom has led her down a unique path:
- Student Loan Discipline: She paid off her student loans before graduating from college. She avoided accumulating high-interest student loan debt by working while in school. She went to school in state, starting at a community college, and she did not go on to graduate school.
- Thrifty Homeownership: She owns a property in West Virginia worth $50,000. While it requires significant manual labor and construction work, her commitment to this project showcases her dedication to living debt-free. It’s what she prioritizes.
Pros of My Sister’s Approach:
- Financial Freedom: She enjoys peace of mind knowing she is not beholden to creditors or high-interest loans.
- Property Ownership: Owning property without a mortgage is a significant asset that can provide financial security in the long run.
Cons of My Sister’s Approach:
- Limited Opportunities: Her aversion to debt may limit her ability to take advantage of opportunities that require financing. She was able to buy her property, though, so she doesn’t feel like she’s missed out. It’s just that I would feel limited by her approach.
- Slow Asset Accumulation: Building her property from the ground up is time-consuming and physically demanding. She has this as an asset but it’s a long process.
- Lower Leverage: Debt can be used strategically to leverage investments, potentially increasing returns. Her reluctance to use debt means she may miss out on opportunities for financial growth. She is totally fine with that but it’s something to consider.
The Balanced Borrower: Comfortable with Debt
I am on the other end of the spectrum. I am comfortable with debt and have made it work for me:
- Education Investment: I did also go to undergraduate college in-state but I took out as many loans as I possibly could to support my life while in school. I also finished one Master’s degree and have just started a second one, also maxing out those loans.
- Urban Renting: I rent an apartment in San Francisco. In two years, I spent on rent what my sister spent buying her home.
Pros of My Approach:
- Education and Career Growth: I will be honest in saying that my education didn’t translate directly into higher-paying work. However, it was a critical part of developing myself as a human and a writer.
- Lifestyle Choices: I highly value my urban lifestyle, even though it comes with a cost. I am happiest living here. I would be miserable in West Virginia.
Cons of My Approach:
- High-Interest Costs: Carrying substantial debt, especially credit card debt, can result in significant interest costs over time. This can erode potential savings and reduce overall wealth.
- Risk of Overleveraging: I take a risk in overleveraging herself, meaning she may have too much debt relative to her income and assets. This can and has led to financial instability and stress at times. This is exacerbated by the inconsistency of freelance income.
- Lack of Long-Term Security: I do tend to prioritize immediate goals and lifestyle choices. I do this potentially at the expense of long-term financial security. This certainly poses challenges when it comes to thinking about retirement, etc.
Why Both Approaches Work
We have both found what works for us. The key takeaway here is that there is no universal formula for financial success, and one person’s approach may not be suitable for another. What truly matters is aligning your financial choices with your values, priorities, and goals to create a fulfilling and satisfying life. Ultimately, it’s about recognizing that financial well-being is a journey, not a destination and that there’s no one right or wrong way to navigate it. Some of the reasons our unique approaches work for us include:
- Personal Values: Our financial decisions align with our values and priorities. My sister values debt-free living and homeownership, while I prioritize education and urban living.
- Contentment: We are both happy with our choices, reflecting that the amount of money doesn’t matter but rather what matters is that it aligns with your own life.
- Flexibility: The ability to adapt to individual financial situations is crucial. What works for one person may not work for another, and that’s perfectly fine. We’ve both been flexible with our own experiences.
What We Learn From Each Other
We’ve certainly debated a lot about debt and spending and financial choices. We call each other country mouse and city mouse which reflects more than just our financial choices but deep roots of why we choose to each live where we do. But in that debate, we continue to love each other. And we learn a lot from each other even if we don’t take the same approach.
She’s learned from me that sometimes debt is okay. She and her partner couldn’t buy their property outright and did get a loan. It’s a small loan compared to most home loans and they’ll repay it in five years. But it’s still debt. She has also had the opportunity to see that I prioritize that right now and this sometimes reminds her to take a vacation or otherwise indulge in spending.
I’ve learned from her that there’s a lot less concern about money when you aren’t juggling credit cards and loans and debts. While I prioritize the right now, there’s an element that’s missing because of the immediate financial stress of that. She reminds me that the free things in life are the ones that we value the most.
Read More:
- 6 Ways I’ve Viewed Debt Over The Years
- How My Substack Experience Fits Into My Freelance Writing Goals
- Tips for Crafting a Conscious Spending Plan
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Kathryn Vercillo is a professional writer who loves to live a balanced life. She appreciates a good work-life balance. She enjoys balance in her relationships and has worked hard to learn how to balance her finances to allow for a balanced life overall. Although she’s only blonde some of the time, she’s always striving for total balance. She’s excited to share what she’s learned with you and to discover more together along the way.
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