What does “financially stable” mean to you?

[Maistre Gracey]

To me it means ZERO credit card debt (yes I put everything on a CC, but always pay it in full).

Mortgage being paid with extra to be paid early.

Car payments okay, as long as not upside down on payments vs value.

Student loans… should be paid imo.

Retirement stash…??? If you’re saving, you are ahead of most. Amount depends on how close to retirement.

College fund for kids?? We don’t have kids, and some say they’re on their own. YMMV.

Oh yes… and a healthy emergency fund.

Thoughts??

 

[FreckledOne]

To me it means ZERO credit card debt (yes I put everything on a CC, but always pay it in full).
Agree. Love the points/miles/$back.

Mortgage being paid with extra to be paid early.
Agree. We apply the same amount towards the principle.

Car payments okay, as long as not upside down on payments vs value.
Agree. Try to pay it off in 36 months or less. We shoveled money towards both cars during the pandemic and paid them off.

Student loans… should be paid imo.
Agree. Although, we never had any, but I can imagine the stress many have because of it. We both joined the military in our youth and used the GI bill when we transitioned to civilian life.

Retirement stash…??? If you’re saving, you are ahead of most. Amount depends on how close to retirement.
Most emphatically agree 1000%. I visit patients in their homes and financially, they have fallen into two categories without fail: A. Those who planned early and well. B. Those who didn‘t. Huge scary lesson for me. I tell my husband about some of the less fortunate heartbreaking situations, but he is cold as ice. His favorite adage is, „If you fail to plan, you plan to fail.“ No compassion or empathy.

College fund for kids?? We don’t have kids, and some say they’re on their own. YMMV.
Agree. Told our only we have her Bachelor‘s covered (must be public in-state uni) and she is on her own after that.

Oh yes… and a healthy emergency fund.
1000% agree. Our ancient water heater went kaput a few months ago. Because of the fund, we were able to hire a plumber to replace it and haul away the old one within six hours. No cold showers for me. Nope.

An extra category would be a vacation fund. Being able to put $ in it after funding the above categories is financial stability for me.

 

[kathy884]

I am nearing retirement and financially stable to me means that in retirement I can draw from savings (401Ks / IRSs) at a rate under 4% a year and with that and social security that I will start taking at my full retirement age have the same amount of money that I take home from my paycheck right now that is available to spend / put in funds. Projections in a variety of different scenarios say that my money should last for 30 plus years and that most likely there will also be some that I can leave to heirs. It doesn't mean I am wealthy, but it does mean IMHO that I have enough. And given that I plan to leave what has been a good career for me at age 65 when I can go on Medicare and try some other things -- most likely volunteer stuff and hobbies.

It also means that with the monies I take from my job now and later from investments and social security in retirement (just a year and 1/3 of a year away) (although I am on a budget and still need to watch money and spending), I am happy with the lifestyle that affords, -- can allocate monies toward property taxes and insurance payments, can help others in my extended family a little bit, can afford / enjoy hobbies -- indoor tennis in the winter, a few theatre shows (season tickets to our rep theatre), can afford to do some modest travel (have an annual vacation budget for that), have emergency funds for medical, home repair / minor improvements. I also put monies aside for a replacement car and fund a Roth IRA for my son who does not have a high paying job.

Money in my paycheck is taken out for:
-- Medical Insurance and HSA (Medical fund for high deductibles and high out of pocket costs) - Have a medical emergency fund equal to Out of pocket maximums and some extra for dental
--Retirement savings

I have funds for:
-- Home repair / improvements (unexpected expenses or minor planned improvements. e.g. our washing machine just broke last week and we got a new one with monies from this fund)
-- Car replacement / repair -- I buy cars for cash, but keep them for a long time. My current car is 9 years old.
-- Annual property tax and car insurance premiums -- those seem to continually go up. I put aside monies every two weeks to make sure I can cover these expenses.
-- Vacation (modest annual vacation fund) -- We are planning to do less travel than we did when we were younger. We don't have the travel bug as much. I do though annually like to visit close relatives that live far away and those airfares, rental cars, and in some cases hotel vs. staying in relatives homes can add up even for short trips. And in July of 2025 we are doing a big trip to Glacier National park -- me and DH and DS and his spouse (we will pay for all).
-- Funding DS's Roth IRA

I am married and DH covers our groceries, utilities, more than 1/2 of our going out (we have a regular Saturday night date night), and helps many in his family who are struggling. When I retire we will each pay for our own Medicare part B and D and our own Medicare supplements. Right now with him retired and me working I pay for his medical. He is on Medicare, but just Part A and is on my group insurance.

 

[tvguy]

Financial security to me means no debt. No mortgage. No car payment. Major projects around the house like a new roof, new HVAC, new water heater done in the years before retirement. Social Security more than covers all your expenses. Similar to @kathy884 our Social Security is more than our take home pay was working since Medicare and a high end Medigap plan are far cheaper than group insurance was, and of course 15% of our pay is no longer going into a 401k. 45 years of IRA and 401k saving will be our cushion. Now we just have to stay healthy to enjoy it all.
For my wife and I, we just followed the financial planning our parents used.

 

[LuvBulldogs]

I say "Financial Security" is a term that changes as you age. Here's a quick glance at what's "comfortable" to me:

- At any age it'd mean carrying no credit card debt. You can never get ahead if you're still paying for yesterday.
- In your 20s it'd mean saving for /buying a house and starting retirement accounts. It'd mean learning to live below your means so you can save significant amounts of money because those next decades go fast!
- In your 30s it'd mean continuing those retirement accounts and saving for your kids' college education -- ideally you need to have the kids' accounts funded before they become teenagers. Kids cost less in elementary /middle school, and compound interest is still on your side -- teenagers need adult-sized clothes, eat like adults, and they need braces, car insurance -- it adds up.
- No later than 40 a person who's financially stable should be able to pay cash for a car, and by 40 the retirement account should be well on its way. Your kids'll probably start college in your 40s -- part of being financially secure is helping them make a choice you can afford (without borrowing!). Help your kids make plans for transitioning out into their own homes -- you don't want to support them for life.
- While your retirement account might not be fully funded in your 50s, you should have a firm grasp on your numbers. I've read that 1/3 of all Americans do not choose their retirement date (and looking at my friends, this seems to be about right -- lay offs, medical issues, family needs), so a person who's financially secure won't wait too long to plan his retirement. And your house should be paid off in your 50s.
- In your 60s (and beyond) it'd mean being able to retire on your own terms -- in a paid-for house, with a paid-for car and ample resources for what matters to you. And a plan for Social Security benefits.

 

[LuvBulldogs]

Major projects around the house like a new roof, new HVAC, new water heater done in the years before retirement. Social Security more than covers all your expenses.

I agree it's wise to enter retirement with "all your ducks in a row" -- house in good repair, etc. But those things will wear out, and while Social Security may be enough to cover everyday bills, it's smart to have some savings for the day your car dies or a tree limb falls on the roof.

I'm retired but not old enough for Social Security yet. My teacher pension is enough to cover our electricity, groceries, etc., but I'm not saving. I'm glad I have money "at the ready" for when the water heater goes out. What's killing us is insurance and taxes; We haven't reached into savings for those things yet -- but they've increased so much! We might have to do so at some point.

 

[tvguy]

I agree it's wise to enter retirement with "all your ducks in a row" -- house in good repair, etc. But those things will wear out, and while Social Security may be enough to cover everyday bills, it's smart to have some savings for the day your car dies or a tree limb falls on the roof.

I'm retired but not old enough for Social Security yet. My teacher pension is enough to cover our electricity, groceries, etc., but I'm not saving. I'm glad I have money "at the ready" for when the water heater goes out. What's killing us is insurance and taxes; We haven't reached into savings for those things yet -- but they've increased so much! We might have to do so at some point.

Wow, I didn't think teachers paid into Social Security, they don't here, so they just get their pension. But you bring up another good point........have adequate insurance to replace a totaled car or tree on the roof. My wife and I both put 15% of our pay, plus a 4% company match into 401k plans for over 40 years and hope not to touch those until mandatory distributions start in 6 years when we turn 73. But that cushion is there if needed. We have been living on one my three 401k plan accounts that we converted to IRAs the past year. That is ending with Social Security coming in.
But again, the main plank of our retirement planning for over 40 years was doing everything we could to NOT have unexpected expenses. Only vulnerable items are consumable durable goods, like the washer, dryer, stove and fridge. We have enough pad in our budget from Social Security income.........assuming they don't all die in the same month.

 

[Anthony1971]

So many ways to approach this and yes it will hopefully become easier with age as your income should increase.

I have high expectations.

Pay with credit cards for rewards only (all) and is paid in full
everything else is paid with cash. - this means your 401K and Savings are already fully funded and yes it implies living below your means.

 

[Bellex917]

Starting off my saying I'm in my late 30s, have 2 school aged kids, daycare is behind us but sports/activities are hundreds a month, and we are in the "messy middle" of life right now.

Financially stable to me means a positive net worth and the majority of your money working towards your future and not your past.

For US- that means debt free (2k left for us on a car- will be gone next month) but we are ok if we took out small debts (like a car) in the future- but no credit cards or high interest debt.

For US it means putting money to work for us every month- retirement accounts, savings accounts, etc.

We just started on this path 2 years ago. Ironically the driving force was Disney related- I desperately wanted to buy DVC. In May of 2022 I told myself I could buy it (resale only) if I met certain goals. This changed everything. At the time we had credit card debt and not enough saved. We now have paid off 2 DVC contracts (and are done buying that- we have enough points for us), paid off all credit cards, have our car almost paid off, and are saving more than ever before. To me this is stable.

I'll feel MORE stable when I have doubled my E fund. That's the current goal.

Oh one more thing- I felt stable when small things (tires, needing to call a plumber) didn't panic me. I'll feel fully stable when big things (HVAC, etc.) can happen and I'll still have a solid efund. Right now we could fund them, but it would hurt. I'll feel very stable when it would be a dent, not a depletion.

 

[DCLMP]

In this day and age....not a whole lot. In this current economy I don't think it exists for most people...even if they think it does.

 

[amylevan]

I would define it as a positive net worth with enough money coming in to cover all bills plus enough left over to save and have some fun money.

 

[WDW_fan_in_TX]

I'm doomed if this makes one successful as I'm like 0 for this list. Other than mortgage (we rent).

I have CC debt, but we're trying to pay if off. No sense in putting stuff on CCs then paying off CCs. I don't earn any points, miles, money back on my CCs.

I've been paying on my car monthly since I bought it 18 months ago, and I've paid like $1k off of the loan. The rest has gone to interest. It sucks. I owe $18k on it, and it's worth about $14k. I have an okay APR (like 26%). I've tried to get it lowered, but I've been told I can't until I pay it down to what it's worth.

I am paying on student loans (had 60k when I graduated in 2003). Got about 1/3 left.

Don't have a retirement that I know of. Not sure how to start it (I'm almost 49, so probably need to start one in the next couple of years).

No kids. So don't deal with the college fund.

To me it means ZERO credit card debt (yes I put everything on a CC, but always pay it in full).

Mortgage being paid with extra to be paid early.

Car payments okay, as long as not upside down on payments vs value.

Student loans… should be paid imo.

Retirement stash…??? If you’re saving, you are ahead of most. Amount depends on how close to retirement.

College fund for kids?? We don’t have kids, and some say they’re on their own. YMMV.

Oh yes… and a healthy emergency fund.

Thoughts??

 

[firefly_ris]

Starting off my saying I'm in my late 30s, have 2 school aged kids, daycare is behind us but sports/activities are hundreds a month, and we are in the "messy middle" of life right now.

We're in the "messy middle" right now too. Do you watch The Money Guys by chance?

I would echo most of your sentiments since we are in the same area of life (I am 40 and have 3 kids in beginner teen/tween phases).

For us personally, we've never held consumer credit card debt (we use a card for daily purchases and pay in full each time) and our mentality is that's not even an option barring some really catastrophic thing. We have had some catastrophic medical things happen to 2 of our kids unfortunately, but were able to get by with our high-deductible insurance plan and money my husband has slowly squirreled away in an HSA. My son walked away from the hospital with a $67k bill that we paid I think about $13k out of pocket for all said and done.

Financial Stability for me personally also means if one of us lost our job or if God forbid something permanent/long-term happened medically to one of us or the kids, where one of us needed to stay home to be a caretaker, that we would still have the same ability to pay all of the bills on a single income. We do have a mortgage and all that goes with that (utilities, property tax, insurance, maintenance, planned large replacements/repairs). I would love to go more aggressive on the mortgage, but just holding steady on that 3.75% interest and regular interval payments for now, but may change in the future. No car payments, they bother me personally. That's just a me thing, but plays into the whole "should be able to live one one income if needed" concept. We wouldn't need to worry about the repo man or anything if things were really tight and could solely focus on the roof over our head.

General big picture, having positive net worth and focusing on how to make the best use of a combination of investments to make what we make go further is the season of our lives right now. Right now we are in "pain mode" because my DH likes to max out his 401k during the first half of the year so his take home is miniscule, plus I'm self-employed so I just paid my quarterly taxes. E-fund is in a HYSA, I recently converted my kids paltry savings accounts into CDs, we throw bits at money market funds and stuff like that -- we aren't high income, but just try to take advantage of current interest rates and try to stave off some of that inflation pain the best we can. We have enough in an emergency fund to cover large things like septic failure, HVAC failure, or income replacement for about 8 months. It would still take a good chunk of time and cutting in other areas to replenish it, if for example we needed $10k to replace the septic system. That's always at the front of my mind because the septic system is original to the house (1963) but still doing great so far.

Daily habits help fund all of that I would say. I don't buy new phones (used/refurbished from Amazon does just fine), meal plan based on sales, grocery shop at Aldi and Walmart, buy kids sports gear used on Marketplace when possible, never had cable TV, don't buy the latest fad thing every 5 seconds, do my own (very) basic vehicle maintenance (hoping to do more myself in the future, I do oil changes now but want to add brakes to that at the least), look for good solid wood furniture to flip on Marketplace before opting for something new, grow some vegetables, only buy coffee out when I have gift cards, primarily cook at home, groom my dogs myself, cut my husband's hair, among other stuff. We do 98% of all home improvements and repairs ourselves. Living below our means is what enables us to have the ability to have some extra bucks to throw at retirement or go on a vacation or sign my kids up for sports.

My next main worry is kids college, which we've never been able to set aside extra money for. I'm trying to steer them either towards public, in-state university, or do community college for the first two years like I did, or trade school. And if they do need to take out student loans, to try to get them to really consider what the ROI is going to be and if the income they will realistically make makes sense to take out the debt for. No loans for underwater basket weaving, in other words. I'm hoping to be able to help at least partially but our retirement has to come first. Hoping decisions we are making right now will compound in the future and help us to cash-flow college in some capacity. Right now that's still in the hopes and dreams department though.


Wow that was a book sorry. Just something that is on my mind a lot I guess!

 

[Twilghtsprkle]

Financial stability for me is not worrying about bills. Of course this means living below our means but not in a way where we’re going without.

We are in a good position because of some luck and some tragedy.

Kids both have good college funds because my BIL and SIL passed from COVID. Their estate was divided among the nieces and nephews. We hadn’t saved any for them prior to that.

We always pay cash for cars. Our current cars are beyond when we had hoped to replace them. COVID made the car market go a bit crazy so we’ve been waiting, but I think we both have to bite the bullet and just buy them at this point.

Due to my husband getting into Bitcoin at the right time, the house is paid off. I’d call it luck, but he doesn’t invest in all areas of the stock market. He watches a couple niche areas for investing. I’m too risk adverse to handle the investments.

My husband is nearing 60, but he has no plans to retire anytime soon. He just landed what is his dream job so I can easily see him working there for 10 years.

 

[barkley]

Financial Stability for me personally also means if one of us lost our job or if God forbid something permanent/long-term happened medically to one of us or the kids, where one of us needed to stay home to be a caretaker, that we would still have the same ability to pay all of the bills on a single income

this has always been a primary consideration for dh and i. when we bought our first home we immediatly got each of us life insurance coverage that would have paid off the home if one of us passed. we did'nt want either of us to be dealing with that on top of the death of a spouse. we increased the policy when we bought subsequent higher mortgage homes.

we experienced the issue you speak of above-i became unexpectedly totaly disabled at age 41. thankfully our kids were of the age where they were in full day school b/c while i could take care of myself i could not have cared alone for them during the initial months. so-our income was cut in half-still better than if dh had to stay home and care for me or the kids b/c then our income would have been zero (even states with paid fmla have lengthy processing times-and it's only paid for what, 12 weeks?), better still that there was no major cost difference between having had the household on my (former) employer's health insurance vs. putting us on dh's (i know folks who have seen quadruple the cost difference ). it took some months but fortunatly my employer had long term disability insurance as one of my benefits so eventualy we started receiving at least a portion of my former income. if an employer does not provide it i strongly reccommend folks look into it-having some form of income during what is already a trying time is vital to 'stability'.

if for example we needed $10k to replace the septic system. That's always at the front of my mind because the septic system is original to the house (1963) but still doing great so far

PREACH! but if it makes you feel any better-my septic system guy who has been in the bsns for decades claims that the systems were built MUCH better back then and were built to be repaired (vs. the newer ones which are more prone to need replacement).

 

[WDW_fan_in_TX]

Financial stability to me would mean not having to worry about bills, payments, food, etc, for 2-3 months if I were to lose my job. Or not panicking and having to go take out a loan sharky loan if I were to need new tires/car repairs like I had to deal with last week. It's getting down to the final day before a paycheck and not having to worry about what we're going to have for dinner. Or getting to the day before rent is due or the day before my electrIc, water or cable/internet gets turned off with no money to pay the bill.

I've been in all of those situations in the past, and each time, God has provided for it to happen. I'm very blessed in that regard. But it's not something I want to face/deal with all the time. So financial stability is having enough money in savings to deal with those type of emergencies/issues, having a mindset to live on a budget to where those things don't happen and trying to create some sort of retirment to where I'm not having to work when I'm 80 years old.

 

[Bellex917]

We're in the "messy middle" right now too. Do you watch The Money Guys by chance?

-----

My next main worry is kids college, which we've never been able to set aside extra money for. I'm trying to steer them either towards public, in-state university, or do community college for the first two years like I did, or trade school. And if they do need to take out student loans, to try to get them to really consider what the ROI is going to be and if the income they will realistically make makes sense to take out the debt for. No loans for underwater basket weaving, in other words. I'm hoping to be able to help at least partially but our retirement has to come first. Hoping decisions we are making right now will compound in the future and help us to cash-flow college in some capacity. Right now that's still in the hopes and dreams department though.

1- Yes I do! That phrase is so perfect for describing this phase of life.

2- SAME. We started slowly saving for college last year but I have under 5k saved (between the two of them) bc getting out of debt was our goal. We will be debt free next month and then we can start really funneling into savings/college/etc.

 

[FreckledOne]

Don't have a retirement that I know of. Not sure how to start it (I'm almost 49, so probably need to start one in the next couple of years).

I starting panicking as I read your reply, but the above terrifies me. I am no financial expert, but watch a lot of finance videos on YouTube. Perhaps start your retirement journey with a Roth IRA.?.? If I am off in the weeds with this suggestion, whoever is more financially savvy than me can comment.

 

[barkley]

I'm hoping to be able to help at least partially but our retirement has to come first.

i cannot stress the importance of this. financialy planning for YOUR OWN future is vital and it must come before funding a full ride college education for one's child(ren). yes, student loans are a terrible thing to consider your child taking on but there are means during college to at least partialy reduce overall cost and reduce the amount that will require repayment. when you retire (through choice or circumstance) there's no such thing as retiree work study, retiree scholarships, retiree loans or lower cost retirement options (i'll note here-i live in the land of colleges, 4 universities/2 community colleges w/in short distance and there are MANY more discounts offered by local buisnesses to students vs. seniors ).

those of you in the 'messy middle' or with kids rapidly approaching college-think for just a minute how much MORE stressful your life would be if on top of all you are dealing with-you were suddenly responsible for the financial support of another additional household that is the reality for far too many i know who are learning that THEIR parents are unable to meet their own retirement needs. housing, utilities, groceries, med co-pays....basic staples of life that their parents are unable to meet in part or whole. i see/have seen households devastated by this additional financial impact. i know households where this scenario is down the road in the next 10-15 years when retirement is no longer optional on the parent's part (and their adult kids have no clue-never questioned how their parents managed to afford setting aside the amounts that their college, weddings and such entailed). it is a horrific situation to be in and one that noone who cares about their children ever wants to put them in.

please-do not short change your own financial security.

 

[Forevermarypoppins]

Living within your means!

If something like getting a new roof, a new water heater, a new furnace or having to replace a car that was just totaled from a car accident is going to put your finances in a big bind, then you're not in a good place!
I like having separate savings accounts for Needs and Wants.