Your 30s is where you are most likely to accumulate massive levels of debt. The two main culprits will be marriage and home-buying, so you need to evaluate what direction you take regarding these events honestly.
Welcome back to the Staying Debt-Free at Any Age series (20s), where we try to make it through life while avoiding debt at all costs.
Rolling into your 30s. If you did a great job of avoiding debt in your 20s, you’d have a much easier time in your 30. Why is this?
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Most people today will get married in their 30s. If you figured out how to navigate the world by living below your means, saving, investing, and buying income-producing assets, chances are you’ll find someone with a similar mindset.
The biggest financial decision you will make in your life is who you decide to marry. I am not including the financial repercussions of going through a nasty divorce, but just standard day-to-day living.
If you are saving and investing, and your spouse is spending and spending, it will be challenging to make the marriage work. Marriage is 30% love and 70% finances.
The marriage 30/70 rule. Okay, I just made these numbers up, but I will qualify them. Notice that the 30/70 rule applies to marriage, not necessarily relationships in general.
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Chances are, when we fell in love; we were not financially responsible for our partner at the time. They may have been living at home, in college, in the military, or with roommates.
Our love could flourish because we didn’t need to focus on bills, mortgages, credit cards, student loans, and kids. We were in “pure” love, and we didn’t concern ourselves with the dynamics of the “real” world.
As we marry, we don’t plan for the reality of the $5 million lifestyles. We begin to buckle under the pressure of only having one (or two) income streams. We can’t get ahead, so we begin to bicker and blame each other.
However, it’s not our spouses or our fault. They designed the system for us to be in debt for our entire lives. We don’t receive the financial education to start life off on the right foot. Hence, we try to marry into a failed system, and chaos ensues.
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Breaking the cycle. You have to break the cycle in your 20s. Obtaining assets needs to be your number one goal in your 20s, moving into your 30s.
Your mindset will change as you focus on building passive income, creating content, investing in dividends, and starting small businesses. You’ll also meet people with similar perspectives—these will be your future spouses.
It’s nearly impossible to have an entrepreneurial mindset and stay married to a standard “ham & egger” or regular Joe. Your spouse doesn’t have to be an entrepreneur, but they need to understand and support your lifestyle, mindset, and habits.
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The difference between a growth and fixed mindset. The book “Mindset” breaks down the difference between a growth and a fixed mindset. A growth mindset seeks to find challenges and overcome them, while a fixed mindset avoids change and challenge.
Daily, the growth mindset will come home from work, build a business, read productive books, write articles, etc. The fixed mindset will complain about work, come home and binge Netflix all night.
Over time, these differences will destroy the relationship. One person will wake up at 5 A.M. on weekends, while the other will wake up at noon. As the growth mindset develops and changes, the fixed mindset will resent this new direction.
My wife and I. My wife and I both have a growth mindset. Her mind constantly changes while taking care of the family and household. I focus more on outward tasks like dividends and business.
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We both are early risers, keep ourselves in shape, and are accountable while not controlling one another. We have a fantastic relationship, even after 16 years of marriage. We have always been on the same page financially.
Getting married to the right person. To find the right person, you have to know yourself, through and through. You can’t seek someone to help fill a void in yourself. You may need to fill a hole in your life, but not inside yourself.
“How Not to Die Alone” is a great book to read before dating. Preferably, you would read this book early in your 20s, if not in high school. You’ll need to find what kind of dating personality you have and adjust accordingly.
Next, as you become serious with someone, ask some long-term financial questions. Luckily, I wrote an article titled “10 Financial Questions to Ask Your Future Spouse.” It helps to know how your partner views kids, homes, and retirement.
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Form a financial union. As I said earlier, marriage is 30% love and 70% finances. However, once you all get on the same page financially, build an emergency fund, and multiple income streams, you can focus on swapping the two numbers.
Indeed, once you stop stressing about debt, bills, and retirement, you’ll be in love all the time. Seriously, I get massive $80 dividends and have no obligations to pay down. My wife and I can literally go to sushi just for the heck of it.
Having a passive income stream is how we genuinely envisioned our marriage on our wedding day. Nobody told us that there is a learning curve to becoming financially independent.
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The goal of your 30s. The purpose of your 30s isn’t necessarily to become financially independent but to sew the seeds of this freedom early in life.
For example, if you set a goal of getting married, becoming debt-free, and investing $200,000 in a dividend portfolio by age 35, you’ll have a great life.
The power of compounding will continue to grow your dividend portfolio until your end of life. With this mindset, you can go into your 40s and focus on your children and relationships. You’ll never have to add to your dividend portfolio again.
By age 70 (35 years later), you’ll be sitting on $2.1 million from your portfolio without adding a penny (at 7% interest). You don’t need to go super crazy into overdrive in your 30s if you live in a sustainable and minimalist fashion.
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The housing crunch. Unfortunately, I went on about marriage for too long. However, I’d be remiss, not to mention buying the right size (and priced) home. If you purchase a home out of your budget, you’ll suffer financially for 5-10 years (if not more).
I will point you to one of my recent articles, “Home-Buying for the Average Person,” to help you form the correct mindset when going into the home-buying process.
Conclusion. Again, if you find a suitable mate, the wedding, house, honeymoon, etc., will all be part of the master plan. You won’t get yourself in debt trying to keep up with the Joneses.
People won’t like the 30% love and 70% finances number, but you can easily swap the numbers. Your passion will take over as soon as your finances go into autopilot.
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You can’t have a healthy relationship if finances are always your number one concern. Becoming debt-free and building a $10,000 emergency fund will do wonders for your relationship.
Then you can work towards accumulating your first $100,000 and $1,000/month of passive income. You can use this passive income to go on dates and vacations to enjoy each other’s company without financial worry.
Thanks for stopping by and reading. In the following article, I will discuss adding children to the mix. Standby for even more fun in the Staying Debt-Free at Any Age series. Good Luck!
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