I remember a few years ago when gold cost something close to $500 an ounce. At the time, I thought it would be nice to be able to buy some gold (this was before I knew about such things as gold ETFs). However, my family had just moved to a new town. We were renting a house that, technically, was probably a little bit out of our price range. We were still paying off credit card debt accumulated in college. And, of course, there were shiny new student loan payments for my completed M.A., and we were struggling to pay on our first car loan. My home business hadn’t taken off, either, and I was doing the writing equivalent of odd jobs to pay our bills.

Needless to say, the money wasn’t available for me to buy even half an ounce of gold at the time. Looking back, I can see that we missed out on a great opportunity because we weren’t financial prepared to take advantage of what turned out to be a fantastic chance to invest in something that has more than doubled in price in the last five years. (I’m kind of ambivalent about gold right now, though.) This experience has taught me the importance of preparing financially so that I can take advantage of opportunities, whether they are investing opportunities, or opportunities to do something more “fun”, like travel, go out to dinner when a friend shows up unexpectedly, or buy a new bed that suddenly comes on sale.

Preparing Your Finances

We did a number of things wrong at first. Obviously, credit card debt is a huge burden, and those obligations can really limit the amount of available cash you have. Additionally, we didn’t have any sort of savings set aside. We hadn’t even opened a retirement account at that time. We were living paycheck to paycheck, saddled with debt, and paying close to half our income for housing costs. We were in no way financially prepared to do anything. Here are some things that could have been done differently in the years leading up to the day that I thought it would be nice to buy a little gold:

  • Borrow only what was needed: One of the biggest issues was that I took out student loans that I didn’t actually need during my undergraduate years. I did need to borrow for my graduate work, but student loans weren’t necessary before that. Additionally, credit card use by my husband and me was a little bit out of control.
  • Spend less: We had serious issues with the difference between needs and wants. We were always mixing up things like cable TV with needs like food. And we ate out more than we really had money to. Living within our means by cutting back on some of our unnecessary expenses would have been a good thing.
  • Earn more: Neither of us was particularly creative in our income ideas. On top of that, I liked to take off work as much as possible, rather than getting things done. We could have worked toward diversifying our income, and even taking some jobs that we thought were beneath us at the time.
  • Saving: We didn’t save anything. At all. If the recession had hit back then, we would have probably been in a great deal of trouble. We should have been setting aside money for long term and short term goals, preparing for the future, and positioning ourselves. If we had set aside money at the time, we could have taken advantage of a number of opportunities.

Now, we are blessed enough to be in a better financial situation. We still have student loan debt, and we recently bought a car with financing, but our housing costs are around 20% of our monthly income, and we have a savings plan. We live within our means, and are financially prepared to take advantage of many opportunities that come our way. But sometimes, looking back, I still sigh at what could have been if we had been prepared a few years ago.

This post was included in the Carnival of Personal Finance



Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.