Increasing your financial runway
There is a very frustrating aspect to getting out of debt: no matter how badly you want it, it still takes time to get there.
I re-run the numbers all the time wondering if there’s another $200 a month I can optimize and throw to debt. However, even that barely seems to budge the needle. Sure, $200 is a worthwhile chunk of money. But when you’re starting with $100,000 in debt like I was, those $200’s don’t seem to add up fast enough. Throw in my desire to also save up an emergency fund and a few months expenses along the way and it can sometimes feel like I’m just spinning my wheels. The truth? It can be difficult to stay motivated on the journey to debt freedom. It’s easy to question whether the progress you’re making is worth anything when it feels like it’s taking such a long time to “arrive”.
We’re going through some life changes right now, so it’s re-awakening my “are we doing enough?” thoughts. The concept of increasing your financial runway helped me in the past (I wish I could remember where I initially read it to give that person credit; if you know please post it in the comments!) so I thought it would be worthwhile sharing.
Increasing your financial runway is the concept that there is value to every incremental improvement to your overall financial picture along the way, even if it does not feel that way.
Picture your life as a plane, and your finances are the runway.
You’re barreling through life, and an unexpected event hits. Do you have time to assess or swerve? Is there still enough space left to take off rather than crash?
Increasing your financial runway buys you time before a problem becomes a crisis.
Living paycheck to paycheck with a lot of debt? Your runway is short.
Fully reached financial independence? Congrats, your runway is essentially indefinite! (Although I’d argue just like a real runway it still requires maintenance and re-assessing from time to time).
Essentially, every incremental improvement to your runway puts you one step further from disaster and ruin.
It’s so easy on your journey to debt freedom to convince yourself you aren’t making progress. Having $55,000 debt doesn’t feel much different than paying it down to $52,000, but it IS. It’s an extra few paces of runway.
There aren’t two categories: in debt or out of debt. There’s a whole spectrum in between, and just moving closer to debt freedom gives you more options.
While you’re trying to save an emergency fund it’s not at zero or fully stocked. Even if your goal is to have $10,000 in an emergency fund that doesn’t mean the first $500 is inconsequential. There are lots of events where $500 could save your butt and prevent you from falling further back into debt.
Finances aren’t black or white. The options aren’t start line or finish line. You’ll likely spend years or decades at the “in between” phase. Try to appreciate the journey and not just the destination.
Every step forward increases your financial runway and give you more options. More time to figure things out and avoid a crash.
You’re making progress. I’m making progress. Sometimes we just need to be reminded 🙂