How to Easily Crush Your Goals With a Budget
Oftentimes when people hear the word budget, they curl up inside as they start to imagine all the fun things they won’t be able to do anymore. I’m here to stand up for the budget! But when done correctly, a budget does the exact opposite, it helps curate your dream life.
So let’s dream a little. If money wasn’t a factor, what would your life look like? Would you move to the beach? Go back to school? Upgrade your car? Whatever you want to achieve in life, here’s how you can utilize a budget to help you achieve real results.
Set SMART Goals
If anything is true, it’s that you can’t get somewhere if you don’t know where you are going, the same goes for your goals! This may not be the first time you are hearing about SMART goals but if it is, you want your goal to meet the following criteria:
Specific - make your goals specific.
Measurable - define how you’ll know if you are making progress.
Attainable - make it something that’s actually attainable.
Relevant - align with your values and long-term objectives.
Time-based - be clear and realistic on your end-date.
When you create goals, you’ll want to calculate how much it will cost. Whether you’re paying off debt or running a marathon, your goal will require a set amount of money. Set some time aside to ensure you’ll be able to reflect on your goals without interruptions. Bonus points if you get cozy with your favorite beverage as you dream.
Adjust Categories to Save for Targets
Once we have our SMART goals, it’s important to look at your budget to financially account for this new goal. If you are thinking to yourself, ‘what budget?’ then don’t sweat! Simply look at all of your planned money going out of your accounts (in the form of bills, household expenses and cost of living) compared to your income.
If you have a plan to run a marathon this year and you want to start going to the gym, you’ll want to save for your membership, a new pair of shoes and miscellaneous expenses as you test out different energy gels or performance enhancers.
If you don’t have a wellness category in your budget, be sure to add it to account for your new goal. If you do already have a wellness category, you may need to increase the amount you’re saving each month.
Saving small amounts of money over a period of time is called a sinking fund.
Adjust as Needed
As we start saving for new items (or take on a new expense) it’s important to look at our budget as a whole to see if your income allows for this change. If you have extra money in your paycheck it’s easy to allocate these funds to go towards your goal. If you don’t have extra money you might need to adjust your budget by reducing spending in other areas.
You never want to be spending more than you bring in each month, that is how we accrue debt. Be sure to follow a zero-based budget to ensure every dollar is accounted for while avoiding excessive spending.
Start Saving Early
The best time to start saving for something is today! A clear example that I think a lot of us can relate to is saving for Christmas. If you start saving in January you’ll have a full year to reach your target versus sacrificing your entire paycheck in November and December.
Outlining your goals early will allow you to save with less stress as it will require less of your paycheck each month.
Automate
There are plenty of tools to help you automatically save and transfer money. I personally love YNAB (You Need A Budget) to keep track of my monthly savings goals. Otherwise setting up an automatic transfer at your bank into a savings account will help you stick to your goals.
Pro tip, be sure to have a tracker to know how much of your savings account balance is earmarked for each goal. As a transfer happens, increase the amount funded for each goal in your tracker.
A Real Example
Here’s an actual screenshot of a portion of my budget within YNAB. Below are goals that we have committed to saving for at the beginning of the year, each with a financial target and date we need the money by. By using sinking funds we are able to take off some of the stress of life being so darn expensive while also ensuring we reach our goals.
There are plenty of other sinking funds in other parts of our budget that include paying for my MBA in cash, completing house projects or saving for pet expenses. The number of categories you have will depend on how specific you want to be.
5 Debt Statistics You Should Avoid
Whelp folks, 2021 numbers are in and not to anyone’s surprise, things didn’t go great for us financially. The good news is that you have the power to change your life! The tricky part is that only you can do the work to change your life.
But don’t fret, I am all about giving you the tools and empowering you to change the financial path you’re on. Below are a few 2021 financial statistics, provided by SpendMeNot.com along with some free advice to help you ditch debt and live rich.
The average credit card debt in America is $6,270.
SpendMeNot claims that “credit card debt is one of the biggest financial problems that households face in the modern world. According to estimates, 45.4% of families carry some sort of credit card debt.”
When we carry over a credit card balance, not only are we paying high interest, but we are proving to ourselves that we can’t afford the lifestyle that we are living. This doesn’t necessarily have to mean that you are living extravagantly, but that you are spending more than you make.
When creating a debt payment plan, paying off credit cards is often top priority as the interest rates are unaffordable. Getting personal loans or transferring the balance to another card is always an option to reduce this debt, but should be consulted first with a professional. Whichever debt payoff strategy you choose, eliminating this high-interest debt should be top of mind.
Just 39% of Americans have enough cash to cover a $1,000 emergency.
When we think about the emergencies that happen in our life, it’s often a car needing repairs, a water heater going out or an unforeseen medical expense. It’s important to have money set aside for these obligations as they often find their way to credit cards, resulting in paying high amounts in interest.
A simple plan to increase your savings will ensure you don’t have to put unforeseen expenses on a credit card. Even if that means putting a pause on other financial obligations, it will be worth it in the end. If you don’t have additional income to build up your savings, you may want to look at temporarily cutting unnecessary expenses or increasing your income.
70% of Americans say their financial planning needs work.
If you feel like you don’t have enough tools in your toolbox to make the financial decisions in your life, you’re not alone. Enlisting the help of a financial planner or coach can help you ensure you reach the goals you have outlined for your life. No goal is too big or too small and the time to start saving is today!
I offer a free initial call to those seeking out expert advice in budgeting and managing debt, you can schedule here.
16% of Americans say they have more debt than before the pandemic.
The pandemic created a financial mess in our lives, lost jobs, reduced hours, business closures and so much more. The key takeaway is that we don’t have complete control over our lives but we should always be doing our best to prepare and move on from financial hits we take.
If you have increased debt, create a plan to pay off your debt and increase your savings to reduce the amount of debt you might have to take on in the future.
It’s also smart to think about diversifying your income. If you were to lose your job today, how else would you make money? When we have multiple income streams we are adding a layer of protection in case our employment changes.
Only 24% of Millennials demonstrate basic financial literacy.
While this stat is scary for millennials, I am not sure it’s any better for Gen X or Gen Z. A basic understanding of expenses, income, assets, liabilities, tracking spending and creating a budget is crucial to your financial success.
The ball is in your court to improve your financial literacy. By gaining basic knowledge in managing your income, debt and assets you’ll be able to set yourself up to build real wealth to reach your future retirement goals.
A key takeaway from these statistics is that no matter how bad you think your finances are, you’re not alone and hiding from the problem will never make it go away.
9 Things That are Better When Buying Used Than New
Each time you go to make a purchase, I want you to ask yourself if this is something you can find used. First, buying used in the categories below will always save you money. Second, buying used eliminates waste.
Every time we buy from a thrift store, garage sale, online marketplace or from a friend, we prevent another item from making its way to the landfill, giving it a second chance at life while reducing waste.
Here are nine things that are better when buying used rather than new.
Clothing
Shopping at thrift stores, garage sales, online second-hand marketplaces or your friend’s closet isn’t just good for the environment, it’s also good for your pocketbook. The standard clothing markup from a wholesaler to a boutique is normally 2 or 2.5 times their purchase price. This doesn’t mean the price isn’t justified, a lot of money goes into owning a business and producing fair trade items. But paying premium prices for clothing must be something intentionally set out to do, not just because you landed yourself at the mall.
Books
Whether you’re looking for a specific book or your next fun read, online bookstores allow you to buy books that are both used and in top condition. If you are looking for audio books, apps like Overdrive allow you to connect using your local library card and rent e-books and audio books for free. You can also look for used textbooks online for school at sites like Amazon, Chegg and Campus Books.
Designer Labels
Whether you’re looking at clothing, handbags or accessories, buying used will always reduce the cost. Look for designer consignment shops or search for specific brands on your favorite online secondhand marketplace. Be sure to watch out for fakes and always meetup in public places if you are buying from an individual.
Jewelry
I bought my engagement ring at an estate jeweler and not only did I pay less than what it was appraised at, but was able to find a vintage 1930’s ring that fit the unique style I was searching for. Be sure you are using certified and trusted dealers, you don’t want to be spending money on misleading or fake pieces. Here are some additional helpful tips when shopping vintage.
Exercise equipment
Remember when Peloton was blowing up in the beginning of the pandemic? It seemed like everyone I knew bought a bike. Those same bikes, purchased by well-intended individuals, are now selling for hundreds off online, barely used.
Being in the first wave of shoppers comes with its perks but if you are willing to wait, this is an industry that will always have used equipment for sale at a heavily discounted rate.
Sporting equipment
Retailers like Play It Again Sports are a great example of buying used with heavily discounted prices. Buying kids gear used is an especially good idea since they often outgrow items before the next season. Shop by sport and filter your results even further by specific pieces of equipment or by gender. Stores located nationally!
Furniture
It is few and far between when I buy new furniture, the last time I did was for a desk and it was because what I was looking for basically didn’t exist in the beginning of the pandemic when everyone was working from home. Besides these rare occasions, you can find anything online. If you’re looking for something specific, Facebook Marketplace is always a favorite, allowing you to set up alerts when new items are posted. You can also filter by price if you want to browse but know you don’t want to spend more than $20.
Pro tip, I often upgrade my furniture using Facebook Marketplace as I get sick of something. I have replaced my coffee table three or four times, selling the old item often for more than I buy the new one for.
Lawn & Garden
Rakes, shovels, hand tools, garden wire, pavers and so much more are available online at discounted prices, oftentimes free. I use Facebook Marketplace here as well and most of the time it’s a matter of remembering to search used before going out to Home Depot for whatever you need. You’ll see more of these items seasonally once people clear out their garages or as they move. Prices will be much cheaper off-season so if you know you want a new snow shovel, summer is the time to start looking!
Kitchen Misc.
I recently was on the search for ice cube trays and while I could have purchased them on Amazon for probably $2 I wanted to find some used because I knew thrift stores are always filled with them. Items like plates, blenders, graters, cooking utensils and storage jars are easy to find and almost free. Look for these both on Facebook Marketplace and your local thrift store or garage sales.
5 Things I Spent Money on While Getting Out of Debt
Deciding to pay off your debt is a personal decision with a path that is as unique as you are. There are no formulas that will get you the same results within the same timeframe as any one else and that’s ok.
If you have chosen to pay off your debt you may decide to be gazelle intense as some personalities might suggest, or you may choose a lifestyle that will allow you to stick to a long-term plan.
Whichever route you take, here are five things I still did while paying off debt and looking back, I don’t regret any of it!
Life Milestones
There comes a time in our lives when it seems that everyone we know is either getting married or having a baby. Watching close friends and family tackle these new phases of their life was something I wouldn’t have missed for the world.
Participating in bridal showers, bachelorette parties, wedding showers, weddings, baby showers, sprinkles, etc. is something that took considerable financial resources. If avoided, I could have been debt free months earlier than my actual debt free date, but for what?
At what expense was I willing to become debt free while missing out on these large life milestones? This was not one of them.
Travel
While excessive traveling wasn’t in question, it was a no-brainer for Derek and I to participate in trips that we both considered important. This often looked like visiting friends for big birthday celebrations, weddings that were out of state or long weekends up north to enjoy the woods.
Whatever the event, we made it happen within a budget that was predetermined while weighing all of our options to ensure the trip was affordable, while allowing us to stay on track to pay off our debt.
Happy Hour
One of my favorite pre-pandemic rituals was happy hour at the local watering hole with co-workers or close friends to unwind from the day.
To keep costs low, I was always willing to pick the location to ensure a good happy hour menu with plenty of snacks and beverages at a discount.
I think back fondly on those days as a moment in time I got to connect with friends on a micro level, which can never be replaced by virtual happy hours.
Good Groceries
Good food has always been important to me and as a pescatarian, eating grilled chicken with veggies isn’t an option for my weekly meal prep as some influencers might suggest. A healthy diet including a lot of fresh fruits, vegetables, nuts and seafood ensures I care for my body as much as I want to care for my checking account.
Our co-op membership was also supported while we were becoming debt free and something we valued as a couple.
Weekend Fun
Whether there is a local art fair, music at the park or a new beer release at a brewery, it was always important we had money each weekend to get out and enjoy time off of work.
Sometimes the lines blurred as we were spending weekends traveling, chasing the latest food craze or meeting up for Sunday Funday but that’s where we were flexible. As long as we were making our monthly extra debt payment we were able to choose how we spent our time and the money that was left after our fixed expenses.
The more we spent the more shifts I’d usually pick up waitressing but it truly was a work hard play hard time in my life. And I don’t regret a single moment of it.
Don’t feel guilty for spending while you are paying off debt. Society might try to tell you you’re cheap or stingy but only you get to say what stays and what goes. Afterall, personal finance is just that, personal.
5 Ways to Tackle Debt While Federal Student Loans Are Deferred
Federal student loans have been deferred since March 2020. That is two full years of your loans not accumulating interest. If you haven’t been tackling your debt head on, now is the time. As jobs are restored and payments continue to be deferred, you’ll be able to make the dent in your debt that could change your life. Here are 5 ways you can reduce your debt.
Continue Making Payments
Payments on federal student loans were initially paused as we were facing the pandemic head on and millions of Americans lost their jobs (or were seeing a reduction in hours). Now that employment is up, you should really look at your finances to determine if you can afford to start making your monthly payments again, even if they aren’t required.
By making payments, you are putting more of your money at work since your loan isn’t accruing interest each month. Your entire payment will be going towards the balance, making it easier than ever to pay off that loan.
If you can’t afford to make the entire payment, assess how much you can afford. It’s easier to start adjusting to what life looks like with that new expense before it’s actually required to allow yourself some room as you are testing your payment affordability options.
Pay More Than Your Minimum
Really ask yourself, can I afford more than the minimum payment or do I just not want to? If you are barely scraping by, without excessive spending in areas like restaurants, clothing or vacations, then maybe the minimum payment is all you can do right now. Be ok with that! As you have time, start to look at how you can increase your income.
If you can afford to pay extra, how much extra are you able to pay each month? This will be determined by your existing income and expenses but a budget can help you answer that question. I like to use this Debt Reduction Calculator spreadsheet from Vertex 42 to see when you can be debt free, allowing you to play with different monthly payment scenarios. This might be the exact tool you need to get motivated to pay extra on your debt.
Focus on High Interest Debt
If you have debt with higher interest rates than your current federal student loans, you may want to think about tackling that debt first, utilizing the avalanche method. Use the calculator above to assess your options. Using money earmarked for your student loan payment to pay extra on another debt will allow you to reduce the principal on the high interest debt, allowing you to pay less interest over time.
This will only be your strategy during the deferment period but if history repeats itself, extensions of this grace period will continue to happen.
Adjust Your Budget
Whether you are struggling to make a payment or trying to calculate how much you can afford to pay towards your debt, a budget can be a helpful tool to answer all your questions. The 90-Day Expense Tracker in this free Ditch Debt Bundle will help you to figure out where the heck your money has been going. From there, you can decide if you need to tighten the belt in areas of excessive spending or eliminate spending in areas of habit or convenience.
Remember, following a plan to pay off debt can be as aggressive as you want and it doesn’t last forever. I followed an intentional semi-aggressive plan to become debt free and while 20 months seemed to last forever, it still included vacations, happy hours, weekend festivals and home repairs. Paying off debt can happen in tandem to enjoying life.
Increase Your Income
At the end of the day, sometimes we just have to increase our income. Take a look at your free time and decide if a side job is necessary to tackle debt. This doesn’t mean working every weekend at a job that pays barely above minimum wage. Get creative and truly work smarter, not harder. Utilize your hobbies, skills, certifications, previous experience and network to find work that will pay you what you’re worth.
Once you have additional income coming in, don’t waste it. Make a plan to use that money to pay off debt, save for a large expense or increase your emergency fund.
While working with clients to become debt free, the problem I often see isn’t that they don’t make enough money. It’s that they don’t have a plan for their money and they don’t give every dollar a job.
5 Unhealthy Money Habits That Lead to Excessive Stress
There are a lot of things that can cause worry when it comes to money. Do we have enough for retirement? What happens if the car breaks down? Can we afford to go on a family vacation this year?
Don’t let money stress scare you off from changing your financial situation. Acknowledging where we are financially is the first step to gaining clarity and reducing stress. Here are five money habits to avoid while trying to reduce stress.
Focusing Too Much on the Future
Saving for your future, having a rainy day fund and setting some money aside for an emergency are all important aspects to managing your money with less stress, but only to a point. It is crucial that we are enjoying today because we don’t know if we’ll have another tomorrow.
In addition to preparing for your future, set money aside each month to have a little fun. Whether you dabble in the music scene, have an expensive hobby or enjoy wine with friends, don’t let a limiting mindset stop you from actually living.
Trying to Keep Up With the Joneses
We’ve all been guilty of wanting something because it looks cool or we hope it will make us feel better about our life. But if we are constantly chasing someone else’s dream, where does that leave us with our own dreams?
Take a look at all of your spending and ask yourself, is this something that is truly important in my life? If so, great! If not, maybe it’s time to let it go.
And now is not the time to be worried about sunk costs that you already have invested, you’ll be saving yourself more money in the long run by quitting now versus later.
Being Stuck in a Job You Hate
Chances are your stress is high if you are at a job strictly for the pay or the benefits. We often feel like we don’t have a choice or we should be grateful if we are able to make a livable wage but I ask you, can we not raise the bar?
With increased stress, you might find yourself drinking more, have more stressful weekends fearing Monday or be unable to contribute to your household in a way your partner might prefer.
All of these events may not make the pay or benefits worth it in the end. You may also discover that you’d be able to survive off less money each month if you lived a more curated life.
If you don’t look forward to your job each week, click here for additional resources.
Hiding Money Secrets From Your Partner
When we hide things from our partners everything immediately becomes more stressful. We have to keep up with the lies we have told, hide transactions from accounts, come up with excuses for missing money and an assortment of other stressful events.
Having honest and open money conversations with your partner can result in reduced stress and anxiety, and can even help improve your financial situation.
Feel Pressure to Hit Societal Goals
Have you ever thought that you should have your student loans paid off by a certain age or that you will reach retirement by another age? The stress comes into play when we make these promises to ourselves as goals are unattainable, don’t speak to our true desires or aren’t taken seriously by following a plan.
Worse yet, we can start to have feelings of failure when we are off track in reaching these goals even if the reasoning behind the goal was societal pressure, not our true desires.
Don’t choose your goals simply by what a friend wants to accomplish or will make your mother proud. Choose one that will speak to your soul.
Ready to Invest? 5 Steps to Reach Goals You Can Afford.
Investing is the fun and sexy part of personal finances. We all have that dream of building our nest egg so we can retire, quit punching a clock and finally fill our days traveling with a margarita in hand.
“How should I grow my investments” or “what do I need to do to start seriously investing” are questions that people start to ask as we get excited about this phase of our finances, but let’s not rush things.
In order to start investing responsibly, a few things need to be in order first. To sort out how much you should invest and when you can start, follow these five steps to start investing.
Write Out All Your Financial Goals
When we financially want to take on new things it’s important to weigh them against what your current priorities are. Since money is a relatively limited resource (in the sense of how much you bring home today, of course this number can increase in the future) we need to work to ensure every dollar is working towards our greater mission.
To do this, write down everything you want to accomplish. Whether you’re looking to move across the country, upgrade your old car, pay off student loans or retire by a certain age, each will require money.
As you write down your goals, be sure to include a healthy balance of short-term and long-term goals.
Rank Goals in Order of Importance
Take a look at the list of everything you want to accomplish and rank them against one another.
Which goals did you write down that are absolutely critical to your happiness? Which ones can wait? Which ones will require a large financial investment? The answers to these questions will show you where you should start saving.
Be sure to include both short-term and long-term goals on your final list. It's important to take care of yourself today while also keeping your future self in mind for their hopes and dreams.
Calculate Monthly Amount for Goal
Once you have narrowed down your list, create a mini budget to calculate how much money you should set aside in your sinking fund each month to reach your goal on time.
Here’s a video walking you through this simple yet critical process.
For example, if you want to save for a down payment on a new car you will need to know how much money you will be saving and when you will need it. If you want $8,000 by next summer, let’s say that’s in 15 months, you need to start saving $533 a month to reach your goal (the amount of money needed divided by the number of months you have to save).
If your target monthly savings may be adjusted if the amount is unaffordable (taking into account your monthly expenses and income). If this is the case, determine if there is room to adjust the amount needed or the date you wish to accomplish the goal.
Reconcile With Other Expenses
The cost of your current monthly expenses will determine how many goals you will be able to start saving for immediately and which ones will have to wait. If you have monthly expenses that are less important than the goals you are trying to accomplish, look at reducing these expenses. This will allow you to increase your monthly cash flow and save worry-free for these goals each month.
For example, maybe you want to join a running club to help you train for a big race but you don’t know if you can afford it. You could evaluate your streaming services and reduce your monthly entertainment expenses since more of your time will be spent outside training with your new run club friends.
Automate
The first trick to paying off debt or saving money to reach a goal is to automate. Don’t let that money hit your bank account, or be sure it doesn’t stay long. Work with your bank to automatically transfer money to another account to help you reach your goals without ever having to lift a finger.
Bonus: Paying Off Debt and Your Employer Match
If paying off debt and investing for retirement make the final list of goals you want to accomplish then there are a few routes you can take. Choose a route that feels most comfortable to you, taking into account the time it will take to become debt free and how long you have until retirement.
Option 1 - Pause investing until debt is paid off (recommended for short-term debt payoff plans, 24 months and less). This is a route some people take when paying off debt is more important than anything else or causing a lot of stress.
Option 2 - Continue investing to qualify for your employer match but contribute nothing more (normally recommended). This option is ideal for those with the idea that missing out on employer matched funds isn’t worth becoming debt free sooner.
Option 3 - Continue investing fully to reach retirement goals (this will extend your goal date to become debt free). Ideal for those with the mindset that debt is a part of life but their future should be considered over anything else.
Please speak with a certified professional to help you make a decision.
5 Questions to Ask Yourself Before Making Big Personal Finance Decisions
Spending money is something we all do basically everyday. Oftentimes we don’t even think twice about it. We are trained to swipe a card and make the monthly payment, we have become numb and disconnected from our money.
In order to reach our goals, we need to be sure we aren’t setting ourselves back. Big decisions often take time and it’s important to weigh your options to help you make less-bad choices with your money.
To help in making important personal finance decisions, here are five questions to ask yourself before making those big decisions.
Do I understand what I’m signing up for?
There are things we do on a daily basis that have a major impact on our finances, and we don’t even take time to think about the downstream effects. Whether we are taking on new debt, refinancing a loan, deferring a payment or carrying over a credit card balance, our monthly cash flow is affected.
Luckily, it’s not always affected negatively but it’s important to understand what each of these items mean to your bottom line. Before you sign up for anything, research which questions you should ask and what you should know before going into the deal to ensure you are prepared and not caught off guard if something comes up.
Why does this have to happen now?
We often find ourselves in a pickle financially because we made a quick decision in the moment that we thought would be a great idea (The Hangover anyone?). Well I hate to break it to you but your future self is usually less that impressed with these spur of the moment choices.
If you’re buying a new car, is it because your old one literally needs a new engine or is Tesla’s new model blowing your mind? Are you house hunting because you are now sharing a bedroom with your kids or because you got a raise at work and could use the extra space?
Understanding why this is happening right now will help you decide if it has to happen right now or if it can wait. If it can wait, this allows you to save a bit of money to prepare and take less of a hit to your checking account.
What would I do with this money if I didn’t spend it here?
Let’s go back to that car loan example. If I were to venmo you $246 each month, would you spend it on a car loan or would it be going towards something else? If you immediately start thinking about that beach vacation, a new patio set, hockey equipment or anything else besides the car, you might not need the car.
Start thinking about debt and expenses as opportunities to spend money on something that makes you happier or your life easier. This will allow you to stress less about, “can I afford this payment?” and dream about “what could I be doing instead”?
Am I trying to make someone else happy?
Your life should consist of only the things that bring you the greatest joy, and nothing else! I often like to purge things in my house as I feel the clutter building up. I then start to wonder, why did I even buy this in the first place? The answer is usually because I found the thing at a thrift shop and it was too cheap to pass up or I was at a friend's house and saw the thing and had to have it myself.
When we are alone with our thoughts we are truly able to imagine our dream life without the influence and clutter of other people’s opinions. What are you buying to look a certain way? Are you spending your time on things that are based on loneliness, missing out, the latest trend or what you “should” be doing? If so, it’s time to let that go!
Does this align with my larger goals?
At the end of the day, we only have so much money to work with. The only goal for that money is to allow us to live a happy and healthy life, with those we love most and in a place that speaks to our soul. That’s it.
When we waste money on things that don’t bring joy or we spend it chasing something that we no longer want, we are throwing away precious resources that could help us live that best life.
It’s important to know what your version of “best life” looks like and map out how to get there. Focus your savings and align your spending on reaching those goals, you’ll be happier because of it.
4 Ways to Heal From Financial Trauma to Begin to Pay Off Debt
The journey to pay off debt, or simply stop living paycheck to paycheck, can be a long one. We are flooded with emotions of failure, overwhelm and stress topped off with an overarching feeling of “what the heck am I even doing?”
I’m here to tell you, it doesn’t have to be that way. I avoided my debt for eight years because I thought it would eventually settle itself and I’m here to tell you, that just doesn’t happen.
The best way to fix our problems with money is to tackle it head on! Sit with the emotions that money stir up, work everyday while giving ourselves grace and just try to improve one thing at a time.
To help you get started, here are four ways you can begin to heal your relationship with money and actually make progress on paying off your debt!
Dig Into Your Current Beliefs
I used to say things like “must be nice to not have any student loan debt” and looking back now, I cringe. I had no idea what those people were dealing with in their lives! Did I wish that I didn’t have student loan debt? Absolutely! But I didn’t need to project that onto other people.
What are some of the things you tell yourself or think about money? Are you embarrassed by how much money you make? Do you think people with flashy things are greedy? Are you afraid to spend money because you have to save some for a rainy day?
Many of our beliefs are instilled in us at an early age and it’s often not a reflection of our true beliefs. Take some time to write down all the things you have heard about money. Reflect on whether or not those statements have to be true. If not, how can that change things in your life?
Change Negative Messages You’re Telling Yourself
Unfortunately we are often more harsh on ourselves than we are to other people, and that has to stop! The messages that we are telling ourselves are more powerful than we even know.
To quote Gandhi, and yes, I’m bringing Ghandi into this:
“Your beliefs become your thoughts, your thoughts become your words, your words become your actions, your actions become your habits, your habits become your values, your values become your destiny.”
So be nice to yourself and start to reframe negative self talk before you manifest a nightmare. Instead of telling yourself that “you’ll never have enough money” start saying “I am excited for the future because I have the power to change my life” or “I know I can build wealth and am worthy of nice things.”
Create a Roadmap to Reaching Your Goals
In order to reach our destination, we have to know where we are going. Once we start to believe that we have the power to change our lives and that we are worthy of wealth it becomes much easier to curate the life we’ve always dreamt of.
Write out your top goals you’d like to accomplish within the next six months, two years and five years. For each goal, write out what you’ll have to do to make them come true. How much money do you need? Do you need to start scheduling your time better? Will you need to surround yourself with a supportive community? Use all of this information to propel you to running that marathon, paying off that debt, moving abroad or whatever speaks to your soul.
Celebrate Your Progress
It takes a lot of guts, self-love, patience and perseverance to tackle our money problems and we often don’t see results overnight. Be sure to build in moments to celebrate your goals and take time to reflect just how far you’ve come.
I used to buy a fancy bottle of wine or have a date-night with my partner (restaurant my choice, of course) when I was paying off debt. I say this because even if you are throwing all your extra money towards a goal, you should still be spending money on the things that bring you joy, otherwise it won’t be something you stick with long term.
If debt is something you have been struggling with and need some support on, schedule a free consultation call and let’s see how I can help you reduce stress, pay off debt and build wealth!
4 Apps You Need to Get Out of Debt
There’s an app for that! There is seriously an app for almost anything, even an app called I am Bread where you are a slice of bread and your entire mission of the game is to become toast.
Even if you are feeling the stress of ‘I have too many apps’ there are always a few that should make the cut. These apps are designed to help keep your spending in alignment with what makes you happy, pay off debt and live your #bestlife.
Here are the four apps you need in your life to keep your bank account fat and happy!
App to Budget
It’s no secret that I am a huge fan of You Need A Budget (YNAB). I have personally used this app for a few years now and it’s my lifesaver as I try to stay on budget and reach my large savings goals. Be sure when you choose an app you pick something that doesn’t just track your spending, you want to be sure it aligns with your budget and the amount of money you assign to each category within your budget.
Pro tip, some apps don’t make you pull money from other categories when you overspend. If you have a budgeting app and use it regularly, this might be why you are still feeling broke and stressed with your money.
Check out other apps that you might want to check out.
App to Track Debt
When you are getting out of debt, it’s important you have one place to track all of your individual debt balances, interest rates, payment due dates and extra payments made. Apps like Debt Payoff Planner can help you achieve debt freedom quickly as you get organized, play around with payment options and stay motivated to achieve your goals.
Here’s a full list, be sure to check each app to be sure it includes features that are important to you.
App to Split Expenses
Picture this, you're going on vacation with a friend and you're sharing a room. You pick up the room charge but your friend promises to pay for the car rental. You take turns paying for dinner but who's really keeping track, right?
Hear me when I say, you are not cheap when you keep track of expenses while you are trying to get your finances organized. Never.
Apps like Splitwise can take the guesswork out of who pays for what and who owes who. Do you have that cheap friend that always gets out of paying? Even better!
Once I introduced this app to my friends on our first trip, it became a no-brainer and I’ve used it ever since.
App to Get Paid
You’ve done the work to get your budget in order, you’re making progress on your debt and you are finally going on a trip with friends, life is great!
This sounds obvious but, have an easy way for people that owe you money to pay you. Don’t let someone else mess up the system you worked hard to build. Don’t trust they will pay you when they get cash later or they will cover your next concert ticket, you don’t have time for that and your debt is charging you interest by the day.
I use Venmo or PayPal but use what your friends use and use something that doesn’t charge you a fee, here’s a full list of options.
Tips to Keep Our Kids Out of Debt
Let’s face it, a lot of us have learned about debt and managing our money the hard way. We found out about negative balances when our cards declined at checkout or we saw firsthand what 20% interest on a credit card balance actually adds up to.
While our kids have grown up with money in the digital age, there are still some lessons we can help them to learn while they are under the safety of our homes to allow them to start steps ahead of their peers.
Pre-Teen & Teenager Money Tips
Teach them the basic principles of personal finance such as income, take-home pay, expenses and savings.
Our teens will be more interested in budgeting when they know what they’ll get out of it (be sure to highlight how budgeting can get them what they want).
Help your teen create the budget categories that fit for their life (Clothing, Personal care, Car insurance, Cell phone coverage, Gas money, Entertainment or going out with friends, Food, School supplies or extracurricular activities that you don't pay for).
Assign percentages to each budget category to help them budget more easily (50/30/20 rule can help with this and make budgeting go more quickly - needs, wants and goals).
Highlight and help them curb their impulse spending on items that weren’t considered important when creating their budget.
Teach them about loans (especially student loans and car loans) and help them decide if it’s a smart choice for them or how to avoid crippling debt.
Money Tips For Any Age
Sit down with them on a regular basis to show that money isn’t a taboo topic and your home is a safe place to make mistakes and ask questions.
Show that money should be used for 1) expenses 2) giving (donating or supporting a friend’s fundraiser), 3) saved for later and 4) enjoyed!
Especially for our younger kids, use a clear jar to save to create the visual of money.
Talk about the importance of saving up for larger items and help them break down the math into monthly savings goals (saving for a game, large toy, car, first year of college, etc)
Show them that stuff costs money by removing money from their bank account or piggy bank to make a purchase, this visual will make it more real in the digital world we live in.
Apps & Games for Money Conversations
Learning about money and keeping track of it can be fun and it’s important to show your kids this side of personal finance. They won’t be interested in something boring so here are some tools to keep your kids engaged in money topics, help you track chores, give your child their allowance and ensure they are following the plan you created together.
5 Money Lessons I Learned While Getting Out Of Debt
When I was getting out of debt, I was learning all sorts of money lessons that I felt I should have been taught years ago. Things like loan terms, budgeting, minimum payments and interest rates have a real effect on our finances and if we don’t understand them, or use them to our advantage, we directly feel the pain of financial stress.
Here are 5 money lessons I learned while getting out of debt that you can use to get yourself out of debt and help your children stay out of debt!
It’s Important to Understand Things Like Loan Terms and Interest Rates
Before I got serious about paying off my debt I consolidated some of my student loans to get a better interest rate. Sounds smart, right? No! I didn’t understand loan terms and while that sounds simple, it’s a trap we can all fall victim to. The possibility of a much, much lower monthly payment gets a certain part of our brains excited and we don’t even realize how much more we’ll end up paying in interest. My advice, do the math and don’t sign up for longer terms unless it’s absolutely necessary, extending your debt doesn’t help.
Minimum Payments Won’t Make Your Debt Go Away
The amount of your minimum payment doesn’t really matter. For example, I used to think that just because I paid over $500 a month on my student loans I was being responsible because that’s a lot of money! In reality, it was that high because I had a lot of debt. Consider your minimum payments just that, the bare minimum.
Do yourself a favor and use a calculator to see how much you can save if you were to pay just a little extra each month. Here’s a great calculator for credit cards and here’s a more general calculator for all loans. When you can see how much money you can save on interest by paying just a little bit more each month, it might be all the motivation you need to pay off your debt. Your hard earned money should be used to live life, not pay interest on debt.
Looking at Statements Is Important
I am a sucker for setting up auto payments. Having to remember to login on a certain day to make a payment does not bring me joy. But, the entire reason I am here today is because I decided to login to my accounts one day and see how much I had remaining - spoiler alert, it was a lot! I wasted years of interest payments because I assumed I was close to paying off my loans.
When we force ourselves to login, see how much we are paying in interest a month and look at how many more payments we have left, we are more likely to change the situation. I’m not saying you aren’t allowed to auto pay each month, but it’s wise to login and be involved with your debt on a regular basis.
It’s Critical to Have Goal Around a “Debt Free” Date
The quickest way to get to the finish line is to know where the finish line is. Committing to yourself to become debt free isn’t easy but it’s a game-changer when we feel the stress and anxiety debt can cause. By setting a goal to become debt free you can keep your head down to do the work while knowing this isn’t forever. Here's a great calculator to help you set a goal to pay off your debt. You’ll be amazed how quickly you change your life when you become intentional with your spending and your goals.
I had a goal of $400 a month that I needed to earn waitressing as a side hustle. If I broke that down, it was only $100 a shift, once a week. By setting a realistic goal of additional income, I wasn’t stressed by the feeling of always needing to make more money. I also committed that $400 to pay extra on my debt, no matter what. If I made more than $400 in a given month it was up to me to decide what to do with it, no added pressure. As my debt total began to dwindle it was amazing how motivated I became to pay even more than the $400.
Every Penny Matters and a Budget Helps
When you commit to your new monthly payment (beyond the minimum payment) it’s important to stick to that number. That monthly payment directly affects the date you’ll become debt free and every time you pay just a little bit less, you are extending your debt free date.
If you are having trouble sticking to the payment try to make that payment at the beginning of the month so you don’t have a chance to spend it as ‘something came up.’ If you are not happy with your debt free date, look at your current spending and see how you can increase that monthly payment, you’ll be amazed how much money we spend on convenience items (like going out to eat because we don’t have groceries). Here’s my free 90-Day Expense Tracker if you need to sort out where your money is currently being spent on.
8 Money Routines From People Who Are Great At Building Wealth
Someone once told me “rich people follow a budget” and I still think about that phrase today. We often think that we have to manage our money when things are going bad or when we have to get back on our feet, but that’s simply not the case. Here are eight routines that rich people follow to continue to build wealth (and that you can use to get out of debt).
Follow A Personalized Budget
Personal finances are just that, personal! Don’t download a budget template or trust that you can use the one your friend had success with. A family of four spends more on groceries than a single person. Rent in the city costs more than living in BFE. Your bar tab in your twenties is very different than in your forties. You get my point, create a budget that fits your lifestyle and allows you to reach your goals while taking into account your income.
Live Below Your Means
Debt is simply spending more money than you make and we want to avoid that at all costs! Be sure to know what your monthly and annual take-home pay is and live within that number. If you can’t afford to #liveyourbestlife then either increase your income or decrease spending in areas that don’t truly make you happy.
Create a Savings Plan Around Retirement Goals
Don’t just sign up for the 5% savings rate with your 401k administrator. Use calculators to figure out how much money you will need at retirement and work backwards to determine how much that translates to in monthly contributions today. Our retirement goals look different, you may be on a FI/RE plan or you may want enough to travel the world in a jet. Whatever your plan, know how much that life will cost you.
Pay Off All High-Interest Debt
Not all debt is bad, but all high interest debt is! Any easy rule of thumb is to look at debt with interest rates above 5% and pay it off as quickly as possible. Be sure to use the debt snowball or debt avalanche method to make progress and stay on track.
Utilize Apps and Software
There’s an app for that! Make managing your money easy. Try apps like Debt Payoff Planner to keep track of your debt, You Need A Budget (YNAB) to track your net worth and follow a budget or Splitwise to track group vacation expenses. You’ll immediately notice your stress going down as you gain clarity around your money.
Pay Credit Card Balances In Full Each Month
Never carry a balance on your credit card, that’s when interest charges kick in and you’ll be paying money just to swipe your card. If you already have a balance it probably qualifies as high-interest debt should be paid off as soon as possible. Otherwise, if you swipe and pay in full each month, you’re one of the few gaining the rewards without paying a penny!
Learn How To Be Frugal (Not Cheap)
When you see store-brand groceries in my cabinets, it’s not because I’m cheap, it’s because I know it’s the exact same as those more expensive brands. The same goes for my jeans that aren’t $100 a pair, it’s because I’d rather sip on fancy old fashioned bevvys than to spend my money on clothing. Since we all care about different things, learn where you can spend less without sacrificing what you care about most.
Make More Money
Can I get an amen! When we make more money we have more choices and life becomes a little bit easier. We still have to manage that money and we still need to keep an eye on our spending but if you can continue to ask yourself, how can I make more money, more things will start to fall into place. If you don’t have time for a side-hustle you can seek a promotion at work or change employers all together.
If You Don’t Like Budgeting, Try This!
I get it, not everyone is as obsessed with budgeting as I might seem to be and that’s ok! If you are one of those people that would rather pick up dog poop around the neighborhood instead of sitting down to figure out your monthly budget, I have a solution for you.
Say hello to the “One-Number” approach to budgeting. You might have heard about it online when searching for budgeting alternatives, I like this article on The Street if you want to dig in a little deeper.
What the one-number approach does is it tells you how much you get to spend in any given week without going into debt, knowing that your living expenses and savings are being taken care of.
I recommend this approach to people that get stressed out by calculating the details that might be involved in a budget.
To calculate your one-number, follow these six steps and start spending without the stress!
Start with your monthly take-home pay
How much money do you bring home after taxes? This is the pot of gold that you’ll start with to determine how much you can spend weekly, stress free.
Subtract fixed spending
Next subtract your monthly bills. This will include your rent or mortgage, phone bill, subscriptions like Netflix or your car payment. These areas should include everything that comes out of your accounts on a monthly basis.
Subtract non-monthly expenses
Now we dive into the items that aren’t paid for on a monthly basis. This might include your 6-month car insurance premiums, annual subscriptions like Amazon Prime, vacation money or more expensive holidays like Christmas. It’s important to figure out how much you spend in each of these areas and divide that number by 12 to calculate how much you need per month; you’ll subtract your monthly amount in this step.
Subtract how much will go towards your future
Now we are getting into areas of savings. By subtracting your monthly savings you can ensure that money is being set aside for the future or a rainy day. This will include how much you want to save for investing into your 401k, an emergency fund or paying off extra debt.
Calculate your flexible spending money
The amount of money that you are left with after step four is how much flexible spending money you have to spend guilt-free each month. This money can be used for anything that wasn’t already included above.
Calculate weekly spending limit - Divide by 4.3
Did you know that there are 4.3 weeks on average each month? When we divide our monthly spending number above by 4.3 we get the amount that we can spend each week.
There you have it, the one-number approach. Remember this number, jot it down in your note app or create a list of transactions on the fridge to keep it top of mind. Maybe you’ll find joy in living each week by one-number instead of keeping track of multiple categories within a traditional budget.
Ready to stay motivated? Join the Ditch Debt & Live Rich community on Facebook for access to private trainings with support from others that have similar financial goals.
4 Steps To Tackle Debt This Year
New year, new you, right? That’s right! What better time than a new year to refocus on what is most important in life. If paying off debt and reducing money stress it on your list of things to-do, then follow these four steps to help you make progress on your goals without the stress.
Decide What to Pay Off
This may sound obvious but in order to tackle debt and be able to scream ‘I’m debt free!!’ you’ll actually need to know what you're paying off. To get started, make a list of all of your debts, anyone that you owe money to (yes the car counts). Next to each debt, write the monthly payment and the interest rate. You may decide to pay off your high interest debt first, to reduce the total amount you pay. Maybe you go after those pesky smaller debts that you can pay off today. Emotion might also come into play, maybe there is a debt that you have had forever and you just need to see it go, that’s ok too!
Align Your Budget With Debt Payments
To eliminate debt you’ll want to pay extra on top of the minimum monthly payment. In order to know how much extra you can afford, you will have to look at what else is fighting for your money. A budget can help align your priorities, if you don’t have one yet, get started here with this three-part series.
Determining how much extra you can afford to pay each month will depend on how much of a priority paying off your debt is at this time in your life. It might come before extravagant vacations, eating out excessively or that new jacket. And maybe not. That’s a personal choice and your budget will allow you to figure out what you can, and want to, afford.
Calculate Your Debt Free Date
Once you know how much your new and improved monthly payment will be, you’ll be able to calculate when you will become debt free! Make things easier on yourself and use a tool to help you calculate your debt free date (it will also help you adjust your plan as life happens). I love the Vertex 42 spreadsheet, it allows you to adjust your monthly payments as you pay extra or rearrange the order of what you would like to pay off first. Checkout this YouTube video to walk you through it as you get started.
If your extra monthly payment isn’t getting you debt free soon enough, you’ll have to go back to your budget and look at how you can bump up that payment. Are there any expenses that you can reduce or cut out completely? Is there a way to increase your income? Play around with your budget and your debt payment amount until you find a debt free date that works for you.
Break Larger or Irregular Expenses Into Sinking Funds
After you have done all the hard work in determining how much money you can afford to pay towards debt, don’t let the ‘little’ things in life ruin your entire plan. For larger expenses like Christmas, or mysterious ones like personal hygiene products, do the math to see how much it’s costing you.
I love to use mini budgets to break down larger expenses - here’s a video to walk you through the steps. As you break down your larger expenses into amounts you need to save each month, we call those sinking funds, be sure to include them in your budget so you are always saving for larger or mysterious expenses.
By following these four steps, you can ensure that you are able to make progress in paying down your debt while reducing your stress. The key to real change is by creating habits and making your budget and your debt payment a part of your routine.
If you are ready for some accountability and to see changes in 2022, join my 8-week program, Living Large By Keeping It Simple.
Ready to Ditch Debt? Three Steps to Pay Debt Off Quickly
Having debt is no fun. Not only is it another bill siphoning money out of your paycheck, but you have to pay extra on top in the form of interest. Sometimes debt is unavoidable, emergencies do happen, or maybe you have debt but are ready to pay it off! Here are three steps to ensure your debt gets paid off quickly so you can spend that money on something a little more fun than a payment.
Know Your Numbers
In order to make a plan to tackle your debt, you’ll want to know your numbers. What are these ‘numbers’ I speak of? You’ll want to know four things; the interest rate, minimum monthly payment, debt balance and any promotional offers such as zero interest for the first year.
When we know these numbers, we can use a debt calculator to see how long until we are debt free using scarios with various monthly payment options. You can see how long you have left if you continue to make minimum payments, pay an extra $50 a month or pay an extra $300 a month. Testing various monthly payment amounts might be the motivation you need to pay off your debt for good!
Here is a tool by Vertex42 that I love to use (scroll down to download in Excel or Google Sheets) and I have a video here explaining how to use it.
Choose a Non-negotiable Payment Amount
Once you have decided on a payment amount that works for you, make that number non-negotiable in your brain and your budget.
When I was paying off my student loan I promised myself that before restaurants, clothing or vacation, I made my extra payment on my student loan. This was so that I could have them paid off by the date that the debt calculator gave me without things popping up and ruining the plan.
To help buffer the budget during this phase I waitressed a few nights a week on top of my day job. I say this because it allowed me to have more money for things like vacation and restaurants. Without that extra income I would have had to reduce spending on those areas quite a bit.
Whether or not you have to reduce spending in certain areas while you are paying off debt will depend on your income and your cost of living. Maybe you have a great income you just need to streamline a bit. Or maybe you don’t have a high income and taking on another job isn’t possible right now, that’s ok you’ll just have a ‘debt free’ date that is a bit further out.
Use the Snowball Method
If you have multiple debts that you are trying to pay down, you should use the debt snowball method to focus on one debt at a time. By focusing all of your extra dollars on one debt, you can make a larger dent in the balance and ultimately pay all your debts off more quickly.
For example, I had multiple student loans I was making payments on. By using the snowball method, I threw my entire ‘extra debt payment’ amount, that non-negotiable payment you have from above, at the debt with the smallest balance. This was on top of my minimum payment. Once I paid off that debt, I focused the minimum payment from the paid off debt along with my non-negotiable payment towards my next smallest loan. I continue the process until all debts are paid.
For the longest time I was trying to pay extra on all of my debts but I wasn’t seeing progress, I was losing motivation and I would quit. With the snowball method, my non-negotiable payment actually increased as time went on. Not because I was making more money, but because I was getting better at budgeting. As I saw my balance dwindling, I was becoming more motivated and started eliminating other expenses from my budget to focus every possible dollar towards my debt. This is how I was able to pay off more than $46,000 in 20 months.
I Spent Money Out of My Emergency Fund, Is That Ok?
Emergency funds can be tricky because it isn’t always fun saving for the unknown, especially when we could be using that money for things we want to be doing right now. Present wants aside, they are crucial to ensuring you stay out of debt and can be lifesavers in reducing stress. Let’s dive into what exactly an emergency fund is, where you can keep it and what it can be used for. Hint hint, you can use it for really fun things too, keep reading!
What Is an Emergency Fund
An emergency fund is simply a pile of money that you have set aside to help take the pressure off when you run into, well, an emergency. An emergency can be anything from your car needing a repair or your furnace going out in the middle of winter. Let’s qualify an emergency as something we can’t predict might happen and so by having money set aside for these unpredictable events we are reassured that we cover the cost without going into debt.
It is recommended by the powers that be that we have anywhere from three to six months worth of expenses saved to have a fully funded emergency fund. The amount you decide to save will depend on how expensive your lifestyle is, how steady your income is and how secure it makes you feel to have a little cushion in the bank.
Where Should You Keep Your Emergency Fund
Since you are going to want to have access to this pot of money, you will want to be careful where you keep it. Long-term investments such as a bond or your 401k is a bad idea because these investments take time to see any sort of return.
In order to keep the money liquid, a fancy way of saying accessible, I recommend keeping it in a high yield savings account (HYSA), here are some good options. Now if you are thinking, what’s the difference between a HYSA and a regular savings account, don’t worry, I got you! Basically a HYSA offers higher interest rates on the money in your account so you are earning more than you would with a traditional savings account. Normally these accounts are with online banks without the costs of a brick and mortar so they are able to pass on this savings to you in the form of higher interest rates. Another bonus of a HYSA is that since they are online it can add an extra layer of protection against you spending that money, just don’t carry your card around. More info here from an earlier blog post where I went further into detail.
When to Spend Emergency Fund Money
Ok so you have this pile of money sitting aside, earning decent interest, when are you allowed to use it? The hard part about this question is this, personal finance is just that, personal. You get to determine when and how you use this money, which can make things a little ambiguous.
So I recommend this, after you determine how much money you need, set some rules around when you get to use it. Does a flat tire count or should that be taken out of an auto maintenance category? How about that coat you have been eyeing up at Macy’s? Set some real guidelines while allowing yourself to be flexible. While you are building up this savings you may need to dip into other funds like vacation or restaurants if an emergency does pop up, and that’s ok.
OK now I am going to go against everything I just said, you ready? I truly believe in not guarding your money in a way that you believe spending money is losing money. What I mean by that is if you think every time you spend money that that money is gone forever, there may be some mindset work to tap into. I will be the first to admit that I was that way for years and up until recently I have totally shifted my mentality on this subject. If you are looking for a good book that dives more into this, I recommend You Are a Badass at Making Money. Basically, if an opportunity arises for you to better yourself, better your business or simply take a leap that just feels right in your gut, then spend the money. My partner and I recently made the choice to spend a good chunk of our emergency fund on a business coach for me. This was not a simple decision but after thinking about it and having multiple conversations, we truly felt the impact making this move could have on my business. I’ll tell you this, agreeing to the payment was the hardest part and I don’t regret spending that money at all.
Keep Your Emergency Fund Stocked With Cash
If you’re like me and dipped into that savings then pat yourself on the back because that is exactly what it is there for! Give yourself a moment to breathe because chances are dipping into this fund wasn’t easy and possibly something you didn’t want to do. After all of that, take a look at your budget and see what areas you can pause or reduce spending in to bring that emergency fund back up to your target amount. Remember, this is only temporary and it’s really important to build it back up to ensure it’s ready for you when you may need it next.
Mastering the Spiritual Parts of Money
I am going to go out on a limb and say that we all, at some point, have struggled to openly talk about money. I’m talking about the nitty gritty details like how much debt you have, how much money you actually spend at restaurants or how on track you are with your retirement savings.
In order to make changes in our lives around money, we need to get in touch with both the physical aspects of money as well as the spiritual. I talk about the physical parts of money quite a bit, budgeting is a great example of this.
But what about our spiritual relationship with money, the thoughts and energy it provokes within us? There are entire books on this topic but I want to dive into three ways to better your spiritual relationship with money that will ultimately determine how much you physically have.
Be Aware of Your Limiting Beliefs
I have been reading You Are a Badass at Making Money by Jen Sincero and the first chapter hit me like a ton of bricks. I was the person that didn’t think I had limiting beliefs with money because I truly believed that I was good enough to be financially successful in the eyes of society. But when Jen said that one limiting belief is the fear that money you spend may never make its way back to you, my jaw dropped!
I had always thought this in the back of my mind that money spent is money out the door. I’ve always lived my life spending money that I “could afford” so it wasn’t a big deal that I was saying goodbye to it.
But the idea that positive alignment with money energy can lead to money coming back into our lives is the best news I have heard all week! As I learn more on this topic I suggest you do too. Here’s a resource as you dive in!
Don’t Compare Yourself to Others
For example, I paid off over $46k of student loans in 20 months. To some, that may seem like a ton of money, wow, how did she do that, that’s incredible! Others might think, wow must be nice to only have $46k of debt, I wish! Ok not only is that a limiting belief but you are also comparing yourself, stop it!
When we compare our personal situations to others we aren’t taking into account the thousands of factors that led us there in the first place!
Only you have the power to change your life and only you are living your reality. Don’t spend time wishing you had what others had. Don’t waste your money buying things that society tells you to own.
Take a moment to reflect on what is truly important to you and do the work to get those things. Whether it’s your dream to start a business, buy a larger home or invest in personal growth, set yourself up to accomplish those items with your new and improved outlook and mindset towards money. Here’s an article to help you map this work out.
Forgive Yourself for Past Mistakes
We have all done some pretty stupid stuff, right? To name a few, I financed a study abroad trip with a credit card that had interest well into the double digits. There was also that time I came out of a public school with nearly $60,000 in student loan debt while I worked the entire time (you try the math on that one).
The point is, they are done! There is no amount of complaining that I could do to change what had already happened. And trust me, I tried! I spent the first eight years out of college making my minimum payments and complaining about how expensive they were (another limiting belief right there).
As we dig into the work for a healthy relationship with money it’s key we accept our past mistakes, really feel the emotions that come to us and forgive ourselves as we commit to do better.
One of my favorite sayings is, when we know better we do better, and it’s the truth!
How will you change your inner dialogue around money? What can you do right now to better your situation? Because only you have the power to up your game a bit. Now you know!
Three Reasons Why Investing in Ourselves Can Sometimes Feel Excessive (And What to Do About It)
We’ve all added the guac for the upcharge or bought the fancy coffee on the way to work because frankly, we deserved it.
But I’m here to talk about how society shames us about this excessive spending and how we can get that shame mixed up with areas of our life such as personal growth that we should be investing in.
This can look like hiring a personal trainer to get ready for that marathon or investing in a new wardrobe for that dream job while we are trying to look the part. Spending money isn’t always unnecessary and it’s time for you to actually believe that to change your life for the better!
Here are three things that we tell ourselves to limit our spending in personal growth areas and how you can overcome them.
Spending money on ourselves can feel selfish
Raise your hand if you have ever felt guilty when you spend money on yourself when it could go towards something that is more ‘responsible’. We all have! We get shamed or judged by society when we spend $150 on a monthly gym membership when we are living paycheck to paycheck.
Of course it makes sense to pay off debt first or save for a down payment on a house, but those things take time and we also have to be sure we are taking care of ourselves in the present.
There Are Tons of Resources Available for Free, Why Pay For It
The internet is full of wonderful things and you can figure anything out for zero dollars. While this is true the internet is also full of conflicting and sometimes false advice. On top of that, accountability is something else that is missing when we go after something new and potentially difficult on our own.
But there’s a happy medium and I’m here to say that I paid off my debt on my own researching things on the internet. Are you the type of person that is willing to put in this work? If yes, great, what has stopped you up until this point?
If not, that’s when we need to reach out to the professionals. Whether we want to lose that weight, become educated on a specific topic or update a space in your home, outside support helps get the job done much more quickly.
So many options and we can’t afford them all
So when choosing between paying for the personal trainer, hiring a designer to update our new in-home office or speaking with someone about how to get out of debt, the answer is unique to everyone. We most likely can’t afford to do them all which is why we need to determine which items are priorities.
Also keep in mind to go after things that align with your happiness and that will move the needle. When resources are tight you will want to go after items that will actually make you happier or change your life for the better.
Ensuring personal growth fits in our budget
Let’s focus on debt and money for this one. It would be silly for me to say, hire a personal finance coach, don’t worry about all the debt you have! But in the same breath, where is your money currently going that would temporarily allow you to hire someone to help clarify some of the stressful parts of your money?
Reducing your spending to pay for anything isn’t always permanent, it’s a choice we make everyday. We buy generic brands at the store to spend less on groceries or we opt for the slightly older car model to reduce our monthly payment.
If getting out of debt or finding financial clarity is a priority, I would ask you to see how you can adjust your regular spending to ensure you don’t go further into debt during this process.
Here’s a good article that differentiates spending for growth versus comfort.
Applying What We Learn to Make It All Worth It
Once we make that investment into ourselves, it’s important to implement what we learned and to continue the work on our own. With the personal trainer example, you probably won’t need one forever. You can learn the techniques they taught you to create your own workouts and to build a routine that you are comfortable following. The same goes with a personal finance coach, they should help you get to the next level to gain back the confidence and trust you once had in yourself.
Ready to learn more or get started? Book a free call with me and let’s put financial clarity on top of your priority list to accomplish this year.
How Paying Off Debt Allows Me to Say Yes More
Debt comes in all shapes and sizes and it’s so normal we don’t even see how it affects our daily lives. When we choose to look at debt as something that consumes our monthly incomes, we can start to see how we ended up as a paycheck to paycheck nation. By paying off debt I have more flexibility in my income to say yes to things that make me happier, and you can too!
We have to reframe our thinking around debt
We all know debt isn’t necessarily a good thing and we are taught to try to avoid it, but do we actually avoid it? Maybe you take out loans for college because you can’t foot the bill with cash (who can) or your car is about to take the turn for the worst and you need an upgrade. It’s so normal to have payments in this country, I often don’t think we understand what we are actually signing up for.
When we think about ‘avoiding debt’ I don’t want you to just think of keeping your credit card balance as low as possible. I want you to think about anything that will require a payment in the future, even if it is 0% interest.
Payments can be a means to getting something that we want or need, but do we understand how these payments really affect our everyday lives?
Debt payments hold your income hostage
A ‘no big deal’ $200/month payment might not seem like a lot when you are signing up for it but I want you to think about it this way. If someone offered to send you a $200 check every month for the next three years, would that make you happy? What would you do with that money? How would it change your life?
When we think about debt as ‘is this something I can afford right now’ we are missing out on asking ourselves ‘how would this extra money per month change my life?’
When asking clients this same question, I often hear they would travel more, take a lower paying job that they have a passion for or build up their savings for early retirement.
The opportunity cost of debt is not being able to go after the things that truly matter to you, because you frankly can’t afford to!
Having more income means you have more flexibility
My partner Derek was recently approached by his company to take a job in the Pacific Northwest and to be honest, if we would have had debt there is no way we would have been able to make it work.
We said heck yes! without knowing if I was going to be able to keep my job. We said yes knowing that I was going to lose all of my side hustles which added a lot of income to our house each year. But we said yes because we knew that if we had to we could live off one income for a period of time and still be ok.
Maybe making a move halfway across the country isn’t what you would do with flexibility in your income but would you keep your same job? Would you buy a larger house? Would you finally upgrade your car that has been on its last leg for three years now?
Staying on budget to maintain happiness
While not having debt made the decision to move that much easier, it also wouldn’t be possible without staying on some sort of a budget. I know I lose a lot of people here but hear me out. When we overspend we go into debt. When we go into debt we bring those monthly payments back into our lives. Sticking to a budget allows us to afford our monthly expenses, save for irregular or unplanned items and reach our long term goals.
So here’s some homework for you. Add up all of your monthly payments, and yes ‘good debt’ counts such as your car, that couch you just financed or your student loans (you can exclude your mortgage).
How much money are you sending to debt each month? How would your life change if you were able to keep that money? What would you say yes to if you got to keep more of your paycheck each month?
If you are up for an exercise that goes a little deeper into this work, I encourage you to download my free 90-Day Expense Tracker tool to see just where you’re sending your money each month. It’s really eye opening and helps you highlight areas you can reduce your spending as you are starting out.
Remember that one tiny change or step forward can lead to big things! Let me know how it goes and as always, email me with questions or when you want to celebrate your wins!