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 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.
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.
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.
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.
Can Being a Minimalist Build Wealth?
The idea of owning more is a western phenomenon that assigns value for having more stuff. If you don’t have a boat or a wardrobe full of the latest fashion trends you are less worthy and should probably go buy something now to fill the void (just kidding but that’s how we feel, right?).
What is Minimalism?
The idea of minimalism has always intrigued me, especially as I clean and wonder how I ended up with so much crap! And then when I really start to think about it, I realize that I purchased all this stuff, most of which I didn’t even know I owned and certainly don’t use.
The Minimalists describe minimalism as, “a tool that can assist you in finding freedom. Freedom from fear. Freedom from worry. Freedom from overwhelm. Freedom from guilt. Freedom from depression. Freedom from the trappings of the consumer culture we’ve built our lives around. Real freedom.”
Using Minimalism to Stay Frugal
This is where minimalism and frugality come together to make a beautiful frugal baby! When we buy less stuff and focus on only what makes us happy, or is a necessity, we have more physical and financial space in our lives. We also get the wonderful side effects of having less stuff to clean, organize or manage.
The FIRE (Financial Independence Retire Early) community does a great job of bringing these two ways of life together to live intentionally while focusing on building wealth. When we clarify what is important to us and commit to only spend money in those areas, we free up a lot of income to invest and build wealth. This is a topic of its own but if it interests you at all, read more about it here.
How to Start Living Minimally Frugal
So what are we to do about it? The Minimalists also have a great 30-Day Minimalism Game which can help you start to clear out what you currently own. Look around and find patterns in areas that you spend money that you end up getting rid of. Home décor your weakness? Or maybe it’s books? Whatever it is, commit to spend less in these areas and use that money to pay extra on debt or invest. Having less is more after all.
How Your Spending Can Help Guide Future Habits With Money
We’ve all been there, too much month at the end of the money or you make too much money to be this broke!
It’s not a fun place to be and when you’re feeling that stressed with money, you can’t possibly see a way out.
What if I told you that if you looked at your current spending habits, you’d probably be able to tweak a few things to relieve your money stress? Of course there are always the situations when you simply don’t make enough money (you’ll have to increase your income or lower your monthly expenses) but I’m talking to those of you that have a decent income but it never seems to be enough.
This is where tracking our spending comes into play and it’s a total game changer! When we see where our money actually goes, versus where we think it goes, we are able to do a better job with our everyday spending. Do we want to continue spending the way we have been or do we want our money to be going towards something else like a vacation, season tickets at the local theater or a larger Christmas fund?
So how do you go about tracking your money so that you can make changes to actually be able to afford the things you love most in life? Here is a free 90-Day Expense Tracker that you can use to get started. Use bank statements, both checking and credit cards, Venmo history and whatever other accounts you spend money out of to fill in this spreadsheet to get your monthly averages. These averages will tell you how much money you spend in any category on average.
Since money isn’t an infinite resource, it helps to see how spending in one area will decrease the amount you have available to spend in another. This is when we can ask what’s more important, this new pair of jeans or another day at a resort?
When you compare those totals to your monthly income you can start to ask yourself, can I afford to keep spending this much money in certain categories or is this the reason that I run out of money each month?
Use your monthly averages to outline a budget and don’t forget to include your goals like that vacation you have been wanting to go on. If the totals in each category are more than you make in a month, you will have to reduce your spending in some areas.
By aligning our planned spending with our income, we can ensure we reach our goals and continue to do what matters most in life, without going into debt. But the trick is to get started. Start with the 90-Day Expense Tracker to see where your money is going and decide, is this the path I want to stay on or do I have other plans for myself?
Budgeting Made Easy By Following These Simple Steps
When you think of budgeting, I want you to think about a 5-minute task while you’re relaxing. Maybe you’re having a beer with your spouse after a long day or you’re cozied up in bed about to dig into a great book.
That is what budgeting can look like when you have a system in place and goals that you are working towards. You are no longer stressing about a bill that’s due or working the math to figure out when you get paid next before you can go grocery shopping.
These are the tasks that I do on a regular basis to ensure my budgeting system is working for me versus the other way around.
Weekly I categorize my spending and readjust areas I overspent in. When I overspend, I look at categories that have a little extra money that I can pull from so I am not negative in any area of my budget.
Monthly I create a new budget based on what I have going on that month. Whether it’s a graduation party or date night to a baseball game, I set money aside to make sure I don’t have to put these expenses on a credit card to pay later.
Quarterly I update totals for my net worth and (if you have any) debt balances. Seeing these balances change each quarter will keep you motivated to continue to build wealth and pay off debt.
Annually I plan for the year ahead and readjust categories in the budget for what’s to come. Whether it’s a vacation or big house project, I add the category and start saving.
By putting a little effort into creating a system, you are ensuring that you reach your goals while reducing the effort that you have to put in on a regular basis.
So what does budgeting actually look like? After I make a purchase I categorize the transaction. Sometimes I do this while standing in line at the checkout or while I am pumping gas, other times it’s a few days later when I get a minute to login to my budgeting app.
If I overspent in a category, which will happen more as you start out with budgeting, I move money from another category to cover the overspending. So maybe I had $100 to spend on groceries but I spent $115, I’ll move $15 in my app from a category that will be ok without the $15, sometimes it’s Vacation or Extra Fun Stuff, it really depends on what’s going on at the time.
I continue categorizing my transactions all month and as money comes in, I put that money into categories for spending later. And once a new month hits, I make sure all the categories make sense and I continue where I left off.
So that’s it! If this seems like a lot, I promise it will reduce so much stress and uncertainty you have around your money. It will become a routine that you don’t give much thought to, like grocery shopping or mowing the lawn.
What systems can you put into place to make budgeting take less than five minutes each week?
4 Reasons You Aren't Budgeting and Why It's Hurting You
One of the main things that stopped me from budgeting was that I thought it was just something that was supposed to tell me no all the time. I thought that it would be the end to life as I knew it and that it was going to take a lot of time to manage.
The only thing right about my assumptions was that life would be completely different. But little did I know, it was about to get so much better! If I would have known that I would have started much sooner and if you’re not already budgeting, I’m here to show you why you should start one today.
When we become intentional with our spending we ensure that we get to do more of what we love most! We actually save for the vacations that we have been dreaming about for years. We might even save for a down payment on a new home or invest in ourselves by going back to school. No matter your goals, a budget helps get you there so much more quickly while remaining out of debt!
Here are four things you might be telling yourself that has stopped you from creating a budget. But don’t worry, personal finance is something we aren’t taught about so no wonder why we aren’t always good at it.
Budgeting just tells me want I can’t buy
A budget would only tell you no for a couple of reasons; 1) it’s not something that you said was important enough to start saving for it or 2) it costs more than you were planning to spend. When I help people create a budget, we are sure to include our goals, hobbies and things we love most in life. So you’re only telling yourself no to something that you once said wasn’t important. If things changed, let’s make room for it in the budget!
I am always overspending
When you overspend on your budget it might be because you didn’t estimate the correct amount for a certain category. Help yourself out by putting in a bit of effort to see how much money you need for each category, and the 90-Day Expense Tracker can help with this. You can also overspend if you aren’t checking in on your budget. Set five minutes aside a couple of times a week to see where you are at with your spending.
I don’t have enough money to budget
Believe or not, everyone no matter their income benefits from budgeting. It’s easy to think that you’ll start budgeting once you make “more money” but that day never seems to come. And in fact, we don’t magically become better with our finances because we make more money. No matter your income, get started with a zero-based budget to ensure every dollar you make is working to create your dream life.
I’m too afraid of what I’ll find
This is a real one and since it’s emotional it can take some time to overcome. One thing I would say is that nothing gets better as it is being ignored. We don’t just wake up with more in savings or less debt, we have to be intentional for these things to happen. So what do we do about it? We dig in, giving ourselves grace and we start working to improve our situation. It’s usually not as scary as we think it is and having the knowledge can help our situation change rather quickly!
So what can you do today to be just a little bit better? Maybe you look into your spending, clarify your goals or look into increasing your income. Whichever you choose, just choose one thing and get started. You won’t regret it!
Sign up for the weekly newsletter Budgeting. (yup, that’s Budgeting Period) to be the first to hear about all things around budgeting and your money.
We Often Don’t Include the Most Important Things in Our Budgets
Before I started on the path to figure out my debt, I was completely in the dark about a budget. What is a budget for? Who needs a budget? What am I supposed to include in my budget? Once I have a budget, now what do I do?
I initially started with listing out all of my bills and the sort of obvious things, like groceries or restaurant spending. That made sense, right? I quickly hit a brick wall when I bought a present for a friend’s birthday, that didn’t fit into any of the categories I had listed.
So there it began. I would add categories to my budget as life happened, and I was missing a lot of things! I didn’t account for bachelorette parties, weddings, insurance premiums, attending Twins baseball games or annual events like the Minnesota State Fair.
How was I so far off? The idea of saving for these “smaller expenses” didn’t even cross my mind until they started adding up. One summer I remember being a bridesmaid in three weddings and attending 10 more, I was broke!
This is what got me looking at my calendar and creating space in my budget for the things that were already scheduled and I wanted to attend. I would quickly add up what I thought that event was going to cost to calculate how much I had to start saving with the time that I had left.
Sure spending $200 at the Minnesota State Fair wasn’t necessarily going to break the bank, I could pick up another shift at work and be fine. But when I started saving just $17 a month year around, that affected my finances so much less!
That is when buying all the beer at the fair and eating all the fried pickles, corn and donuts became really fun. Because it didn't matter if I also went out to eat that week, because I planned for this.
So I challenge you, take a look at your calendar and what can you start saving for right now? Make a list and figure out how much you should save a month. Here’s a free tool to get you started on all those categories you might be forgetting in your budget.
7 Questions to Ask Yourself to Be Better With Money
Reaching goals can be hard and it just doesn't happen by accident, we have to actually put in the work. So whether it’s running a marathon, eating healthier or getting that next promotion at work, a plan is laid out so we know, how am I going to get from A to Z? The same works with reaching financial goals or simply getting rid of stress around money.
For example, if you want to increase our savings for an emergency fund, you have to determine, how much money am I going to need? From there, how much can I afford to set aside each month? Then you have to set that money aside and actively not spend it unless it’s an emergency.
Below are 7 questions to ask yourself so you can stay on track with your goals and crush it with your finances.
What can I do to increase my income?
I am sure you know by now but the side hustle game is real! It has never been more important to have diversified income because a job is not forever. There are so many options today so get creative, try selling something you enjoy making, teach or consult in your area of expertise or pick up some dog-walking clients.
Can I afford to pay more towards debt? What would my budget look like without debt?
If you are making your monthly payments on debt I would push you to see how much extra you can afford each month, especially on high-interest debt. By making only the minimum payments we are paying more in interest and increasing our chances of disaster if something were to happen with our income. Best bet is to pay it off as quickly as possible. And for a bit of extra inspiration, take a look at a life without those monthly debt payments, what else could you be spending that money on? Más vacaciones por favor!
Am I saving enough today to fund my vision for retirement in the future?
How much are you saving per month and are you on track for retirement? The answer is different for everyone, it depends on how much money you would like to have for retirement and how long until you want to retire. Use this calculator to see what your balance will be at retirement. If you haven’t bumped up your contributions lately you might want to look into that, 15% of your paycheck is a good goal if you don’t have high interest debt. Bonus credit if you want to reach financial independence at an earlier age, use this FIRE calculator (FIRE stands for Financial Independence Retire Early) to see when you can reach this goal!
Is my emergency fund all set or how much do I need to get it funded?
Having an emergency fund to fall back on will relieve a lot of stress in case a pandemic happens, an expensive car repair is needed or your furnace breaks in the middle of winter. A good rule of thumb is to have 3-6 months worth of expenses saved up and set aside in an account that you have easy access to. Don’t include unnecessary spending while calculating this number, it should only include what you would need to get by, we aren’t going on vacation during an emergency.
What are two of your big goals and do you have a plan to get there?
In order to truly enjoy life, we have to be sure we are doing the things that make us happiest. Sure we have to go to work and pay bills but outside of that, on the weekends or in your spare time, what do you enjoy doing most? Maybe you want to save up for a camper or you want to buy a cabin up north. Whatever it is, are you setting money aside? Do you know how much it will cost? Have you created a vision board on Pinterest to stay motivated? Ok, the Pinterest part isn’t necessary but it sure can be fun!
What system am I following to stay on track with my spending?
Just like we have to be intentional to reach our goals, we need a system in place to help us get there. Do you have a budgeting app to watch your spending? Do you use the cash-envelope system for categories you tend to overspend in? Do you log everything in Excel and update the pivot charts to see your savings progress? Whatever method speaks to you, put in some solid effort and you’ll be amazed how easy it will become.
Is there anything holding me back from taking action?
If you aren’t able to get started on the above items, why? Are you too stressed to even start? Do you not have a supportive partner? Does your debt seem too high to even begin to dream about retiring? Whatever it is, take one little step forward. Choose one thing that you can start to work on and begin there. You’ll be amazed that with a little support, it’s not as scary as you might have imagined!
What to Do When You Are Bored at Home
I think it is safe to say that by now we have all become very comfortable at home and have been pretty good at getting creative in our spare time. Remember when we were making fancy coffee drinks by grinding instant coffee for hours?
But I would like to offer up a few (budget friendly, of course) ideas to enhance your home-life as we are in the weirdness of winter, besides that one 60 degree day.
Ok, 12 things you can do at home to fight boredom
Make a playlist of your favorite throwback songs - cleaning, taking a bath, you pick the vibe
Watch a classic movie you’ve never seen - if you haven’t seen When Harry Met Sally, I strongly suggest
Listen to one of Michelle Obama’s podcast episodes while sipping a mimosa on a yoga mat on a Saturday afternoon- this one is very specific, might be on my to-do list
Plan your next trip in extreme detail - bonus tips if you figure out how much you need to save a month and incorporating it in your budget
Clean your makeup brushes - the reward with this one will come the next time you have to put on makeup
Unsubscribe from emails - easy targets are ones you delete right away, you know which ones they are
Make delicious bread - start with a simple banana or sourdough if you are a newbie
Create a vision board - this can be for goals, your room or a van you are preparing to buy and live in (ummmm this last one is me!)
Send a note - pick a friend, family member or lover (oh lal la) and tell them just how much they mean to you
Start learning a language - this is great to brush up on those high school skills or to prepare for your next trip, pick an app like Duolingo to help
Learn to french braid - this has been on my list since I was 6 but I refuse to give up on this dream
Organize a clothing swap with friends - this can be to keep, borrow or sell
Alright, there you have it. Easy ways to perk up your day that won’t break the bank. The key is to stay inspired, keep dreaming and living life intentionally.
Start Here if You Are Feeling Overwhelmed With Your Finances
I get it. Start budgeting! Pay off debt! Refinance your loans! Save for an emergency! Don’t forget about retirement!
We are constantly hearing messages on how we should be doing better and how to fix things. There are a ton of routes you can take while on your personal finance journey, so feeling overwhelmed is normal.
Instead of not starting because you feel paralyzed, let’s break a few of the important items down into manageable tasks.
Once you start to see progress, you will build up your confidence and motivation to continue on this journey.
I compare a financial journey a lot to our health and wellness journeys. You could start working out, eating better, drinking more water, or getting your steps in. They all are good things but you can’t do everything all the time, that is a recipe for burnout.
So, this is how you start. And remember, you take this one day at a time, if you are starting to feel overwhelmed, come back tomorrow. The key is to make small daily progress, tiny steps forward, that will add up to big improvements in your life.
Dream big. Get a clear mental picture of the reason you want to clean up your finances. Maybe it’s for your kids or so that you can go on a dream vacation without going into debt. Depending on your style, you can detail your dream out in a journal, Pinterest board or app on your phone.
Put a list together of all your accounts. Write out all your debts and assets. By seeing on paper how much debt you have, you will be able to get a better idea of how bad (or not so bad) your finances are.
Track your past spending. List out and categorize all your spending from the last 90-days to see where your money has been going. This will help you see if it’s going towards things that are important in your life.
Debt or savings. Decide what your main goal is so we can add it to the budget.
Create a budget. Use your past spending, and debt or savings goal, to create a budget that aligns your income with your spending. Don’t forget to include those larger annual expenses and break them up into monthly savings goals.
Follow the plan. Track your spending moving forward and try your best to stick to your budget. It won’t be perfect the first few months but you will get better each day, week and month.
Ready to dive in but want a bit of help? Schedule a free call today and let’s chat. This is an investment into your future, your future self will thank you.
Living Paycheck to Paycheck? Do This to Get Ahead.
When you rely on your next paycheck to be able to pay bills, buy groceries or have drinks with friends, life is different. Life becomes less enjoyable.
What if your paycheck was something that became a side effect of work you loved? What if you started being intentional with that money to actually accomplish your biggest dreams?
Something shifted in my life when I decided to use my paycheck to accomplish my goals. I no longer looked at my account balance as money I had to spend. I looked at it as a lump sum of money that was broken down into smaller goals. Some of the money would be used to pay down debt, some was set aside in case of an emergency and some was for bills.
When I made this shift in my thinking, while being intentional, it no longer mattered when that money hit my checking account. I was no longer rich on the 1st of the month and broke by the 10th.
If getting ahead of your bills and not having to rely on your next paycheck to pay your immediate bills sounds like something you are craving in your life, I have good news for you. It’s easily within reach, you just need to make a few intentional shifts in your habits.
Sell anything around your house that you no longer need, use or want for some extra cash
Cancel any subscriptions you don’t use and ask yourself if you need all of the ones you do use
Cook at home and use everything in the fridge to avoid waste
Reduce your spending on everyday items by buying generic or in bulk while cutting your impulse and excessive purchases
Save any ‘bonus’ money such as stimulus checks, tax returns or gifts
Keep an eye on money you are giving out as gifts
Get a side hustle and find ways to increase your income
You don’t have to do all of these items, I would rather you do a few things really well than all of them poorly.
When I was getting out of debt, I focused on cooking at home, reducing my spending and increasing my income. By making more money and spending less, I was able to make larger payments to my debt each month without having to give up too much of my lifestyle.
Sure I had to get creative with my vacation time and say no to house projects. But by being intentional with my money, I was able to make real progress while still enjoying the things that made me happiest in life.
12 Things You Are Wasting Your Money On
OK, I am not here to tell you that you are bad with money because you are spending way too much money on certain things. Absolutely not! But I am here to be a friend that reminds you that “hey, personal finance, you got this, and here’s another way you can get even better with your money!”
Where we buy certain items can have a big impact on our money. By spending more money than we need to on certain items, we are basically lighting cash on fire or throwing it out the window.
Please don’t light your cash on fire.
A dramatic example, if you were walking around Nordstrom and you noticed they started selling toilet paper, would you buy it there? I hope not! I bet it’s going to be $63 for a 24-pack and that is just not responsible.
The same goes for everyday items we buy from stores that we find ourselves in more frequently.
Two reasons why you might be overspending is that you shop out of convenience, meaning you like buying everything in as little stops as possible, or you like shopping local.
Concerning the second point, I understand that supporting a local business is important. I’m not here to argue that, but it can end up costing you more money on certain items. If you are struggling to pay your bills or you are drowning in debt, I ask that you take a pause and buy certain things at a cheaper store while you catch up and get back on track.
Spoiler alert: I remember the first time I even noticed the Dollar Tree even had thank you cards. I was there with a friend who was looking for something specific. So I did what any good patron would do, I started walking the aisles to see if there was anything that I needed (which I am sure I didn’t need a darn thing).
I found myself in the stationary isle and noticed at least 10 different options for Thank You cards! My mind was blown because I always hated keeping these in stock at my house because they were usually expensive to buy! But here I could get a cute set, for cheap, and not feel guilty about it.
Another item is seasonal décor. While I am not a huge fan, I hate storing it to use only one time of the year, there are tons of options that are all budget friendly if this is your thing! And remember, Santa doesn’t care where you bought the stuffed snowman from, it’s the thought that counts!
Ok so here is the full list of items that you can find at discount stores, such as the Family Dollar or Dollar Tree, that have little to no difference in quality.
Greeting cards
Seasonal decorations
Notebooks
Wrapping paper and gift supplies
Storage bins and decorative containers
Party supplies
Vases and other decorative items
Dinnerware
Food storage containers
Cleaning supplies
Coffee filters (do people still use these?)
Travel size essentials and containers
Take some time out of your next errand day and jump into one of these thrifty stores to see what you can find. Make sure it’s already on the list, I am not giving you permission to go on a shopping spree here, though sometimes it can feel like you are robbing the place because it’s so cheap!
4 Things to Do With Your Money Before Year-End
The end of the year is the perfect time to wrap up bad money habits and start fresh.
Things that we want to be doing on a regular basis include creating a spending plan, tracking our spending and investing towards retirement.
But there are some items that can be done less frequently. Use the end of the year as your reminder to check off some of these less frequent items.
Do you have money sitting in your name waiting for you? You might! You heard me right, old bank accounts, insurance claims or tax refunds get left unclaimed on a regular basis and are easily searchable on a government site for unclaimed money.
Find a cause close to your heart and give them some extra love. Besides the obvious reasons for donating, it also lowers your taxable income and can result in less taxes owed to Uncle Sam. Win-win, just be sure to donate by December 31.
Every year, you get to pull a copy of your credit report from each of the three reporting companies, Equifax, Experience and TransUnion, for free! By pulling your report, you can see any errors or fraud under your name, loan balances and your credit score.
Use it or you’ll use it! If you started saving with a Flexible Spending Account (FSA) through your employer you’ll want to spend those dollars before December 31. Funds within this type of account are only good until the end of the year but shouldn’t be confused with an HSA. Besides the more obvious expenses you can purchase, such as medications or deductibles, here are a few other things to ensure you are using these dollars wisely.
Managing your money doesn’t have to be hard or time consuming. Use these tricks to stay on top of your debt and ensure that you’re not missing out on any money that’s yours!