How Jealousy Stopped Me From Building Wealth
How many times have you said to yourself, “once I make more money we can start paying off debt” or “I could pay off my student loans if I made as much money as (insert name).”
Unfortunately, I know that feeling all too well and it didn’t do me any good! I was constantly making excuses as to why I wasn’t making progress or why I wasn’t further ahead in life.
I would blame it on my income or the fact that I didn’t have parents that paid for my school. But in reality, it was because I didn’t use the money that I was making efficiently. I was still spending tons of money going to restaurants or out on the weekends. I was young and I deserved that, right?
Looking back, if I would have dedicated a portion of my income to debt, I would have been able to pay off my student loans so much quicker than I had and, this is the important part, I would have had so much less stress around money. I could have afforded to make less money because I wouldn’t have had student loan debt and I wouldn’t have had to miss out on trips because I had to work.
When I was comparing my situation to those around me, basically having an enormous pity party for myself, I wasn’t able to make progress in my life.
Once I decided that it was time for a change I immediately saw a shift in my stress and the clarity that I had around money. I wasn’t making any more money but I was seeing my debt total decrease so much more quickly than I ever had. All because I was actually using my income to change my life, versus wishing I had more income or less debt.
When we stop wishing for things to improve our lives, we are actually able to see what we can do to live happier lives. Stop worrying about the new car your neighbor bought or your friend that is looking at cabins up north. This is your life, use your resources to curate your version of happiness.
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?
My Why & How a Budget Changed Everything
After I finished college, I did what a lot of broke 20-somethings do. I moved to the city, got a full-time job making very little money and made up for my inflated lifestyle with a waitressing gig five nights a week.
I had around $60,000 in student loan debt, a number so big that I couldn’t even comprehend it as a 22 year old. Combine that scary number with a society that tells you “student loan debt is good debt” and “debt is a part of life”, I had accepted my fate.
So instead of more efficiently managing my finances, I worked to enjoy life and put my debt on auto payments. For around eight years it was out of sight and out of mind. I tell you this because I think a lot of us feel this way, especially before we drink the debt-free-lifestyle kool aid. We don’t believe we have options! We believe debt is a fact of life and we don’t have a choice in the matter.
It wasn’t until my late 20’s that my monthly debt payments were becoming an issue. How was I supposed to buy a house or save for a wedding with this much debt? Let’s be honest, I wasn’t close to either of those things but I wanted to be ready once I was at that point in life.
I started talking about my money struggles with peers and I learned of an entire community of people paying off large amounts of debt, in relatively small amounts of time. These people were living my dream and I couldn’t believe it took me this long to find them!
I quickly tallied up my debt and there it was, the number that I had been avoiding for a long time, the amount between me and my new debt free life, $46,514.91.
I created a “budget”, at the time it was more like a list of bills, and I committed to a number that I thought I could afford to pay extra towards my debt each month.
I had a target date that I was going to be debt free but once I started to see progress, I cut the time in half. Not because I was making a ton of money but because I quickly realized how much money I was actually wasting a month. Going out to eat, new clothes, alcohol. All the things!
I was making progress and I was seeing first hand the impact of paying extra towards my debt! I also began playing around with a few debt-free calculators online and calculated the impact of every extra dollar that I paid. This became my motivation to bump up my payment to something bigger, while still manageable, and it allowed me to shed years off my debt free journey.
Each milestone was cause for celebration and motivated me to pay even more. Quickly my amount owed was $40,000, then $30,000 and eventually single digits and gone!
My budget evolved over time and became the source of my success, as cheesy as that sounds. I was able to prioritize the things I loved most, like going out to eat with friends or road trips with my partner and pup, while still paying down debt.
Some months I paid more and some less, but the goal was there and my mind was set that my future life was so much more important than this life I was living that was making me more broke.
Becoming debt free doesn’t happen by accident and it doesn’t happen overnight. I had to learn what a budget was and how to stick to one. If you can’t relate to the word budget, I was right there with you! I mostly wanted to know how much extra I could be sending towards my student loans and it just so happens a budget tells you that, who would have thought?
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.
My Debt Free Journey Started With a Pressure Cooker
I am a big believer in having as little debt as possible, but probably not for the reason you are thinking. There are actual physical, emotional and financial reasons for you to get rid of your debt.
When I was on my journey to getting rid of my student loans I was stressed constantly! And the ironic part was that I couldn’t afford the occasional massage, because I had no money, and I couldn’t relax by curling up on the couch because I was working all the time.
Symptoms of financial stress are real, here are a few of the big ones:
The first real reason to get rid of your debt is that you are carrying less risk, hello 2020. Lose your job? Pay cut? I dropped from 40 hours/week to 20 hours/week basically overnight at my dayjob because of the pandemic, and that was way more stressful than my previous student loan stress. But since my loans were paid off, I just had to reevaluate my budget and watch my spending. Even though I didn’t have extra money, I wasn’t wasting what little money I did have on debt payments.
A better credit score is another. Sure, debt is a factor for a good credit score but it’s not that simple. You can have too much debt which would end up costing you thousands of dollars of interest for that next house, car or boat you’ve been eyeing up because you didn’t qualify for a better interest rate. And debt is actually a very small percentage of this score. The only debt I have is a mortgage and I pay my credit card in full every month and my rating is still excellent, it can be done!
Better cognitive function is next up. Yup, this is proven! Studies show that experiencing poverty impaired people’s attention span, working memory, and self-control. Did someone say self control? Have I ever mentioned that I once bought a pressure cooker on an infomercial before Instapot was even a thing? Yeah, I couldn’t afford it and who knows why I thought I needed one. Now I have the pleasure of a kitchen appliance that weighs a ton that I use once a month when I decide to make rice. Fortunately, studies also show that paying off debt reverses these problems!
Less chronic pain is another real benefit to getting rid of your debt. People with high levels of stress caused from debt were more likely to experience migraines, back pain and general muscle tension. They were also more likely to buy over-the-counter painkillers.
Money Crashers goes into thirteen other reasons you will want to get rid of your debt. The general consensus is that debt is bad, we all know that. But maybe you will see some of your symptoms on this list, just like I did. And maybe it will be enough for you to take the steps to pay down any unnecessary debt to improve your finances along with your mental and physical health.
6 Reasons You Are Still in Debt
Your debt and your thoughts towards debt is directly tied to our society. Debt is normal. Just because something is normal doesn’t mean it’s good. As my mom used to say, “if your friend jumped off a cliff, would you?”
But there is hope! Here are some reasons that people stay in debt:
1. You think there is no way out. Being in debt doesn’t have to be your destiny. You can kick it to the curb, you just need to have the confidence to take the steps to change your future.
2. You don’t know the reason you keep accruing debt. Knowing how you accumulate debt is the key to getting out. Do you have a problem with a credit card? Do you like fancy cars? Look into these traps and stay away from them!
3. You don’t want to make sacrifices. I’m not asking you to give up your hobbies or to never go on a vacation, but there might be some things you have to say no to.
4. You and your spouse are on different pages. This is a hard one but something that needs to be addressed head on. If you share money with someone, both parties need to agree on how you will spend your money and what your priorities are as income changes.
5. You don’t have goals or a plan. At the end of the day, it’s hard to stay motivated when times get tough if you don’t know your why. Take some time to dream big! Write down everything you are going to do (or buy) once you are out of debt.
6. You don’t have a budget. This is a simple one. Get on a budget, they are a necessity for everyone!
This App Will Change How You Think About Budgeting !
While I was getting out of debt I started using an app early on that I think was a total game changer. This app not only helped me stay accountable, but it took all the guessing out of “how much do I have left in groceries” or “oops I spent too much, now what?”
Drumroll please - YNAB (You Need A Budget). Yup, that’s the name of the app!
Now, there are a lot of budgeting apps and there is a chance that you might already have one. But let me tell you why this one is different and why you should think about spending the $7 a month for it.
First off, if you spend too much in a category, YNAB will turn the category red and you won’t be able to ignore the problem. It will then ask you where you want to pull money from to make things right again. When you overspend that money has to come from somewhere and YNAB has no problem holding you accountable.
The second reason I love YNAB is that it let’s you use credit cards and it’s easy! I won’t go into the details here but just know that you can still accumulate your miles while you are paying off your debt.
Lastly, it makes saving for larger items a piece of cake. Maybe you want a savings goal for a specific item, like a new coach. Or you are saving for vacation but are going to be spending money along the way. Or maybe it’s a monthly bill and you are sick of looking up how much it is each month. Yup, it’s all there, and more!
The point I want to make is to encourage you to reach out and find tools that will make things like budgeting or paying off debt easier. Don’t try to create fancy spreadsheets or processes for saving receipts that you will never use.
Why make things harder?
This Is Why You Might Be Broke...
Are you confused at the end of each month because you know how much money you make, and there should be plenty to cover your bills, but then POOF - it's gone before you even knew what happened? Unfortunately, I think we can all relate to this one! I promise I won't harp on the importance of a budget in this post, even though that would tell you exactly where your money is going.
My guess is on subscriptions! And not only subscriptions themselves, but the mentality that the purchase doesn't effect anything. How many things are you "subscribed" to each month? I'm not talking about magazine subscriptions like the good old days. I'm talking about Netflix, Hulu, Disney Plus, Amazon Prime, Bark Box, Spotify, all the beauty boxes, Dollar Shave Club, Stitch Fix, Hello Fresh and the ever so popular wine club -- the list can go on FOREVER.
This is where your money is going. $5 here, $15 there, you don't even notice each individual transaction but by the end of the month your paycheck is out the window. And it is not each tiny service that is making you broke, it is the mentality that these things don't have any effect on your money.
I'm not saying you can't have these these things, some of them save you time, increase your mental health, allow you something to look forward to during quarantine. I get it! But do me a favor, go through your bank statements for the past month and write down your subscriptions. Do you need them ALL? Are you paying for something you barely use? Can you find a free version? And before you sign up for the next new thing, take a second, see how it is going to fit in your life and determine if there is something else you need to give up to account for this new cost. Small changes like cancelling some of these services can free up money to put towards things you truly love.