My husband and I have been on our financial journey for “some time” and a few of our family and friends are beginning to wonder how we are doing it.
Do you remember the article I posted earlier this year, “How to Talk Finances with Family and Friends?” I wrote, that leading by example will do a lot more good than talking your loved one’s ear off about finances. Well, we have been “walking the walk” and our loved ones are noticing. I have been asked multiple times, how we did it and how can they change their finances. I shared our story and the first few steps they need to take in their financial lives.
Looking back, I wish I had turned it around and asked “How bad do YOU want to be debt free?” “How bad do YOU want financial peace?” How bad do YOU want to have a retirement of dignity?” “How bad do YOU want to change your finances for the better?” Is “DEBT going to be the Worst 4-letter Word” in your household? What are YOU willing to do to WIN?
Don’t get me wrong, I am thrilled beyond belief that some of my loved ones want better financial circumstances. Are you kidding me, I have been praying for a long time for this! But how serious are they? They didn’t see all the day in and day out sacrifices my husband and I have made to change our finances this dramatically in less than three years. They don’t see the daily sacrifices we make to be able to live on one income and still travel around Europe. Do they have what it takes?
After you have told yourself, “okay this is it, I’m going to do something about my finances.” Ask yourself, “how bad do I want financial security? What am I willing to do, to win?”
10 Key Habits that are Leading Us Out of Debt
1. Say No To Debt
Once we decided, “we’ve had it.” We immediately took our credit cards out of our wallets and swore NO MORE DEBT. No if, and, or buts… no more debt, NO MATTER WHAT.
2. Take Your Head Out of the Sand.
Determine your income, your monthly expenses, and your debt totals. Acknowledge your past mistakes with money and move forward. Today is a new day and you are no longer going to live in denial about your finances.
Every financial decision from this day forward is going to be based on a plan. A plan that is based on facts. Facts from your budget and financial goals.
3. Establish a Monthly Budget (with your Spouse if you are Married).
If you are to do only one of these ten habits, please do this one. Living by a written spending plan is the ESSENTIAL key to living a financially secure life. When we established a monthly budget, there was no way in denying that we were spending $400+ at restaurants, $20 there and $50 here that were adding up to $100’s every month… WASTED!
Our written budget gives us a plan to follow to make sure we are spending money on what we “need” and “want” and NOT wasting it away. Do you realize the average American making $50,000/year will have over $2 MILLION go through there fingertips in their working career??? Don’t YOU want to have a plan to make the $$$ do something for you!
4. Use Cash!
Yes, using cash can be inconvenient and a hassle but it is IMPOSSIBLE to spend more than you have and go over budget. It also hurts a lot more to spend cash then just swiping plastic.
Those cute shoes do not look so cute when I think about handing over the last Benjamin in my wallet. It would probably be a little easier to live without the latest electronic device when I think about counting out FIVE Uncle Bens (that took me a week to earn), handing them to the cashier, never to be seen again.
If you doubt me, try it for just for 3 months. You will be surprised how your spending habits change. Our habits changed so dramatically that we have continued to use cash, for the past 3 years.
Your financial decisions mirror what you and your family deem as a priority in your life. For us: living debt free (paying off mortgage), traveling, and saving for retirement are priorities. This is evident in our monthly budget. Just these three categories compromise 48% of our monthly expenses.
Determine your family’s priorities. Then make sure your monthly budget reflects these priorities. When you start to feel like “poor me, I don’t get to go out to dinner.” Remember your family has different priorities and you are sacrificing one measly meal at your favorite restaurant to have a lifetime of financial security. This definitely puts things in perspective when you are having a moment of weakness.
6. Eliminate Temptation.
Do not set foot in your favorite store. I avoided craft stores and Target for many months. If the temptation is not there, you will not spend money on things you don’t need. Try to limit yourself to only grocery stores. Shop with a list and stick to the list.
If you have trouble with online shopping, unsubscribe from store emails that advertise sales and new products. You are too focused and working too hard on your financial goals to have a slip up on something that was not in the budget.
7. Free Entertainment.
At times this debt elimination phase is going to feel like it has sucked out all the “fun” in your life. Just because you are on a tight budget doesn’t mean you shouldn’t have fun. In fact, you need to have fun in order to avoid burn out on this lifestyle.
Seek out free or cheap entertainment. Some of our favorites include hiking, picnic in the park, borrow books & movies from the library, free concerts in the park, board games, playing cards, volunteering our time, photography, visiting a museum or historical site on a “free entry day.” The possibilities are endless, be creative!
8. Reduce Food Expenses.
Food can be one of the highest expenses in your budget (second to housing). Good news, there are MANY ways to reduce the cost of food. Check out “How We Save $100’s if Not $1000’s on Food.”
Grocery Store: Have a list. Stick to the list. Use “Budget Friendly Recipes” to make a meal plan to avoid food waste. Don’t buy or significantly reduce the purchase of convenient foods (anything pre-cut, pre-cooked, pre-prepared). Stick to meat, produce, rice, beans, pasta, flour, sugar, etc. (the basic staples). Don’t be afraid to buy store-brand products.
Restaurants: Avoid them as much as possible. Cooking a meal at home will ALWAYS be cheaper than eating at a restaurant (unless someone else is picking up the tab LOL). When you do eat at restaurants use coupons, Groupons, happy hour discounts, and basically anything to reduce the cost.
9. Team Work.
I can not emphasize enough how important it is, to work with your spouse with your finances. You are in this together. When one of you is having a rough day, the other is there pick you up to encourage and remind you why you are sacrificing, why you are on this journey.
I may be the captain (in my mind) of our “team” pushing us to the absolute limits to pay off debt, but it is my husband, the MVP, who continuously gets us through the struggles and the “bad days” when even I (the “crazy” Budget Loving Military Wife) wants to call it quits on our financial goals.
God put the two of us together because we compliment each others strengths and weaknesses. The same is true with you and your spouse.
10. Establish Goals
Once your financial priorities are establish, it will be easy to write down goals. I suggest writing one or two short term financial goals. Our Financial Goals are to pay off our “Mortgage Below $60,000” and to vacation to a minimum of 3 countries by the end of 2014.
Your goals could be ANYTHING… having an emergency fund of $500 by November 1st, having a “Debt Free Christmas“, paying off your car loan by July 2015. Now that you have your goals established, this is where any “extra” money will be sent. Your goals will help you stay focused and give you motivation to continue your financial journey.
Establishing financial security is NOT EASY, but it is so worth it. It will be worth it when you have less financial stress, less money disagreements with your spouse, more room in your budget for FUN, and when you retire with a fully funded retirement account… it will be so WORTH IT!
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