Last week I talked to you about how 8 years ago, I had zero savings, was constantly overdrawn in my account and didn’t have enough money to pay bills. Here’s how I created a savings, increased my credit 300 points and got my financial life together.
People say things like “there will always be debt”, “money doesn’t grow on trees”, or “there’s never enough money.” Bull. These beliefs makeup your money mindset. When your money mindset is trash, so is your bank account. It’s hard to hear but it’s the truth and the sooner you accept it and change your mindset, the sooner you can start building real wealth. What you focus on grows.
1. Start budgeting.
Bleck. I know. The thought of it makes people want to throw up. But I’m here to tell you, though it’s the hardest to start, it’s also the most crucial. We started with pencil and paper but it wasn’t as easy as digital and things kept getting left off. Now, my husband and I have a google excel sheet that we share so it’s on our phones, laptops, etc. Always at our fingertips. Easy access sets you up for success. We have 4 sections. The first section is monthly bills (mortgage/rent, electricity, groceries, etc). Things like groceries and gas get a number at the beginning of the month. So let’s say $150 for gas. There are simple formulas you can input to subtract 150- (total of each fill up) so you always know what you have left to get you through the rest of the month.The second section is all debt (credit cards, medical bills, etc). In each section make sure you the name of the bill, the amount due, the date due, and whether it comes out automatically or if you have to pay it. We also include login info as well (again for easy access). The third section is for extras (eating out, amazon orders, random things like car maintenance or oil changes). The fourth section is GOALS. All of our debt is listed in this section from highest interest rate to lowest. We’ve calculated what we can pay off every 90 days and that’s what we focus on. Again, what you focus on grows so when you’re laser focused on paying 3 to 4 things off every 90 days, you get through that list speedy quick. What you were paying on those 3-4 now goes to the next 3-4 you’re focused on. A debt avalanche. Everything is color coded. Pink items get paid at the beginning of the month, blue items get paid with the mid month checks. If you fail to plan, you plan to fail.
2. Pay yourself first.
Every wealthy person in history will tell you to always pay yourself first. This was tough when we started and another thing that was hard and made us want to puke. But this is what started our savings. 10% of every single check or cash payment coming in goes straight to your savings account. You live on what’s left over. Not enough? Start cutting. I promise, you can do hard things! Trust me on this.
3. Record it.
On that spreadsheet, we record every single penny that’s spent (including cash) every month. Every cent is accounted for. At the end of each week, we look at it and discuss what we need to reign in and what’s coming up. The first time we had $800 leftover at the end of the month, my husband and I got into a huge argument that “something didn’t get paid! There’s no way this is right!” It was. It just hadn’t ever happened to us before. So whatever is left goes to debt. Pay all of that off as fast as possible. This increases your credit significantly and helps you meet your goals faster. A few months we halved what was left over and put part in savings and part toward debt. Either way works as long as you get an emergency fund set up and debt paid off. Your definition of “emergency” changes when you have a fund for it.
4. Unpopular Opinion
Interest will kick you in the teeth every single month. This is a super unpopular opinion but has saved us a TON over the last year. Open a 0 interest credit card that will let you transfer balances. We did this with our largest credit card that was charging us almost $100 a month in interest. That move right there saved us over a grand last year alone and increased my credit score by almost 50 points!
5. Start reading and Stop Listening
Pay attention to what you’re listening to and looking at. If you’re listening to people that are always broke, you’re probably going to be as well. Surround yourself with people who push you up, teach you things and help you become better. I believe with all my heart and soul that you become like the top 5 people you hang around with most. Read books like Secrets of the Millionaire Mind by T. Harv Eckert, anything by David Bach, Rich Dad Poor Dad by Robert Kyosaki, Tony Robbins has some good ones. Here’s why I’m not a huge Dave Ramsey fan. He says things like – if you owe any debt, you should not be eating out. No. Sometimes you need to enjoy a family dinner out to celebrate or save your ever loving sanity! Family morale means a lot! Does it dent your budget a little more than eating at home, yes. But the fear inducing mindset that statements like that promote are far more damaging than 1-2 meals out a month.
6. Same ole, same ole
Cut what you can. We haven’t had cable in probably 10 years. How many channels do you really watch on your TV? Can you get those same channels with a Roku or an Amazon Firestick, Netflix, Hulu, Amazon Prime?
Shop at places like Aldi. I kid you not, their produce is WAY more fresh than places like Walmart and they have more organic options too.
Do what you have to do for a short amount of time- teach English to Chinese kids online, sell essential oils, sell signs or paintings or clothes, substitute teach, all things I did for a couple years just to have extra funds to help get us ahead. My husband stayed in airport lounges instead of hotels and flew pipeline 5-6 days a week just to save. It wasn’t fun or pretty and our marriage struggled on the daily with all the stress but the payoff was incredible.
These are all the things that you already know. I wanted to help you with things that you may not know or may not do. Everyone hears how they need to budget and many will ignore that advice but that was one of the best things we did for ourselves.
I hope this helped and wish you the best of luck! When your financial life is in order, everything else feels so much better! Nobody will ever have their entire life completely together. That doesn’t exist. But having your finances in order sure does make a huge difference and significantly boosts your confidence!