Any journey toward financial fitness can be daunting, overwhelming, and intimidating.
The internet is full of recommendations about how to get started, where to put your money, and how much money you need (this blog included!).
Our friends and family have their own recommendations based on their own experiences. Hell, just about everyone we know has an opinion on where our money should go.
My two-cents…just take a baby step towards your financial priorities.
Make a small move in the direction of your goals.
Pick one, single priority. – Maybe you’ve been dreaming of a home, maybe you want to start investing for your financial independence, or maybe you want to pay off that annoying loan from five years ago.
Set any amount of money aside for this goal. – Five dollars a week, or $100 a month, or any amount you can spare. You don’t need a large amount of money to start, just anything.
Don’t worry about the interest rate you’re getting on your savings account. Don’t worry about how the stock market dropped yesterday. Don’t get lost in the details, just set the money aside.
Don’t fret about brokerage accounts or credit card points, all of these decisions will come later. We’re just building habits and seeing results.
Repeat. – Continue to put money into the savings account, anything you can add will be enough. If you miss a week or month, don’t get frustrated, don’t stop! Start again the next month.
Don’t worry about what others are (or aren’t) doing, this is personal. This is about YOU and your particular, nobody-else-matters goals!
Soon you’ll see the consequences of your work - progress toward your priorities; forward motion toward your financial goals. You may be motivated to contribute more money, take larger steps – you’ll be encouraged about the possibilities!
After more time, you’ll consider whether you need to invest your money or (for short-term goals) continue to keep in your savings account. But remember, for now…
All you need to do is start with a baby step.
How are you doing on your journey to being financially fit? Are you making progress, or being bogged down by the details?
Wednesday, April 29, 2015
Monday, April 27, 2015
Oh My Darling, Money.
Dear Money,
I know we haven't always agreed about how to live life.
I like to buy new toys. You like to invest and diversify yourself.
I have a tendency to live in the moment. You like to look towards the future.
But I've been thinking a lot about it. I really think that we can come to an agreement.
One that works for both of us. Something that we can both be happy about.
We could find ways to enjoy life, while still being prepared for the unknown.
We could splurge on some expenses but save in other areas of our lives.
I know that working together we can can solve anything. Get through any difficult situation. We just need to be together.
Let's talk. Let's figure this out.
Let's balance living life now, with living well in old age.
Please come back to me.
Yours truly.
Instant Gratification.
I know we haven't always agreed about how to live life.
I like to buy new toys. You like to invest and diversify yourself.
I have a tendency to live in the moment. You like to look towards the future.
But I've been thinking a lot about it. I really think that we can come to an agreement.
One that works for both of us. Something that we can both be happy about.
We could find ways to enjoy life, while still being prepared for the unknown.
We could splurge on some expenses but save in other areas of our lives.
I know that working together we can can solve anything. Get through any difficult situation. We just need to be together.
Let's talk. Let's figure this out.
Let's balance living life now, with living well in old age.
Please come back to me.
Yours truly.
Instant Gratification.
Friday, April 24, 2015
Building a Healthy Financial Relationship is Possible.
If you don't treat your money well, then it will disappear.
Easily given away to perfect strangers, in return for rent, food, consumables, and debt payments.
Spending every penny you make - plus some you don't have (credit cards) - is unsustainable. You may be fine for now...as long as you hold down that paying job. But what about an unexpected emergency or job loss? How do you cover your living expenses when your monthly income is gone?
This is even more exasperated if you're using debt to fuel your lifestyle. You are digging yourself into a hole, fueling a life dependent on you making more money than required to pay back to creditors. Doesn't sound fun to me.
The solution?
Building a healthy relationship with your money.
One where you save for emergencies and retirement. One where you pay off your credit card balances monthly. One where you are not tied to the ebbs and flows of merit increases and bonuses.
Sounds much less stressful!
So how do you build this healthy relationship? Nothing new, just sage wisdom...
1. Prioritize.
2. Budget.
3. Small emergency fund (increasing over time).
4. Monthly contributions to a company 401(k) or IRA (or Roth IRA).
Trying to ignore the problems - or ignore your finances completely - will only make things worse.
Results come from action.
Is money something that doesn't matter to you? You spend it and that's how it should be?
Or, is money a means to an end? Where you use money to reach your goals and priorities in life? Letting money work for you through savings, investing, and compounding.
Actually acting on these steps. Actually putting in the time to care about your money. That's the only way things will change.
Are you working on your relationship with money?
Easily given away to perfect strangers, in return for rent, food, consumables, and debt payments.
Spending every penny you make - plus some you don't have (credit cards) - is unsustainable. You may be fine for now...as long as you hold down that paying job. But what about an unexpected emergency or job loss? How do you cover your living expenses when your monthly income is gone?
This is even more exasperated if you're using debt to fuel your lifestyle. You are digging yourself into a hole, fueling a life dependent on you making more money than required to pay back to creditors. Doesn't sound fun to me.
The solution?
Building a healthy relationship with your money.
One where you save for emergencies and retirement. One where you pay off your credit card balances monthly. One where you are not tied to the ebbs and flows of merit increases and bonuses.
Sounds much less stressful!
So how do you build this healthy relationship? Nothing new, just sage wisdom...
1. Prioritize.
2. Budget.
3. Small emergency fund (increasing over time).
4. Monthly contributions to a company 401(k) or IRA (or Roth IRA).
Trying to ignore the problems - or ignore your finances completely - will only make things worse.
Results come from action.
Is money something that doesn't matter to you? You spend it and that's how it should be?
Or, is money a means to an end? Where you use money to reach your goals and priorities in life? Letting money work for you through savings, investing, and compounding.
Actually acting on these steps. Actually putting in the time to care about your money. That's the only way things will change.
Are you working on your relationship with money?
Wednesday, April 22, 2015
Understand. Own. Tweak. The Benefits of Financial Awareness.
In a recent presentation we were discussing personality traits. The conversation focused on how awareness can bring about change (even if only small changes) and the presenter shared a great formula to remember the process – understand, own, tweak.
An individual must understand their habits/traits, take ownership of the pros and cons of the traits, and finally tweak (make small changes) for progress.
My first thought was, “Hey! The Understand, Own/Tweak formula has the same application to personal finances!”
UNDERSTAND
There are numerous facets of our finances where just having awareness, an understanding, can be the tipping point to bring about action.
Understanding our cash flow, brings awareness of how much we’re spending, where we’re spending it, and if we’re spending more than we’re making.
Understanding our financial priorities and goals, brings awareness of where we want to be, what we want to be doing, and whether we’re making progress. (Are we actually on the path to financial independence, owning our dream home, or retirement? Or are we still fantasizing about it?)
Without understanding, there isn’t consciousness to determine if you need to make financial improvements.
OWN
Just having understanding, awareness, and consciousness by itself doesn’t change your financial picture. You need to own the fact that this is you. That where you are now is the outcome of actions you’ve taken and decisions you’ve made. And that you have the means to make the necessary changes.
Ownership means responsibility. Ownership means accepting our faults. Ownership means the choice to make modifications.
If your finances are a mess, or you’re not on track for your goals, this is your doing.
But you can also make the changes. You can own your next decisions, decisive actions to make progress towards being financially fit.
TWEAK
The actions stemming from understanding and owning your financial decisions do not have to be major changes. You don’t have to be extreme. You don’t have to go from abundance to poverty.
But, you should be trying to make forward progress.
Small changes, small tweaks, which will have large outcomes - especially as they become your new habits.
RINSE AND REPEAT
The Understanding, Own, Tweak process isn’t a one-time deal.
This is a formula which should be applied to your finances constantly (or at least regularly).
Repeat the process. Continue to make financial improvements. You’ll soon find that you’ve built strong financial habits and you’re reaching your desired outcomes.
Are you already using this formula? What are tweaks that you’ve made to improve your finances?
An individual must understand their habits/traits, take ownership of the pros and cons of the traits, and finally tweak (make small changes) for progress.
My first thought was, “Hey! The Understand, Own/Tweak formula has the same application to personal finances!”
UNDERSTAND
There are numerous facets of our finances where just having awareness, an understanding, can be the tipping point to bring about action.
Understanding our cash flow, brings awareness of how much we’re spending, where we’re spending it, and if we’re spending more than we’re making.
Understanding our financial priorities and goals, brings awareness of where we want to be, what we want to be doing, and whether we’re making progress. (Are we actually on the path to financial independence, owning our dream home, or retirement? Or are we still fantasizing about it?)
Without understanding, there isn’t consciousness to determine if you need to make financial improvements.
OWN
Just having understanding, awareness, and consciousness by itself doesn’t change your financial picture. You need to own the fact that this is you. That where you are now is the outcome of actions you’ve taken and decisions you’ve made. And that you have the means to make the necessary changes.
Ownership means responsibility. Ownership means accepting our faults. Ownership means the choice to make modifications.
If your finances are a mess, or you’re not on track for your goals, this is your doing.
But you can also make the changes. You can own your next decisions, decisive actions to make progress towards being financially fit.
TWEAK
The actions stemming from understanding and owning your financial decisions do not have to be major changes. You don’t have to be extreme. You don’t have to go from abundance to poverty.
But, you should be trying to make forward progress.
Small changes, small tweaks, which will have large outcomes - especially as they become your new habits.
RINSE AND REPEAT
The Understanding, Own, Tweak process isn’t a one-time deal.
This is a formula which should be applied to your finances constantly (or at least regularly).
Repeat the process. Continue to make financial improvements. You’ll soon find that you’ve built strong financial habits and you’re reaching your desired outcomes.
Are you already using this formula? What are tweaks that you’ve made to improve your finances?
Monday, April 20, 2015
Spend Less Money Than You Earn!
This is not about frugality or minimalism...this is just common sense.
Even if you think everything is under control, one set back (one surprise) can derail your financial life.
Don't give in to the temptation of rolling over that credit card balance.
Don't give in to your urge for that new iPhone watch you saw on the television commercial.
Spend less money than you earn!
This is a problem. A major problem.
Admit it or not, you will need to make some changes.
You can either wait until it's so bad that you file for bankruptcy, sell all of your toys, and move back in with your parent...
Or you can act now!
Make immediate changes!
Start with baby steps. Set your financial and life priorities. Come up with a plan. Then act!
How are your financial goals coming?
Even if you think everything is under control, one set back (one surprise) can derail your financial life.
Don't give in to the temptation of rolling over that credit card balance.
Don't give in to your urge for that new iPhone watch you saw on the television commercial.
Spend less money than you earn!
This is a problem. A major problem.
Admit it or not, you will need to make some changes.
You can either wait until it's so bad that you file for bankruptcy, sell all of your toys, and move back in with your parent...
Or you can act now!
Make immediate changes!
Start with baby steps. Set your financial and life priorities. Come up with a plan. Then act!
How are your financial goals coming?
Friday, April 17, 2015
Your First Action After Tax Season – Update Your Form W-4
Tax season has come and gone.
Some of you were probably surprised by the size of their tax refunds and others...were shocked by the size of your tax bills.
In either case, you need to take action (now!) to make sure you're maximizing or correcting your tax liabilities (as well as your cash flow).
If you work for an employer, the culprit was probably your tax elections (your Form W-4).
You were either withholding too little, or too much, from your pay checks – therefore not correctly accounting for your taxes in your monthly cash flow.
Why Update Your Form W-4 For a Tax Refund?
You are giving the government an interest free loan!
Unless you treat your tax refund as “free” money and apply it towards your financial goals (and not spend it on new clothes), you are missing out on regular, monthly income to help with your cash flow.
By updating your Form W-4, you can take home more money on your paychecks and use it to cover your immediate financial needs. This is key if you're struggling to pay your monthly bills but receive a huge refund every tax season.
Why Update Your Form W-4 For a Tax Bill?
If you have great cash flow, and save up a portion of your monthly income to pay your tax bill every year, then ignore this. But if not, take action now!
If you didn’t have the money set aside and you had to pull from your financial priorities (or use a credit card), then update your Form W-4.
This will lower your monthly income, but you still need to do this to account for all of your bills – you were previously missing a major liability, your taxes!
Factoring in your taxes when analyzing monthly cash flow will give a realistic picture of your finances.
Tax Time
Don’t be surprised at tax time! Be proactive and be in control of your finances (which includes taxes).
The IRS has a great Form W-4 withholding calculator to help guide your elections – use it. Then reach out to your HR Department to get your tax withholding changed.
IRS WITHHOLDING CALCULATOR
What did you do with your tax refund? If you had a tax liability, how did you pay for it?
Some of you were probably surprised by the size of their tax refunds and others...were shocked by the size of your tax bills.
In either case, you need to take action (now!) to make sure you're maximizing or correcting your tax liabilities (as well as your cash flow).
If you work for an employer, the culprit was probably your tax elections (your Form W-4).
You were either withholding too little, or too much, from your pay checks – therefore not correctly accounting for your taxes in your monthly cash flow.
Why Update Your Form W-4 For a Tax Refund?
You are giving the government an interest free loan!
Unless you treat your tax refund as “free” money and apply it towards your financial goals (and not spend it on new clothes), you are missing out on regular, monthly income to help with your cash flow.
By updating your Form W-4, you can take home more money on your paychecks and use it to cover your immediate financial needs. This is key if you're struggling to pay your monthly bills but receive a huge refund every tax season.
Why Update Your Form W-4 For a Tax Bill?
If you have great cash flow, and save up a portion of your monthly income to pay your tax bill every year, then ignore this. But if not, take action now!
If you didn’t have the money set aside and you had to pull from your financial priorities (or use a credit card), then update your Form W-4.
This will lower your monthly income, but you still need to do this to account for all of your bills – you were previously missing a major liability, your taxes!
Factoring in your taxes when analyzing monthly cash flow will give a realistic picture of your finances.
Tax Time
Don’t be surprised at tax time! Be proactive and be in control of your finances (which includes taxes).
The IRS has a great Form W-4 withholding calculator to help guide your elections – use it. Then reach out to your HR Department to get your tax withholding changed.
IRS WITHHOLDING CALCULATOR
What did you do with your tax refund? If you had a tax liability, how did you pay for it?
Wednesday, April 15, 2015
Six Traits of the Financially Fit
Everyone is unique and everyone has their own financial habits - plus most people do not like being told how to spend their hard earned income.
That being said, there are several traits that the financially fit (wealthy) share – and you could possibly imitate to achieve your own high-level of financial fitness.
To be clear, income doesn't equal wealth, as many people have large incomes but no assets, investments, net worth or real wealth.
Six Traits
Living below your means has the obvious benefit of a cash surplus – fewer expenses than income – but it also means that you need less in retirement.
Spending less money than you bring in removes financial stress. You’re not worried about having enough money to pay your bills, the mortgage, or purchase groceries. This is a huge relief!
In addition, you have excess money (the difference between your monthly income and your monthly expenses) to apply towards your financial priorities (retirement/financial independence, a home purchase, paying off debt).
This will also help you to retire (possibly early), as you will need less income than others (those spendy folks) to fund your lifestyle.
Modest homes (and owning for years). Modest vehicles (and owning for years). Purchasing toys with cash, not credit.
Being comfortable with living and owning reasonably, allows you the freedom to focus money into other priorities. Let’s say home-ownership is important to you, but so is financial independence. If you purchase a modest priced home, and have a reasonable monthly mortgage payment, then you’ll be in position to still focus on financial independence. The reverse occurs if you have a lofty mortgage payment, which requires you to use all of your excess dollars to make the payment – little else on your financial priority list can be accomplished if this is the route you choose.
Note that owning more is not the same as investing. You should be investing in appreciating assets (stocks, bonds, businesses), not in depreciating assets (cars, electronics, items with a limited life).
You’re looking for appreciating assets here - investments that will gain in value (a true investment), not depreciate over time. (There is no guarantee of investments increasing over time, but historically, some investments have performed better than others.)
Investing in stocks and bonds, as well as private (maybe self-owned) businesses or real estate, can be wise investments for your money. Investing in education and training to develop your professional skills can be good investments.
Owning toys or assets that have a short lifespan (but using the excuse that they’re investments) will not pay off in the long-run.
Without focus, you will not be able to have a plan and work towards completing your plan. But even having a plan doesn't guarantee results. This requires action! And action requires significant resources – and in this case, it’s time and money.
Make sure you set aside time regularly to review your finances and your priorities. Review whether you’re still on track or if you need to make adjustments. Awareness is key to improvement.
The latest trends, social pressure, what the cool kids are wearing/owning/using, are all ways for you to part with your dollars. You have to buck the trend to reach your financial goals, no one said this was easy – and obviously not everyone is doing this.
If you’re more concerned about what others think about you (or what you own/look like), then you’re going to spend money on trying to meet their expectations. Here’s a secret, they’ll probably still find something lacking. You’ll spend your life trying to measure up, only to find that you haven’t been focused on the right financial path.
Children can be expensive, but completely worth every penny. They are your responsibility and you take that accountability seriously…but what about when they’re adults? At what point should your work have developed them into mature, self-reliant citizens?
Provide financial education to your adult children, help them emotionally, but be weary of the financial support. Are you hurting them or helping them when you provide economic support to grown, capable children? What you are doing, is taking funds away from your own financial independence (a.k.a. retirement).
The financially fit know that there has to be a balance between supporting themselves (being a little selfish) and supporting others.
Mimic Others
Similar to being physically fit and mentally fit, being financially fit can be a lot of work and daunting (and possibly involve some sweat). You have to work hard, have an end goal, and take action.
You might find that you already have several of the habits, but are lacking in a few. Continue to flex your financial muscles by tip-toeing into the other traits.
You don’t have to start from scratch. You have the tools and habits of others to mimic. By modeling others who already have the traits of the financially fit, you have a edge to reach your goals.
Do you portray any of the financially fit traits? Which ones?
That being said, there are several traits that the financially fit (wealthy) share – and you could possibly imitate to achieve your own high-level of financial fitness.
To be clear, income doesn't equal wealth, as many people have large incomes but no assets, investments, net worth or real wealth.
Six Traits
Living below your means has the obvious benefit of a cash surplus – fewer expenses than income – but it also means that you need less in retirement.
Spending less money than you bring in removes financial stress. You’re not worried about having enough money to pay your bills, the mortgage, or purchase groceries. This is a huge relief!
In addition, you have excess money (the difference between your monthly income and your monthly expenses) to apply towards your financial priorities (retirement/financial independence, a home purchase, paying off debt).
This will also help you to retire (possibly early), as you will need less income than others (those spendy folks) to fund your lifestyle.
Modest homes (and owning for years). Modest vehicles (and owning for years). Purchasing toys with cash, not credit.
Being comfortable with living and owning reasonably, allows you the freedom to focus money into other priorities. Let’s say home-ownership is important to you, but so is financial independence. If you purchase a modest priced home, and have a reasonable monthly mortgage payment, then you’ll be in position to still focus on financial independence. The reverse occurs if you have a lofty mortgage payment, which requires you to use all of your excess dollars to make the payment – little else on your financial priority list can be accomplished if this is the route you choose.
- The third trait of the financially fit is to “invest a significant portion of your income.”
Note that owning more is not the same as investing. You should be investing in appreciating assets (stocks, bonds, businesses), not in depreciating assets (cars, electronics, items with a limited life).
You’re looking for appreciating assets here - investments that will gain in value (a true investment), not depreciate over time. (There is no guarantee of investments increasing over time, but historically, some investments have performed better than others.)
Investing in stocks and bonds, as well as private (maybe self-owned) businesses or real estate, can be wise investments for your money. Investing in education and training to develop your professional skills can be good investments.
Owning toys or assets that have a short lifespan (but using the excuse that they’re investments) will not pay off in the long-run.
- The fourth trait is to “allocate time and money to building wealth.”
Without focus, you will not be able to have a plan and work towards completing your plan. But even having a plan doesn't guarantee results. This requires action! And action requires significant resources – and in this case, it’s time and money.
Make sure you set aside time regularly to review your finances and your priorities. Review whether you’re still on track or if you need to make adjustments. Awareness is key to improvement.
- The fifth trait is to “believe financial independence is more important than keeping up with the Jones.”
The latest trends, social pressure, what the cool kids are wearing/owning/using, are all ways for you to part with your dollars. You have to buck the trend to reach your financial goals, no one said this was easy – and obviously not everyone is doing this.
If you’re more concerned about what others think about you (or what you own/look like), then you’re going to spend money on trying to meet their expectations. Here’s a secret, they’ll probably still find something lacking. You’ll spend your life trying to measure up, only to find that you haven’t been focused on the right financial path.
- The sixth (and last) trait of the financially fit is to “view your adult children as economically self-reliant.”
Children can be expensive, but completely worth every penny. They are your responsibility and you take that accountability seriously…but what about when they’re adults? At what point should your work have developed them into mature, self-reliant citizens?
Provide financial education to your adult children, help them emotionally, but be weary of the financial support. Are you hurting them or helping them when you provide economic support to grown, capable children? What you are doing, is taking funds away from your own financial independence (a.k.a. retirement).
The financially fit know that there has to be a balance between supporting themselves (being a little selfish) and supporting others.
Mimic Others
Similar to being physically fit and mentally fit, being financially fit can be a lot of work and daunting (and possibly involve some sweat). You have to work hard, have an end goal, and take action.
You might find that you already have several of the habits, but are lacking in a few. Continue to flex your financial muscles by tip-toeing into the other traits.
You don’t have to start from scratch. You have the tools and habits of others to mimic. By modeling others who already have the traits of the financially fit, you have a edge to reach your goals.
Do you portray any of the financially fit traits? Which ones?
Monday, April 13, 2015
Exploit Your Finances, Exploit Your Life!, Step Four – Exploit YourFuture
Below is part four of a four step series on how to go about Exploiting Your Finances, Exploiting Your Life! Start here - Unexploited Finances.
And the fun continues with Step Four!
Short and sweet = IF you exploit your finances, THEN you'll reach your priorities AND you'll already be exploiting your life!
If you're able to follow this process...if you're able to get a real understanding of how your finances impact your life, and you can take control of your finances...you'll be exploiting your life before you know it!
You'll feel like you have life figured out!
You'll wonder why you didn't do this earlier!
You'll be:
By confronting your finances head-on, with your priorities and a plan leading the way, you can take back your life! Make your own path on your own journey!
Will your path change along the way? Yes, they will! But this isn't bad, life happens. When you change your path, revisit your priorities, revisit your finances, exploit your finances, and continue on!
With this plan, you'll no longer have to stress about money. You'll no longer have to worry about what the future might bring. You'll be financially prepared for anything!
Priorities also change after you've met your prior ones. Don't stop! Revisit what is important to you (Step One), decide how you can achieve it, and prioritize!
If you've just been reading and not acting...start now! Go find a quiet place and determine your priorities!
Get ready to Exploit Your Finances, Exploit Your Life!
Join us in the Personal Finance Revolution!
Are you exploiting your future? How are you exploiting your life?
And the fun continues with Step Four!
Short and sweet = IF you exploit your finances, THEN you'll reach your priorities AND you'll already be exploiting your life!
If you're able to follow this process...if you're able to get a real understanding of how your finances impact your life, and you can take control of your finances...you'll be exploiting your life before you know it!
Exploit Your Life
You'll feel like you have life figured out!
You'll wonder why you didn't do this earlier!
You'll be:
- Taking weekend trips...every weekend!
- Finding financial freedom!
- Finding time! Yes, time! That unstoppable moving ecstasy!
- Retiring early!
- Taking a gap year! Or a few!
- Not stressing about life! Rather, you'll be living life!
By confronting your finances head-on, with your priorities and a plan leading the way, you can take back your life! Make your own path on your own journey!
Priorities Change
Will your path change along the way? Yes, they will! But this isn't bad, life happens. When you change your path, revisit your priorities, revisit your finances, exploit your finances, and continue on!
With this plan, you'll no longer have to stress about money. You'll no longer have to worry about what the future might bring. You'll be financially prepared for anything!
Priorities also change after you've met your prior ones. Don't stop! Revisit what is important to you (Step One), decide how you can achieve it, and prioritize!
Best Time to Act...NOW!
If you've just been reading and not acting...start now! Go find a quiet place and determine your priorities!
Get ready to Exploit Your Finances, Exploit Your Life!
Join us in the Personal Finance Revolution!
Are you exploiting your future? How are you exploiting your life?
Friday, April 10, 2015
Exploit Your Finances, Exploit Your Life!, Step Three – Exploit YourCash Flow
Below is part three of a four step series on how to go about Exploiting Your Finances, Exploiting Your Life! Start here - Unexploited Finances.
Now the fun starts!
Now you get to BLAME your priorities and exploit your finances!
Cutting your expenses is still the default solution to find money for your goals, but it doesn't have to be the only solution. How about your income?!
This may be the time for you to ask about that raise at work. Go in with your accomplishments, what you bring, and why you deserve a raise!
No opportunity for a raise...have you looked at the job market lately? You should always keep your eyes open! If you're not watching for it, your ideal job may pass you by. You may have also boosted your current skills since your last job search. (Don't forget to update your LinkedIn profile.) Go ahead, take a look. Blame it on your priorities!
If time is on your side, just not the income, there is also the possibility of a part-time job or a side business. There are lots of opportunities to make more money, it's just a matter of having a reason! Priorities = Reason.
Adding income is a great tool for exploiting your finances because this money hasn't already been allocated. Fresh money! You can just shovel it into your goals!
Okay, now it's time to look at those bills.
After your cash flow statement work in Step Two, Current Finances, you have a starting point for your current budget. So how does it look?
Does it look pretty slim?
Do you already cook your meals at home and cut out the cable bill years ago?
Write down your priorities from Step One, Priorities. With this list next to you, go through your expenses - one by one. What's more important?
Is the daily lunch more important then getting your time back?
Is the cable bill more important then your gap year? (You watch all of your shows on Netflix and Hulu anyway.)
What's left?
You may not be able to cut expenses out if they're all reoccurring debt payments or rent payments (student loan, car loan, credit card debt, rent, etc). If this is the case, look at whether you really need these items. Take a BIG step back. We're making drastic changes here, we're exploiting!
Do you really need two cars? Can you move to a lower rent apartment?
These are painful decisions. But that's where we exploit our finances! Blame your priorities! Is your priority to be debt free? Well...selling the car can not only reduce your current debt, but also remove a monthly payment! You don't have to go car free, get a used car. One that fits your new goals!
(After my last car and paying off all of my debt, I promised myself that I'll never take another loan out on a car!)
If friends start giving you a hard time about your 'used' car, say "I could have a new car if I wanted, but I have this goal to be debt free"...(priority blamed!).
The 'extra' monthly money can go towards the student debt, paying it off early! And so on, and so on. Amazing!
Make sure you don't cut everything out though. Exploiting life means that you enjoy every single day. If having that morning latte is about the best thing that's ever happened to you on a Monday morning, then keep it!
Keep items that make you happy, remove items that are just filler!
Have fun with the "blame." Make it a game!
What can I change and blame on my priorities?
Your family and friends will understand and soon everyone will be trying to help you meet your goals!
Using your priorities as scapegoats can have positive side effects - one of which is a conversation starter.
When you decline the next lunch out and blame your priority, coworkers and friends will ask you about it. You can share why being debt free, gaining your time back, and/or traveling the world is important to you. They may even be inspired and start working on their own priorities!
As mentioned in Step One, Priorities, talk about your priorities regularly! Don't be shy. This will help set it in your daily routine! This will help keep you focused! This will help you apply your priorities to all of your financial decisions!
You may still feel uncomfortable talking about finances with strangers. Money is still a taboo discussion in society today, but do it anyway! Showing that you're comfortable with your money is an example of you managing your finances! Those individuals who are uncomfortable talking about money are usually managed by their finances. (I'm not saying discuss your huge salary, no one will want to talk to you...ever. I am saying discuss your financial goals and how you plan to meet them!)
Blame, blame, blame! Use your priorities to exploit your finances!
Get ready to Exploit Your Finances, Exploit Your Life!
Join us in the Personal Finance Revolution!
Are you using your priorities as a tool to review your cash flow? How are you exploiting your cash flow?
Now the fun starts!
Now you get to BLAME your priorities and exploit your finances!
Exploit Your Income
Cutting your expenses is still the default solution to find money for your goals, but it doesn't have to be the only solution. How about your income?!
This may be the time for you to ask about that raise at work. Go in with your accomplishments, what you bring, and why you deserve a raise!
No opportunity for a raise...have you looked at the job market lately? You should always keep your eyes open! If you're not watching for it, your ideal job may pass you by. You may have also boosted your current skills since your last job search. (Don't forget to update your LinkedIn profile.) Go ahead, take a look. Blame it on your priorities!
If time is on your side, just not the income, there is also the possibility of a part-time job or a side business. There are lots of opportunities to make more money, it's just a matter of having a reason! Priorities = Reason.
Adding income is a great tool for exploiting your finances because this money hasn't already been allocated. Fresh money! You can just shovel it into your goals!
Exploit Your Expenses
Okay, now it's time to look at those bills.
After your cash flow statement work in Step Two, Current Finances, you have a starting point for your current budget. So how does it look?
Does it look pretty slim?
Do you already cook your meals at home and cut out the cable bill years ago?
Write down your priorities from Step One, Priorities. With this list next to you, go through your expenses - one by one. What's more important?
Is the daily lunch more important then getting your time back?
Is the cable bill more important then your gap year? (You watch all of your shows on Netflix and Hulu anyway.)
What's left?
You may not be able to cut expenses out if they're all reoccurring debt payments or rent payments (student loan, car loan, credit card debt, rent, etc). If this is the case, look at whether you really need these items. Take a BIG step back. We're making drastic changes here, we're exploiting!
Do you really need two cars? Can you move to a lower rent apartment?
These are painful decisions. But that's where we exploit our finances! Blame your priorities! Is your priority to be debt free? Well...selling the car can not only reduce your current debt, but also remove a monthly payment! You don't have to go car free, get a used car. One that fits your new goals!
(After my last car and paying off all of my debt, I promised myself that I'll never take another loan out on a car!)
If friends start giving you a hard time about your 'used' car, say "I could have a new car if I wanted, but I have this goal to be debt free"...(priority blamed!).
The 'extra' monthly money can go towards the student debt, paying it off early! And so on, and so on. Amazing!
Make sure you don't cut everything out though. Exploiting life means that you enjoy every single day. If having that morning latte is about the best thing that's ever happened to you on a Monday morning, then keep it!
Keep items that make you happy, remove items that are just filler!
Blame Game
Have fun with the "blame." Make it a game!
What can I change and blame on my priorities?
Your family and friends will understand and soon everyone will be trying to help you meet your goals!
Using your priorities as scapegoats can have positive side effects - one of which is a conversation starter.
When you decline the next lunch out and blame your priority, coworkers and friends will ask you about it. You can share why being debt free, gaining your time back, and/or traveling the world is important to you. They may even be inspired and start working on their own priorities!
Daily Life
As mentioned in Step One, Priorities, talk about your priorities regularly! Don't be shy. This will help set it in your daily routine! This will help keep you focused! This will help you apply your priorities to all of your financial decisions!
You may still feel uncomfortable talking about finances with strangers. Money is still a taboo discussion in society today, but do it anyway! Showing that you're comfortable with your money is an example of you managing your finances! Those individuals who are uncomfortable talking about money are usually managed by their finances. (I'm not saying discuss your huge salary, no one will want to talk to you...ever. I am saying discuss your financial goals and how you plan to meet them!)
Blame, blame, blame! Use your priorities to exploit your finances!
Get ready to Exploit Your Finances, Exploit Your Life!
Join us in the Personal Finance Revolution!
Are you using your priorities as a tool to review your cash flow? How are you exploiting your cash flow?
Wednesday, April 8, 2015
Emergency Fund - What's reasonable?
Many financial planners say to have 2-6 months worth of expenses saved as an emergency fund.
While I agree with the thought, this is a little restrictive for those just entering the workforce or trying to dig themselves out of a financial issue.
With an eventual goal of 2-6 months worth of expenses in an emergency fund, start smaller.
Start with a goal of $500 (or maybe a $1,000).
This will cover most of your basic emergencies (car breaks down, unexpected bill) and basic medical costs - though, obviously, not the high value medical emergencies.
Once you reach this threshold, determine what financial goals are next.
For example, if you have credit card debt rolling over (and you're paying outrageous interest rates), focus on these next. Throw all your money towards these. (Really, everything...this should be priority #1 after a positive cash flow and an emergency fund.)
On the other hand, if you don't have any credit card debt, but your employer matches contributions to your retirement account, start adding money to your retirement - at least meet the matching amount. (Free money!)
If your next financial goals do not involve high debt issues (credit cards), then allocate your money towards your goals PLUS your emergency fund.
Add monthly increments to the emergency fund until you reach the 2-3 months of expenses point.
This may be a reasonable amount for you - if you have a stable job, live well below your income, and you have support (financial, family, etc.) in the case of a terrible emergency.
If you are self-employed or the sole-income earner, then you should probably strive for the 6 months (possibly more) of expenses in your emergency fund. This will help protect you from losing a large client or the impact of a family (or medical) emergency where you cannot work.
As your income increases, as you get raises, tax refunds - put additional monies toward your goals.
Yes, you should be striving for a large emergency fund. One that will cover 2-6 months worth of your living costs. This will allow you piece of mind in those financial emergencies.
But! You do not need to wait on your dreams or wait to make financial progress in your goals.
Small steps forward is still forward motion.
The key is starting forward. You can always change your speed as you go.
Do you have an emergency fund? How much do you keep in it?
While I agree with the thought, this is a little restrictive for those just entering the workforce or trying to dig themselves out of a financial issue.
With an eventual goal of 2-6 months worth of expenses in an emergency fund, start smaller.
Start with a goal of $500 (or maybe a $1,000).
This will cover most of your basic emergencies (car breaks down, unexpected bill) and basic medical costs - though, obviously, not the high value medical emergencies.
Once you reach this threshold, determine what financial goals are next.
For example, if you have credit card debt rolling over (and you're paying outrageous interest rates), focus on these next. Throw all your money towards these. (Really, everything...this should be priority #1 after a positive cash flow and an emergency fund.)
On the other hand, if you don't have any credit card debt, but your employer matches contributions to your retirement account, start adding money to your retirement - at least meet the matching amount. (Free money!)
If your next financial goals do not involve high debt issues (credit cards), then allocate your money towards your goals PLUS your emergency fund.
Add monthly increments to the emergency fund until you reach the 2-3 months of expenses point.
This may be a reasonable amount for you - if you have a stable job, live well below your income, and you have support (financial, family, etc.) in the case of a terrible emergency.
If you are self-employed or the sole-income earner, then you should probably strive for the 6 months (possibly more) of expenses in your emergency fund. This will help protect you from losing a large client or the impact of a family (or medical) emergency where you cannot work.
As your income increases, as you get raises, tax refunds - put additional monies toward your goals.
Yes, you should be striving for a large emergency fund. One that will cover 2-6 months worth of your living costs. This will allow you piece of mind in those financial emergencies.
But! You do not need to wait on your dreams or wait to make financial progress in your goals.
Small steps forward is still forward motion.
The key is starting forward. You can always change your speed as you go.
Do you have an emergency fund? How much do you keep in it?
Monday, April 6, 2015
Exploit Your Finances, Exploit Your Life!, Step Two - Current Finances
Below is part two of a four step series on how to Exploit Your Finances, Exploit Your Life! Start here - Unexploited Finances.
Have you ever taken a hard look at your current finances?
Some of you may do this regularly, but I’m sure a lot of you are still tracking your finances in your head!
You know you have the mortgage to pay, you know you have to eat every day, you know you have the car loan and the insurance payments. But do you really know where you stand at this minute, this day, this month! You probably are not financially aware!
Just being aware of your finances can have a significant impact on you!
Let’s say that you have never looked at your personal balance sheet – Do you know that you have more debt than you do assets? What does this mean to you? Do you care?
Maybe you've never made a personal cash flow statement – Do you know that you spend more money than you bring in? What does this mean to you? Do you care?
Well…if you want to exploit your finances to exploit your life, then you DO care!
You should care a lot if you want to meet your life priorities!!
The most difficult part of this exercise is being okay with the outcome. At this point, it doesn’t matter if you’re in the red or spending more than you’re making. It’s OKAY! We just want to know what’s going on. Simply bringing self (financial) awareness!
(There are several useful - free - web-based tools for this process. We currently use Mint.com.)
The balance sheet is merely your net worth.
A basic list of all your assets and all your liabilities – with your net worth being the difference.
Assets may include your home value, car values, savings and checking accounts, and retirement accounts.
Liabilities may include your home loan, car loan, student loan, credit card balances, appliance loans, and loans from your retirement accounts.
It’s okay if your net worth is negative! We’re simply trying to capture the data and come to terms with it. We have to be aware and reflect, before we can conquer!
If you have a negative net worth, you are not alone! My wife and I had a negative net worth of over $50,000 when we finally recognized our financial issues. We had over $70,000 of debt!! We had a car loan, we each had student loans, we had credit card debt , and we had a personal loan from family. We even put our new washer and dryer on a credit card!
The debt was way more than the value of our simple list of assets (a small IRA and our car). But we knew our priorities were worth the realization – we came, we saw, we paid it off!
The cash flow statement is a reflection of how much money you spend compared to what you earn.
A cash flow statement is similar to a budget, but it’s not the same! This is a snapshot of where you stand on any given month, we’re strictly tracking your spending. A budget is setting spending goals and is where you want to be in the near future!!
List your income from your job (or possibly multiple jobs) and list all of your expenses.
Food, rent or mortgage, utilities, clothes, drinks, gifts, entertainment…the list of expenses is unending!
Again, we’re not focusing on whether you’re spending more than you’re making. It’s OKAY! We’re focused on becoming aware of our money.
I've been in the red. I've spent more than I made. I was living the American life – playing credit card games. I became aware!
We’ll work on ‘fixes’ in the next step.
Do you have your cash flow statement? How does it look? As good as you expected?
If you’re doing well financially, then you've probably cruised right through this step. You’re feeling good and ready to start exploiting your life!
If you've never taken a good, hard look at your finances before, then you’re nauseous right now! You’re in shock!
Maybe you knew it was bad, but not this bad!
Welcome to awareness! Doesn't it feel great?!
I know. My wife and I came to the same realization once we started this process. Using Mint.com, we uploaded all of our accounts and began tracking our monthly expenses. Then...we went completely numb inside – that tingle, out-of-body experience when you know something is wrong.
We couldn't believe that two grown, responsible adults, with great jobs, could be having so many financial problems. We weren't doing anything different from everyone else! Why did our net worth look like this?!
Answer: Everyone we knew had the same financial problems, but when everyone is doing the same thing, it’s not called a “problem”, it’s called “normal”. Normal!
After the initial awareness paralysis wore off, we slowly built up our resolve – this was never, EVER going to happen again. We reviewed our priorities – that’s how we wanted to live! So we reversed course, and went down our new path!
If you get discouraged in any way during this process, revisit Step One, Priorities. Continue to review your priorities until they’re meaningful enough to outweigh any discouragement!
Are you aware of your current financial state?
Get ready to Exploit Your Finances, Exploit Your Life!
Join us in the Personal Finance Revolution!
Have you reviewed your current finances? What is the toughest part of becoming financially aware?
Have you ever taken a hard look at your current finances?
Some of you may do this regularly, but I’m sure a lot of you are still tracking your finances in your head!
You know you have the mortgage to pay, you know you have to eat every day, you know you have the car loan and the insurance payments. But do you really know where you stand at this minute, this day, this month! You probably are not financially aware!
Just being aware of your finances can have a significant impact on you!
Let’s say that you have never looked at your personal balance sheet – Do you know that you have more debt than you do assets? What does this mean to you? Do you care?
Maybe you've never made a personal cash flow statement – Do you know that you spend more money than you bring in? What does this mean to you? Do you care?
Well…if you want to exploit your finances to exploit your life, then you DO care!
You should care a lot if you want to meet your life priorities!!
The most difficult part of this exercise is being okay with the outcome. At this point, it doesn’t matter if you’re in the red or spending more than you’re making. It’s OKAY! We just want to know what’s going on. Simply bringing self (financial) awareness!
(There are several useful - free - web-based tools for this process. We currently use Mint.com.)
Balance Sheet
The balance sheet is merely your net worth.
A basic list of all your assets and all your liabilities – with your net worth being the difference.
Assets may include your home value, car values, savings and checking accounts, and retirement accounts.
Liabilities may include your home loan, car loan, student loan, credit card balances, appliance loans, and loans from your retirement accounts.
It’s okay if your net worth is negative! We’re simply trying to capture the data and come to terms with it. We have to be aware and reflect, before we can conquer!
If you have a negative net worth, you are not alone! My wife and I had a negative net worth of over $50,000 when we finally recognized our financial issues. We had over $70,000 of debt!! We had a car loan, we each had student loans, we had credit card debt , and we had a personal loan from family. We even put our new washer and dryer on a credit card!
The debt was way more than the value of our simple list of assets (a small IRA and our car). But we knew our priorities were worth the realization – we came, we saw, we paid it off!
Cash Flow Statement
The cash flow statement is a reflection of how much money you spend compared to what you earn.
A cash flow statement is similar to a budget, but it’s not the same! This is a snapshot of where you stand on any given month, we’re strictly tracking your spending. A budget is setting spending goals and is where you want to be in the near future!!
List your income from your job (or possibly multiple jobs) and list all of your expenses.
Food, rent or mortgage, utilities, clothes, drinks, gifts, entertainment…the list of expenses is unending!
Again, we’re not focusing on whether you’re spending more than you’re making. It’s OKAY! We’re focused on becoming aware of our money.
I've been in the red. I've spent more than I made. I was living the American life – playing credit card games. I became aware!
We’ll work on ‘fixes’ in the next step.
Do you have your cash flow statement? How does it look? As good as you expected?
Awareness
If you’re doing well financially, then you've probably cruised right through this step. You’re feeling good and ready to start exploiting your life!
If you've never taken a good, hard look at your finances before, then you’re nauseous right now! You’re in shock!
Maybe you knew it was bad, but not this bad!
Welcome to awareness! Doesn't it feel great?!
I know. My wife and I came to the same realization once we started this process. Using Mint.com, we uploaded all of our accounts and began tracking our monthly expenses. Then...we went completely numb inside – that tingle, out-of-body experience when you know something is wrong.
We couldn't believe that two grown, responsible adults, with great jobs, could be having so many financial problems. We weren't doing anything different from everyone else! Why did our net worth look like this?!
Answer: Everyone we knew had the same financial problems, but when everyone is doing the same thing, it’s not called a “problem”, it’s called “normal”. Normal!
After the initial awareness paralysis wore off, we slowly built up our resolve – this was never, EVER going to happen again. We reviewed our priorities – that’s how we wanted to live! So we reversed course, and went down our new path!
If you get discouraged in any way during this process, revisit Step One, Priorities. Continue to review your priorities until they’re meaningful enough to outweigh any discouragement!
Are you aware of your current financial state?
Get ready to Exploit Your Finances, Exploit Your Life!
Join us in the Personal Finance Revolution!
Have you reviewed your current finances? What is the toughest part of becoming financially aware?
Friday, April 3, 2015
Take Control of Your Future
Take your future into your own hands.
Don’t rely on policies or politicians.
Don’t rely on other people.
Rely on your own actions!
My wife and I have been there. We lost a job during the recession and we were immediately impacted financially.
There were no jobs.
Did this stop us? No!
Did we rely on others to get through the tough times? No!
We actually moved during this time, to an area with a lower cost of living, while we tried to work for ourselves. Eventually we failed and went back to working for someone else.
We found jobs. We worked hard to find these jobs. It took years to get to our current life.
We took control of our future. We took ownership of our finances.
Similarly, you must take control of your own future – your own financial future.
You may be working two jobs – you may be working two mediocre jobs – but figure out where you want to be and keep chasing.
Reach out to others in your network – ask for advice, ask for references, ask for support – but don’t rely on them providing you with money.
Take the wheel for yourself. Don’t wait for someone else to guide you.
Take control of your future.
Do you control your future?
Don’t rely on policies or politicians.
Don’t rely on other people.
Rely on your own actions!
My wife and I have been there. We lost a job during the recession and we were immediately impacted financially.
There were no jobs.
Did this stop us? No!
Did we rely on others to get through the tough times? No!
We actually moved during this time, to an area with a lower cost of living, while we tried to work for ourselves. Eventually we failed and went back to working for someone else.
We found jobs. We worked hard to find these jobs. It took years to get to our current life.
We took control of our future. We took ownership of our finances.
Similarly, you must take control of your own future – your own financial future.
You may be working two jobs – you may be working two mediocre jobs – but figure out where you want to be and keep chasing.
Reach out to others in your network – ask for advice, ask for references, ask for support – but don’t rely on them providing you with money.
Take the wheel for yourself. Don’t wait for someone else to guide you.
Take control of your future.
Do you control your future?
Wednesday, April 1, 2015
Exploit Your Finances, Exploit Your Life!, Step One - Priorities
Below is part one of a four step series on how to Exploit Your Finances, Exploit Your Life! Start here for a little background - Unexploited Finances.
The key to exploiting your finances, and subsequently exploiting your life, is setting your LIFE PRIORITIES.
Your life priorities will drive everything!
You’ll use them to motivate you through the difficult times. You’ll use them to shape your future. You’ll use them as your excuse for changing your financial habits – yes, excuses…you’ll have something to blame!
There’s no set list of life priorities that you have to choice from. You get to choose ANYTHING!
You can use priorities such as buying a new car, buying a new house, or taking a vacation.
Or you can choose priorities that may seem unrealistic – such as taking six vacations a year, saving for a gap year, paying off all of your debt!
(The more outlandish the priority, the more you may be motivated!)
My wife and I had a goal to pay off ALL of our debt (over $70,000) in two years. Without setting our priorities, there is no way (no way!) that we could have paid of our debt so fast. This was a crazy idea for us - we didn't know anyone else that was debt free!
Your priorities may motivate you to act, but this has to be something you really, really want!
A weak priority will fail you when you need it most. A weak priority will allow you to bend the rules, allow you to make an excuse, allow you to cheat!
Pick something that you’re passionate about! Something that you’ll want to tell the world you did! You’ll be so proud of accomplishing this goal that everything else will seem insignificant!
(Don’t worry, once complete, you’ll find even greater priorities…because you’ll know you can do it!)
Picking your priority should take some soul-searching.
Spend some time picturing your ideal life. This is where you want your finances to take you.
Where do you live? Who and what are you surrounded by? What type of profession do you have?
Again, nothing is unrealistic at this point!
Trust me, I had no idea that I could be debt free – honestly, who doesn't have a car payment or student loans anymore – but here I am! I had no idea that I could take six vacations this year, and have all of them paid off before I returned home!
If you're married, or have a significant other, you'll definitely want to work with them on shared priorities. You may each have some individual goals, but shared priorities will help you both support one another and see amazing results!
Now, pick your top one or two priorities.
Do they have the strength to overrule any objections that you come up with?
Can they withstand your internal temptations?
How badly do you want this?
Wow! If you made it through those questions, sounds like one amazing priority!
After selecting your life priorities, think about how your finances can help make this a reality.
Being debt free has an obvious correlation to your finances, but how about gaining more 'time'.
Why do you not have the time now? Answer: I work too many hours.
Why do you work so many hours? Answer: I need to pay my bills.
What bills do you have to pay? Answer: Home, utilities, debt, and food.
Might removing your debt (or lowering your other bills), remove your need for the current job, thereby giving you an opportunity to find a job where you can work fewer hours, and give you time to be with your family? Answer: Yes!!!!
If you go through this exercise with your priorities, you’ll find that money is the major obstacle for us to reach our priorities – which is obviously why we’re talking about exploiting your finances!
The more family and friends that you tell your priorities to, the more they will become real.
Yes, your family and friends may not believe it at first, but don’t worry, this is normal! We’re being different here, going down our own path!
Don't just tell them about your plans, tell them your successes and failures!
Not enough people talk about their priorities and their finances – keeping this hidden does nothing to help accomplish your goals!! Tell the world!
Write the priorities down somewhere in your home. Put reminders up – you’ll need the motivation!
I have a sticky note on my work computer with a countdown to our education year. Every time I need a boost, I update the number of days left – this works wonders!
It’s hard, but doable!
Have your priorities? Good!
This is the most important step in the process!
These priorities will motivate you through the rest of the hard work.
Get ready to Exploit Your Finances, Exploit Your Life!
Join us in the Personal Finance Revolution!
Have you set your priorities? What are they? Have you mapped them back to your finances?
The key to exploiting your finances, and subsequently exploiting your life, is setting your LIFE PRIORITIES.
Your life priorities will drive everything!
You’ll use them to motivate you through the difficult times. You’ll use them to shape your future. You’ll use them as your excuse for changing your financial habits – yes, excuses…you’ll have something to blame!
Life Priorities
There’s no set list of life priorities that you have to choice from. You get to choose ANYTHING!
You can use priorities such as buying a new car, buying a new house, or taking a vacation.
Or you can choose priorities that may seem unrealistic – such as taking six vacations a year, saving for a gap year, paying off all of your debt!
(The more outlandish the priority, the more you may be motivated!)
My wife and I had a goal to pay off ALL of our debt (over $70,000) in two years. Without setting our priorities, there is no way (no way!) that we could have paid of our debt so fast. This was a crazy idea for us - we didn't know anyone else that was debt free!
Priorities motivate you to act.
Your priorities may motivate you to act, but this has to be something you really, really want!
A weak priority will fail you when you need it most. A weak priority will allow you to bend the rules, allow you to make an excuse, allow you to cheat!
Pick something that you’re passionate about! Something that you’ll want to tell the world you did! You’ll be so proud of accomplishing this goal that everything else will seem insignificant!
(Don’t worry, once complete, you’ll find even greater priorities…because you’ll know you can do it!)
How to set your priorities?
Picking your priority should take some soul-searching.
Spend some time picturing your ideal life. This is where you want your finances to take you.
Where do you live? Who and what are you surrounded by? What type of profession do you have?
Again, nothing is unrealistic at this point!
Trust me, I had no idea that I could be debt free – honestly, who doesn't have a car payment or student loans anymore – but here I am! I had no idea that I could take six vacations this year, and have all of them paid off before I returned home!
If you're married, or have a significant other, you'll definitely want to work with them on shared priorities. You may each have some individual goals, but shared priorities will help you both support one another and see amazing results!
Now, pick your top one or two priorities.
Do they have the strength to overrule any objections that you come up with?
Can they withstand your internal temptations?
How badly do you want this?
Wow! If you made it through those questions, sounds like one amazing priority!
What does this have to do with finances?
After selecting your life priorities, think about how your finances can help make this a reality.
Being debt free has an obvious correlation to your finances, but how about gaining more 'time'.
Why do you not have the time now? Answer: I work too many hours.
Why do you work so many hours? Answer: I need to pay my bills.
What bills do you have to pay? Answer: Home, utilities, debt, and food.
Might removing your debt (or lowering your other bills), remove your need for the current job, thereby giving you an opportunity to find a job where you can work fewer hours, and give you time to be with your family? Answer: Yes!!!!
If you go through this exercise with your priorities, you’ll find that money is the major obstacle for us to reach our priorities – which is obviously why we’re talking about exploiting your finances!
Include others.
The more family and friends that you tell your priorities to, the more they will become real.
Yes, your family and friends may not believe it at first, but don’t worry, this is normal! We’re being different here, going down our own path!
Don't just tell them about your plans, tell them your successes and failures!
Not enough people talk about their priorities and their finances – keeping this hidden does nothing to help accomplish your goals!! Tell the world!
Write the priorities down somewhere in your home. Put reminders up – you’ll need the motivation!
I have a sticky note on my work computer with a countdown to our education year. Every time I need a boost, I update the number of days left – this works wonders!
It’s hard, but doable!
Priorities are determined.
Have your priorities? Good!
This is the most important step in the process!
These priorities will motivate you through the rest of the hard work.
Get ready to Exploit Your Finances, Exploit Your Life!
Join us in the Personal Finance Revolution!
Have you set your priorities? What are they? Have you mapped them back to your finances?
Subscribe to:
Posts (Atom)