“About the time we can make the ends meet, somebody moves the ends.”- Herbert Hoover
I don’t know about you , but that quote is so very true for my life. Whether it’s a rainy day I forgot to save for or a parking ticket that could have been avoided, it seems , every time I get on track with my finances something sets me back. I have never been good with money management; I am confident in expressing my flaws. It’s not been for lack of know-how but more out of an impulsive spending habit that seems to have been inherited. Over the years I have done my best to make a conscience effort to save more than I spend , but I seem to be good at only one of those things. The part that is frustrating for me is that this spending is never frivolous or for self- indulgence, if you don’t count food, I’m simply incompetent at budgeting correctly. And that leads to unbalanced accounts and unpaid notes; not good , I know. On the cusp of 25 years of living I am struggling to live in my purpose all while not being a slave to financial debt and the oh so treasured , FICO score. I am not afraid to admit that I have made many mistakes on this slippery slope to financial freedom, but if my mistakes can prevent my children’s , then it’s all worth it. You know what I did today ? In movie theater dramatic fashion, I stormed the kitchen cabinets scouring for a golden pair of scissors! Once found, I hastily dumped out the possessions of my pocketbook , searching for my square plastic pieces of debt and one by one I cut them up. I would love to say that a weight lifted from my shoulders and I breathed a sigh of relief, but nope , the debt is still there. But I will say, it felt good to know that once the debt is paid and the smoke finally clears , I won’t have those square plastic pieces to tempt me with. I don’t think credit cards are bad and I thoroughly understand the importance of credit, but until I am able to successfully budget and save , I am better off without the temptation. Growing up I wasn’t taught the importance of credit and correct money management skills, they were learned through trial and error; maybe I am a better person for it. As I type this up, I am also working on a spreed sheet that thoroughly lists all my debts and a plan for how I can pay everything off by 2017. It really helps to see everything all laid out in front of you; I like to tackle things head on. I may not have as much debt as most stories I’ve heard of, but , even a little is too much. So, based on my experience , I would like to give a couple tips and pieces of advice to help you all on your journey to financial freedom ( I should probably write these down too) :
- Credit , good credit, is important. Parents teach your kids the importance of gaining and keeping good credit by means of good managing skills ( i.e paying on time.)
- Know your credit score. What you don’t know WILL hurt you in this case. Be proactive. There are plenty of free sites [Credit Karma, Credit Sesame] that can give you a rather accurate base of what your score is, but if you are really serious about monitoring your credit I would suggest getting your FICO score directly from the source. [ Myfico.com] You are also granted one free credit report each year offered by annualcreditreport.com. Make sure that everything on your report is accurate and belongs to you, if not , dispute it!
- Pay your bills on time. Not only is it good practice, but it also will help to show future lenders ( think house & car) that you are financially responsible and reliable. If for any reason you fall behind or have an issue with paying , don’t wait , call your creditor and explain the problem and see if there are any payment arrangements that can be scheduled to avoid you getting too far behind. Take the initiative , show a willingness to pay and trust me they will work with you.
- Debt is NOT necessary to establish credit. Do not spend beyond your means , only spend what you are able to repay immediately.
- Ignoring debt won’t make it go away. No matter how far behind you are , it will only get worse if you do nothing.
- BUDGET. *50/20/30 rule. Ideally, no more than 50% of your monthly income should go to fixed expenses ( rent, car note, phone bill, etc), bills that don’t change (much) from month to month. 20% should go to savings ( rainy day, new car, new house) and 30% should be for flexible spending ( entertainment, groceries, gas , etc.) I feel like this model works for the most part and provides a bit of structure to your budget. Try it out , see what you think. Discipline and consistency will be your best friends.
- Plan ahead. Think about how the decisions you make today will affect you 5, 10, 20 years from now. Today you might really want that 3,000$ bag , but can you afford it ?
- STAY AWAY FROM PAYDAY LOANS. (READ THAT AGAIN) Seriously, it’s not worth it. Desperation will make you believe it is, but it is NOT. Just trust me.
- If you make a mistake , don’t beat yourself up. Learn your lesson and keep on moving.
Money is not evil, the love of money is. It is so important to learn how to balance your finances without becoming obsessed with monetary gain at the expense of your sanity. It’s simple, spend what you have on what you need , and only get what you want , if you have it to spend. Don’t work yourself to death trying to impress this world because I’ve and learned that the saying is true
“The best things in life are free.”- A wise soul
As always, thanks for listening
*Information provided by Learnvest.com