When asked, most people will say it is their financial goal to “get out of debt” and “win with money.” However, many people remain stuck in a financial struggle for their entire lives.
Why do some prosper while others struggle? It is what they do in the meantime.
We are all affected to some degree with an “I want it now!” mentality, and in many cases, it is possible. We can decide to purchase a car, and it can be accomplished by the end of that very day. A new computer looks nice, and a simple swipe of a credit card will put it in our hands.
But getting out of debt and winning with money … That’s another issue altogether! These goals require time to accomplish. Time and “in the meantime” effort.
If you want to achieve debt freedom or become financially successful, here are some “in the meantime” actions to take:
- Obtain financial education Through books, websites, blogs, conferences, classes, advisers, and other resources.
- Identify financial mentors You need help from people who are several steps ahead of you on their financial journey.
- Avoid dumb financial mistakes One or two weak moments “in the meantime” can derail all previous good financial decisions. Mentors help you avoid this!
- Establish a written financial plan (complete with goals) Your written goals are much more likely to be achieved than those that are unwritten.
- Invest. Invest. Invest. Compound interest substantially lightens the load! I like a well-diversified approach complete with stocks, bonds, mutual funds, ETFs, real estate, and small businesses.
- Build margin – money in the bank There is nothing like money in the bank to make you become a financially confident individual and encourage you in your financial journey.
By the way, “in the meantime” is measured by years and decades, not days or weeks.
NOTE FROM JOE: I believe EVERY person can accomplish far more than they ever thought possible with their personal finances. You CAN win with your money!
“Remaining broke is a choice.”
The more I teach personal finances, the more I am convinced that “remaining broke” is a choice.
It is true that we can’t change our upbringing or our family. We also can’t change where we start financially. However, ALL of us can affect our financial future.
Every. Single. One. Of. Us.
Now many people will tell you a very convincing story of why this is just not true for them. Their story will be so compelling you will almost believe it yourself.
Here are some common excuses I have heard:
- “I just can’t find a job.” What they are really saying is, “I can’t find the job I really want.”
- “Life just keeps happening to me.” What they are really saying is, “I have earned lots of money over my lifetime, but I chose not to save any of it so I could be prepared for financial emergencies.”
- “My spouse won’t participate in our family finances.” This is certainly a dreadful scenario, but it can AB-SO-LUTE-LY be overcome. I would spend every dollar necessary for the coaching and counseling necessary to help resolve the issues behind this! A huge motivator is the fact that while marriage is grand, divorce is at least a hundred grand! If we’re willing to spend tons of money to split a marriage up, we ought to be willing to spend the same to save it!
- “I am intimidated when it comes to money.” There is a lot of truth in this statement! Learning about investing, insurance, and focusing on becoming a better money manager is challenging. Remaining BROKE, however, is much more challenging, so make the choice to overcome the intimidation and learn little-by-little. Over time (shorter than you think), you will become a GREAT money manager!
I stopped being broke the day I decided to make a choice to win with money.
If you are broke, make the decision TODAY to stop being broke. If you are not broke, stop and celebrate for a moment, and then share this post on Facebook and Twitter with those in your life who are struggling with this!
Get fired up!
A few months ago, I was able to pay off my house. It took us 71 months from the day we purchased this home to pay it off.
We learned a lot along the way – some of it quite surprising to us. Hopefully, the lessons we were taught will help you in your quest to eliminate your home mortgage!
- It required laser-like focus. Paying off our home required immense diligence. We did not just stumble upon this.
- We put off fun purchases. We could have used the additional principal payment money to purchase a 4-wheeler (I really want one!) or upgrade our kitchen (my wife would love this!). We chose not to do this.
- Vision helped keep us on track. We used the “Early Pay-Off Calculator” to see how additional principal payment money would speed us toward elimination of the mortgage. This provided vision of what really could happen!
- A goal motivated us. Way back in December 2002, my bride and I set a goal to be mortgage debt free by January 2014. We did not know how that would happen or if it could even be possible. It was!
- Home repairs will compete with your focus on mortgage elimination. As we focused on killing the mortgage, things in our house wore out. The paint on the exterior wood siding faded while we focused on mortgage pay-off. The dishwasher bottom was torn off by our toddler, the stove started “dinging” at random times, and the hot water heater stopped heating. If we had not completely eliminated the mortgage, the extra principal money would have been forced to be used on necessary repairs.
- My bride and I had to be on the same page. I cannot imagine attempting to eliminate debt without my bride being 100-percent on board with it. There were times when I wanted to stop, and she was there to encourage me. At other times, she would want to slow down or quit. I would help remind her “why” we were doing this. I’m grateful for a bride who is an active participant in financial decisions – especially the major ones!
- It’s hard to stay focused when your house is going down in value. Like many people, our home experienced a decrease in value. It can be very frustrating and demoralizing. However, these emotions do nothing to eliminate the debt obligation. This is when “put your nose to the grindstone” took on an entirely new meaning for us.
- Making it “visual” helped make it more fun. We created a “Sangl Home Pay-Off Spectacular” (see one HERE). This allowed us to give a dollar value to each little square of our house. As we paid off a square, we were able to color in the square. It really helped us “see” the fact that we were making progress in eliminating this very large debt.
- Paying off your house will not eliminate all housing costs. You will still be responsible for taxes and insurance. Repairs will be needed as well. We’re preparing for this by saving for these expenses every single month.
- This process makes you a better money manager. This extended period of financial focus increased my financial prowess in ways I never expected. It extended my vision from “one month at a time” to “years into the future.” This has truly positioned us for an incredible financial future.
BONUS: Anyone can do this! Having completed this process, I am more convinced than ever that ANYONE can do this. Yes, it will require encouragement and equipping, but it is indeed possible. It makes me more fired up to pursue the vision of I Was Broke. Now I’m Not. which is to help people accomplish far more than they ever thought possible!
Have you attempted to eliminate your mortgage? Maybe you already have? Share your lessons with us in the comment section!
Suppose you happened upon a substantial amount of money all at one time. For discussion purposes, let’s say it was $10,000.
What would you do with this money? There are really five options available to you:
- Spend it
- Give it away
- Put it into savings
- Pay off debt
- Invest it
Most people will be faced with this type of situation at least once in their life. Here are some thoughts to consider with each option.
1. Spend it
This would certainly be a fun option! The money could be used to make much-needed home repairs, purchase a vehicle, or take a vacation.
2. Give it away
Being able to give $10,000 away is an incredible option! Consider the impact you could make on the world around you by giving money to support causes you really believe in.
3. Put it into savings
Financial margin provides something I call “financial confidence.” When I first achieved financial margin, it was as if scales literally fell from my eyes. I was able to “see” opportunities like never before.
4. Pay off debt
Debt increases a person’s operating costs and requires more income. If the debt is associated with a no-value or declining value item, it is literally the equivalent of “robbing yourself.”
5. Invest it
What if you could use the $10,000 to start a business that will produce $4,000 of income each year for the next 40 years? Consider the investments you might be able to make – it could literally change your life!
Your thoughts are appreciated. What would YOU do?
Everyone must save for three things: (1) Emergencies, (2) Known Upcoming Non-Monthly Expenses, and (3) Dreams
Of these three, it seems like saving for #2 – Known Upcoming Non-Monthly Expenses is the most difficult and creates the most issues with budgeting.
Here’s why Known Upcoming Non-Monthly Expenses create severe budgeting difficulty:
- They are non-monthly Because of this, we tend to forget about them until they show up
- They are usually larger expenses Property taxes, insurance premiums, Christmas, vacation, car maintenance and repairs, and insurance deductibles usually have larger price tags than typical monthly expenses
- We don’t save for the expenses monthly We wait until the bill arrives and then we are forced to scramble in an attempt to pay for it
This is why I call these type of expenses “Budget Crushing Expenses.” You can avoid this stress entirely by creating a Known Upcoming Expenses saving plan!
Here’s a step-by-step way for you to eliminate “Budget Crushing Expenses” from your life:
- Download our free “Known Upcoming Expenses Calculator” tool HERE.
- Enter all your “Known Upcoming Expenses” into the tool – include the annual expense of each line item.
- Enter your “# of Pay Periods Per Year” into the tool – enter “12” if paid monthly, “26” if paid every 2 weeks, “52” if paid weekly, and “24” if paid twice each month.
- You have now calculated the amount you need to save out of each paycheck to ensure all of your Known Upcoming Non-Monthly Expenses are covered.
- BONUS STEP: Set up an on-line savings account (I use Capital One 360 – formerly known as ING Direct) and make your savings automatic. In other words, you can set up automated transfers to your on-line savings account. This allows you to “set it and forget it” and KNOW you’re major known upcoming non-monthly expenses are covered!
AUTHOR’S NOTE: I am paid monthly. I have set up a monthly transfer to happen on the 6th day of the month from my regular bill-paying bank account to my Capital One 360 account. It may not be the most exciting thing in life, but it is INCREDIBLE to know I have eliminated “budget crushing expenses” from my life!