This post is for the person who needs encouragement in their financial journey right now.
You may have experienced tremendous challenges recently. Perhaps you’ve encountered an unexpected lay-off. Maybe an illness. The car may have broken down and a child fell and broke his arm. Maybe an investment tanked or your small business that once thrived is now on life-support.
Whatever the case, you can do this “money thing”!
In fact, I’ve discovered that financially challenging moments are where I’ve learned new financial skills.
You see, if I had never experienced an empty bank account, I would never have saved money during times of plenty.
If I had never experienced car and credit card debt, I would not have known how important it was to avoid this type of debt in the future.
You can do this!
If I had never experienced a broken down car, I would not know the joy of driving a paid-for brand new one.
If I never had credit card bills beat me home from vacation, I would not know the luxury of paying cash for vacations.
You can do this!
When you are faced with a discouraging financial situation, remain steadfast in employing the financial fundamentals of:
- Planning your income before you receive it (budgeting)
- Saving for Known Upcoming Non-Monthly Expenses (so you can avoid budget-crushing expenses)
- Invest (so you can see compound interest work for you)
- Give (there is something healing and soothing about giving to others – even when you are struggling financially)
You can do this!
Here are 5 financial statistics to mull over (and 3 challenging questions for you to consider):
- $10,890 is the median financial net worth of an American household today – According to calculations by Edward N. Wolff, an economics professor at New York University. See how your net worth stacks up using the CNN|Money Net Worth Calculator
- The average large bank is currently paying 0.01% interest on regular savings accounts (and that interest is taxed). Let’s put this in real dollars and cents. If you had $10,000 in savings, you would be paid $1 in interest for the entire year. One single dollar. This is while they lend the money back to the average American with a credit card at 12% or higher.
- The poorest give more than the wealthiest to charity. This article written by Ken Stern focuses on the research about why this is the case. The poorest give 3.2 percent while the wealthiest give an average of 1.3 percent of their incomes. According to the website JustGive.org, 75 percent of all gifts to charities are from individuals – not government or big corporate entities.
So here is the challenge for you right now – ask yourself these 3 questions and DO SOMETHING about them:
- Do you know what YOUR net worth is and where you stack up versus your peers? Take a quick moment to use the CNN|Money Net Worth Calculator to find out.
- What interest is YOUR bank paying on your savings account? Take steps to address it!
- How much money are YOU giving away? There’s nothing like giving. If you don’t like the amount you’ve been giving, take steps today to begin giving more away and discover the joy of helping accomplish great things together with like-minded people!
“If the mountain was smooth, you couldn’t climb it.”
I heard this statement the other day, and it really connected with me. It apparently connected with a lot of others as well because it became one of my most “re-tweeted” and “fav’d” tweets ever.
Let me unpack this statement while looking at it through a financial lens.
Have you ever experienced a financial cliff – a monumental financial challenge that was seemingly insurmountable? It could be paying for college, putting braces on your children’s crooked teeth, or fixing/replacing a vehicle. It might be the major task of obtaining a better job or starting a business. The financial cliff certainly presents a challenge, but overcoming it provides you an incredible sense of achievement and provides confidence like few other financial events can.
Perhaps you’ve reached a point where there are plentiful footholds and handholds and maybe even a path or two allowing you to move up the mountain at a great pace. This is when you can see the debt on the credit cards melting away and the vehicle is paid off.
Hopefully you’ve experienced a time or two where you’ve reached the pinnacle. A moment where you’ve stood on top of your financial challenges, having overcome them all. That’s the entire reason I started I Was Broke. Now I’m Not. – to help people achieve far more than they ever thought possible with their personal finances.
Of course, a look around while on the mountain top will reveal many other peaks requiring difficult climbs, but past successes will provide the fuel to get back to the top of those too.
Where are you at on your climb up your current financial mountain?
I believe most people are one or two major financial decisions away from completely changing the trajectory of their financial future.
- Increase investment by $200 per month. If a 25 year old were to change their monthly investment by $200, it would change their net worth by $2,352,955 by age 65. (12% growth for 40 years).
- Eliminate all non-house debt. This usually reduces a person’s cost of living by $500 to $1,250 per month. Suppose an individual were making $750/month in payments. $750/month would equal $9,000 per year! If this were invested and received 6% interest for 20 years, it would be worth $346,531.
- Keep the paid-for car for an extra four years. Suppose the monthly car payment were $359.96 (like my first car payment). If the $359.96 were saved each of the next 48 months, it would be worth $19,475 (at 6% annual growth). No more car payments for the rest of your life!
- Eliminate cable TV. At $75 per month, this can add up to quite an investment. Suppose this $75 were placed into an investment for 30 years at 12% annual growth. This would be worth $262,122.
- Prepare a budget. When my bride and I prepared a written budget for the first time in July 2003, we discovered more than $500 was disappearing every month for “miscellaneous cash withdrawal.” This money was utilized to intentionally eliminate debt. In 14 months, all of our debt (except the mortgage) was eliminated. In 10 years 1 month, our home was paid off. Preparing a written monthly budget every single month has been a huge part of our financial progress.
What is the one change you could make this week that could completely change the course of your financial future?
It takes tremendous courage to make a change. It will require sacrifice. It is WORTH IT.
I love my family. To celebrate Valentine’s Day, I thought I would share 5 reasons I love them so much.
5 Reasons I Love My Family
- They are beautiful. My daughters look like their mother. My son has tousled hair and has such a tender heart for others. All three children have dark blue eyes. There is absolutely nothing like the love shared within a family. Amazing.
- They are fired up. From early morning to late at night, our house is a rolling circus. My bride prayed for a calm child while each of our children were in the womb. We’re still waiting for the calm child to appear because these three are FIRED UP!!!
- They believe in me. A person can’t embark upon a journey to launch businesses and travel the corners of the earth without the support of their family.
- We embrace crazy. We have decided to embrace crazy. From track and cross country practice and meets to preschool meetings to newborn doctor visits, life is crazy. It won’t get calmer anytime soon, so we’ve chosen to embrace these moments and enjoy them.
- They are each unique and special. My bride is organized. My oldest daughter isn’t organized, but she is amazingly creative – having her drawing selected as the school mascot and another design chosen for a sculpture placed in the school’s front lawn. My son is hard-charging and driven to complete projects – even at four years old. My newest daughter is still figuring out how she is going to melt our wallets, but has mastered smiling – in the cutest ways!
What are 5 reasons you love YOUR family? I invite you to share them on our Facebook Page.