Y'all, this one is long....I know. Feel free to take it in strides, but DO read each one! :-)
1. YOLO Perspective
This mindset keeps us in a habit of spending more than saving. Which keeps us in the same cycle of debt & financial frustration, month after month. Friend, I want you to live a life of wealth & abundance instead of frustration and overwhelm. That's why I am bringing you the hard truth! The truth that, yes…you do only live once. And because of that, you can manage your money in such a way that allows financial freedom for years to come! Did you know??
Did you know that the Median household income was $68,703 in 2019? Did you know that Americans spent an average of $13.2T (up 2.2% from the previous year in 2019? And, did you know that Consumer debt was approaching $14T after the second quarter of 2019? Did you also know that…despite the struggles of the pandemic…..American's are STILL pending billions of dollars? Friend, here's what my heart desires to convey.....It's OK to spend when you stay WITHIN your income limits and it's best to SAVE more than you spend! You Only Live Once! So, why not develop effective money habits so you can build & live a wealthy lifestyle that lasts generations??
2. "I don't know how"
For years, we spent hours upon hours in school learning things we swore we would never use again. Yet, many of us were never taught the foundational elements of personal financial management. We are often ashamed to admit it, but…one reason we remain stuck in the cycle of living paycheck-to-paycheck is that we don't know how to stop it. And, you know what?? It's not exactly our fault! We embarked on our adult lives with generational mindsets & habits that actually promoted poor money management. Please know, that is not a dig at our parents or grandparents. Honestly, they didn't know either! When I recall my childhood, I think of the years I went to school without breakfast, no money for lunch, and scrounging for snacks when I got home. I think of the times the lights were shut off & being told we could not afford named brand items (not even Kraft Mac & Cheese y'all). And, when I look back, I realized…….my parents did the best they knew how to! The problem? Society got so wrapped up in living the "American Dream" while wracking up debt, failing to save, and NEVER talking about it! Let alone educating others on how to avoid or break free from it!
THIS……my friend, is what has kept many living in shame and stuck in the same old cycle!
3. "Charge it!"
Living in a YOLO generation has created a desire & need to have things now, instead of saving up for them. In turn, this keeps us in debt and financial slavery longer. "Oh, just charge it!" That's what we often say when there's something we want but don't have the cash to pay for it. Sounds simple right? Actually, it's not. The total consumer revolving debt (namely credit cards) sits at about $980 Billion as of October 2020! The average interest rate you pay on that debt is 17.98% for new offers and 14.58% for existing accounts. The total consumer non-revolving debt (loans) sits at around $3.2 trillion! The federal student loan interest rate for undergraduates is 2.75% for the 2020-21 school year. Federal rates for unsubsidized graduate student loans and parent loans are higher — 4.30% and 5.30%, respectively. The average interest rate you pay on a 60-month car loan is 4.22% as of December 2020. These figures do not account for the department store charge cards, payday loans, and other debt that we rack up just to “have it all now.” You can use Bankrate's loan repayment calculator to understand how much EXTRA money you are spending in interest over the course of your loans.
4. Mountain Perspective
We have a tendency to view the “mountain” of debt as something impossible to climb.
It's true, there are many steps involved in climbing a mountain. And, it doesn't always come easy. It takes time, patience, and discipline to get to the top. The problem is that we often give up before we even start. Why? More often than not….we are not equipped with the tools, resources, and mindsets to get us there! Interestingly, there's a beginner's guide to climbing up a mountain.
1. Building the basics 2. Pick your target 3. Take a course 4. Become a master of the maps 5. Get the gear 6. Prepare for altitude 7. Plan, plan, plan 8. Build your skillset slowly
Friend, may I share a secret with you?? The same principles apply when tackling the mountain of debt!! In order to pay down that mountain of debt and live in financial freedom, you have to start with the basics, have goals in mind, educate yourself, master the ins & outs of your path, use the tools available, prepare for emergencies, plan it out, and build discipline along the way!
5. Lacking Prioritization
With all the “rush-rush” of today's culture, something that's thought of less often is planning ahead. Planning ahead is connected to our overall health & wellness. You may be wondering how that's possible. Experts believe that planning reduces stress levels. And, I am inclined to agree. Honestly, not planning ahead and prioritizing my day, week, month, or year has created more stress than peace in my life. Now, how does this factor into money management and wealth? Well, if we are not planning out our bills and giving priority to the basics (4 walls & tithing) first, we are more likely to overspend, have late fees, and rack up more debt over time. This, my friend, keep us bogged down under the stress of our financial situations…..believing there is no way out! One simple way to overcome this is to prioritize your debt using the debt snowball. Nerdwallet provides a simple calculator to give you a visual of how this works.
6. Not Budgeting
Budgeting creates a spending plan for your money and can help ensure there is always enough money to pay for food, bills, and other expenses. Having a budget is a good tool to avoid credit card debt and promotes saving. 3 in 5 Americans Don’t Know What They Spent Last Month! Statistics from a recent Mint Study related to budgeting & spending habits in America was too good not to share. Here's a snapshot of what they said:
When asked whether or not they know how much they had spent in the previous month, only 35 percent reported knowing.
A 2018 study found that 35 percent of people report missing a bill simply because they forgot about it. In a world of automatic bill-pay and banking apps, many don’t feel it’s necessary to keep a close eye on their money until they don’t have enough — which, for many, can be too late.
To find out just how much Americans know about their own spending habits, 1,500 people were asked if they knew how much they’d spent in the previous month and how they felt about it, discovering:
65 percent of Americans said they don’t know how much they spent the previous month.
Gen Z is the least likely generation to know what they spent, followed by Millennials.
Nearly a third of Americans said they wish they’d spent less in the previous month.
Friend, maintaining a monthly budget has lasting benefits! Budgeting will help you stay focused on your financial goals, ensures you do not overspend, leads to a fulfilling retirement, prepares you for emergencies, sheds light on spending habits, and helps you sleep better by reducing stress!
7. Neglecting to Save
As little kids, we are taught the benefit of keeping money in our bank accounts. Yet, over time, we lose sight of it. If 2020 has taught you anything at all, I hope it's that building & maintaining an emergency savings ($1,000 at minimum) is CRITICAL! When this year began, I had my 3 months income in savings, a plan to achieve 6 months toward my emergency savings, and was on track to pay off $1,000 a month in student loan debt.
By May - I had received an unexpected financial blessing which allowed me to pay $15,000 toward student loans, add $5,000 toward savings, purchase retreat tickets to Tulum, Mexico for myself & my sister, and splurge a little too! Then, things started to shift. We purchased my son his first car (in cash) which cost a bit more than I budgeted for, I had an unplanned major car repair, & financial costs with school drug on longer than anticipated. Not to mention, we are entering ANOTHER government shut down which affects my primary income source.
However, I'm STILL able to pay my bills! Y'all, planning ahead by having an emergency savings saved me this year! And, guess what else? I just redid my budget for 2021 with a plan to ensure that my emergency savings is replenished by June. By the end of January, I will already be nearly $1500 closer to that goal!
Are you ready to learn to stop being fed up & frustrated with your finances & learn how you can achieve this too? Check out the M.O.N.E.Y. course by tapping the link below.
See you on the inside!