Beating Broke

Personal Finance from the Broke Perspective

No One is Going to Save You

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I have some bad news for you. If you’re waiting on someone to show up at your door ala Publisher’s Clearinghouse and hand you a big cardboard check that will solve all of your financial problems it’s not going to happen.  No one is going to save you from your financial woes.  No one is going to suddenly decide that you, and you alone, are worth pulling from the depths of your financial hole, pay all your bills and set you up for life.  No one but you.

In truth, I’m writing this post as much for me as I am for you.  I need to hear that message occasionally, just as you do.  It’s nice to daydream about winning the lottery, or some sweepstakes and having some of your problems solved.  It really is.  But, if you, like me, find yourself lingering in those daydreams a little too much, too often, you need to hear those words.

You and you alone can be the savior of your finances.

Savior of your Finances

You (and I) are the best prepared, and the most willing (without fees), to take on the ratted nest of bills and accounts that we call our finances.  You (and I) are the most able to figure out how to sort out where our money is coming from and where it has gone.  You (and I) are the only ones that can drum up the willpower to make the changes necessary to begin telling our money where to go that it will be most helpful to our finances. No one else is going to do it for you.

No one but you.

If you (and I) don’t do it, do you know what happens?  Nothing but the same.  Your paycheck comes in (maybe on time, maybe not), your paycheck goes out.  At the end of the month, maybe we ask “where did it all go?”.  And if we do nothing about it, we’ll never really know.  We’ll just continue the pattern; wondering why we aren’t paid more, and wondering why what we are paid never seems to be enough.

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You can make a difference in your finances though.

Uniquely.  No one but you.

You can budget your money and tell it where it belongs.  You can know where your money is going, and control how it works for you.  If you actively manage your money, it can no longer control you.  Create a budget, track your income and spending, then take back your financial life.

Put your finances in order; be free.  Be debt free.  Be free to spend as you choose.  Be free to earn as you choose.

What are you doing today to break old financial habits and take control of your money?

How Your Confidence Affects Your Finances, Part Two

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For part one of this series, go here.

In our earlier post, we talked about how debt can seem insurmountable to some, as documented in the movie, Maxed Out. Unfortunately, some people feel their debt is so overwhelming that they take their own lives. That includes a college student who owed $12,000. While $12,000 is not a small sum, it’s not worth taking your life.

Debt and Your Self Worth

Our culture recognizes that many people identify their worth by their jobs. When we meet someone new and tell them what we do for a living, we say, “I am a teacher” or “I am an engineer.” We literally take on the identity of the job that we do.

What is not discussed is that we often measure our worth by our debt, also. If you’re in debt and struggling to make your monthly payments, it’s easy to feel worthless and hopeless. When my husband and I finally faced our nearly $57,000 in credit card and student loan debt, I felt embarrassed and stupid. After all, how did I let myself get in this position?

Your Thoughts Can Determine How Quickly You Can Get Out of Debt

Keep Calm Payoff Debt 2You may begin your debt pay off journey as I did–chiding myself and feeling like it was hopeless. How would I pay off this debt that was greater than our annual income? The whole process felt hopeless, and I wanted to give up before I even started.

But through our two year long journey thus far, I learned some things that make paying off debt easier.

  1. Be confident. When I stopped chiding myself and instead decided to encourage myself, the weight caused by debt was lifted. Instead of thinking, “I’m so stupid for being in this much debt,” I thought, “We’ve made mistakes financially, but now we’re on the right path. We’re making strides in our debt repayment plan, and eventually we’ll be out of debt.” This encouraging self-talk increased my confidence and reduced my anxiety. I felt empowered.
  2. Look at the little picture. Sometimes looking at the big picture–the total debt that you owe–can be overwhelming. Instead, focus on the smallest debt. If you put your extra money on the smallest debt, you’ll see progress more quickly. If you owe $60,000 but your smallest debt is $5,000, focus only on that one. Don’t look at your total debt load. You’ll feel elated as you watch your progress paying down the smallest debt.
  3. Celebrate small victories. Encourage yourself every step of the way. Praise yourself when you’re able to pay more off in a month than you typically can pay. Celebrate when you pay off one debt. Shout in your house that the debt is gone. Share it with your friends if they know of your debt struggle.

If you’re in debt, you can either hurt yourself mentally and physically by berating yourself and wallowing in self-pity. Or, you can heal yourself mentally and physically by praising and encouraging yourself through the long journey of paying down debt. Which would you rather do?

How do you encourage yourself when paying down debt?

Avoiding Reactive Personal Finance

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Just what is reactive personal finance?  It’s the management of your personal finance in reaction to events or situations as opposed to the management of personal finance in anticipation of events or situations.

The best example of this is a budget.  A budget is built and held to in anticipation of events in your financial life.  You know that things like your electric bill and water bill are going to be coming and roughly how much they  will be.  That allows you to budget for them and set aside money to pay for them with.  A budget is a great tool in avoiding reactive personal finance.

Why do we need to avoid reactive personal finance?  Because reactive personal finance is disruptive.  You are managing and spending your money in reaction to the events that are happening.  Doing so can cause you to quickly lose control of your finances and find yourself in a downward spiral of poor management choices and, eventually, it can lead to you being broke.

Some examples of events that can cause you to become reactive.  Medical emergencies, blown tires, unexpected social events, and even bills that are larger than they normally are.  Any thing that is unexpected can cause you to spend in a reactive manner.  And when you have events like that, it can often lead to larger problems, like overspending on luxury items to make you feel better.

How do you avoid reactive personal finance?  No plan is foolproof, so it’s not really completely possible.  However, you can make the odds of it happening be cut drastically.  How?  An emergency fund and a bit of willpower.  The emergency fund will give you the available spending power to cover any emergencies that would normally make you spend in a reactive manner.  Instead of trying to react and borrow from somewhere else to pay for the emergency, you can just pay from the emergency fund and not need to react any further.  The willpower comes in where the spending opportunity isn’t an emergency.  You have to have the willpower to avoid last minute and spontaneous spending that could drain your funds and cause you to become reactive when you no longer have the money to pay bills or buy necessities.

The best laid plans often go askew.  But, building an emergency fund and strengthening your resolve can go miles towards avoiding reactive finance and potential disaster.