How to Go From Poor to Not As Poor. Part One:
How to Go From Poor to Not As Poor. Part Two:
Saving Money for a Better Life
How to Go From Poor to Not As Poor. Part One:
How to Go From Poor to Not As Poor. Part Two:
Many people, when they think about frugality think of an austere, miserable existence. They perhaps envision huddling beneath a blanket in a cold room, eating an unheated can of beans. To me, this is not what frugality means at all. To me, frugality means........FREEDOM!
There are many ways in which frugality can mean freedom, but the way I think of it most is in time. Basically, when you work a job, you are selling your time for a fixed rate. Many people don't think of their jobs in this way, but in actuality, that is exactly what people do. Some people sell their hours for $10.00 an hour....some sell their hours for $26.00 and some sell them for $76.00. But no matter what you do for a living, you are selling your time for a fixed rate. Let’s say you need a new refrigerator and it costs $1000.00. Let’s say you make $15/hr. You may believe that that would take you 67 hours of your life; about a week and half working at your job to make that money. After that, if you are paying 16% interest over 5 years and you make $24 monthly payments you may think $24 a month isn’t bad! However, when you figure out what you will pay at the end of that 5 years, you will have paid a total of $1488.00. So, instead of it taking you 67 hours of your life to pay back this loan, not to mention just having a loan on your neck for 5 years, it will take you 99 hours of your life so…..that’s 2 and a half weeks of your life and that isn’t even taking out the income taxes you pay before you get your paycheck. It might be hard to do this at first because sometimes it takes time to turn things around a bit but if you buy a used refrigerator for $400 and you pay cash, that’s only 27 hours of your life to buy that refrigerator. You have to figure out if buying new or used is better for you but in the end, buying with cash is always better.
When you think of your life as hours selling time in order to pay for things you want or need, and turn these thoughts around, you can see that any time you save money on something, those are hours of your life you do not need to sell in order to get what you want. You can use that extra $488 dollars for anything you want. Paying down other debt with that $488 dollars is a great idea and gets you closer to financial freedom.
Once you get your head wrapped around this idea, you may find yourself wanting less. Wanting less is one way to having more freedom to do what you want. Another way is finding ways to save money or make money. If you make $10.00 an hour in your day job and you save $30.00 clipping coupons and the time it took clipping coupons was 1/2 hour, you save $25.00 or 2.5 hours of your time that you would have had to otherwise spend on your job making money for the same things.
I read a book recently that said "We can't retire, we went out to eat instead". The same concept applies with frugality and freedom. The more money you save, the less you have to work and the less you feel stressed about the money you don't have. This means freedom to perhaps work a part-time job instead of a full-time one. It could mean staying home with your kids. It could mean the freedom to start your own business. It could mean the freedom to retire early.
Frugality truly is freedom. It means options. It means empowerment and taking your life into your own hands rather than feeling like you have to do things a certain way. It all adds up and when it adds up, it means you have the power to do what you want more than you thought. Change your Think into a Thunk and Change your Life!!
There is an interesting book called The Millionaire Next Door all about the behavior of millionaires AND you can read it for free!!
Christmas is now over and all the presents have been given, the food has been eaten. You saw the joy on the faces of your loved ones as they opened the Christmas presents you gave them and it was wonderful!
Now, however, you may be sitting looking at your credit card bill, wondering how you managed to spend that much. Again. You just couldn't let little Suzie or little Johnny down. (Or maybe Big Suzie or Big Johnny!) So, although you have great Christmas memories, you also have the bills to show it.
So, shame aside and let's get to what needs to happen. Depending on your income and outgo, you may need to get a second job for a while and pay debt down. If you are worried about what others may think (and this is what keeps many people from getting their finances in order), remember that you don't need to explain anything to anybody! Or, if you feel a need to explain, just remember that 66% of Americans would struggle to pay for a $1000 emergency. There is no need to feel shame about trying to not be one of those 66%. As a matter of fact, it is a reason to give yourself a good old pat on the back!
There are other ways to get rid of this debt or any debt. You also need a small emergency fund to start so you don't end up putting money on a credit card when you hadn't intended to. $1000 is a good step for a starter emergency fund. Here are some ideas on getting started on this:
1. If you can't pick up a second job you may just do a side gig for a while. Take the talents you have and do a little side work.
2. Sell an overpriced automobile. Many people have a lot of money in their vehicles. Just think of how freeing it would be to sell your vehicle, take the cash left and buy a vehicle outright. You can get many good running automobiles that are reliable for much less than you may be paying now.
3. If you have enough cash laying around to refinance your home and you have an older, higher interest rate, now is a great time to refinance. Interest rates are low right now and this can make your monthly payments less. However, you would be best off to keep paying the same amount, if you can.
4. If you have too much house, the market for selling is really good right now. It's not a great time to buy because the market is very hot. But downsizing right now may be a good option for you depending on your circumstances.
5. Another good way is just plain old tightening your belt. Many times people think they can't tighten it further but usually, that's not the case. What are some ways of tightening your belt?
Once you get some of these basic things down you can get that small emergency fund and get rid of that-on average $16,000 in credit card debt. After that, you can work on the next step.
So, a summary on changing your Think into a Thunk:
1. Don't beat yourself up for past mistakes.
2. Look for ways you can change things so you have more money each month-either by earning more or saving more or both.
3. Only spend money on what you really need-Food-Shelter-Transportation.
4. Save up an emergency fund and pay down debt.
5. If you find yourself feeling like you are comparing yourself to others you see around you who seem to be spending freely, remember that 78% of people live paycheck to paycheck and the average credit card debt is $16,000 and 16% interest. Now do you want to be average? Do you? Change your Think into a Thunk.
I have recently become a Certified Financial Coach! I made my first video and uploaded it to YouTube.
I am taking the blogs off of this site and making them into videos. Without this blog and my readers here, I am not sure where I would start! This has given me a great place to launch from so thank you for reading! I hope you will check out my videos.
I also have a website here: https://lyohnk.wixsite.com/freedomfc
Thanks for reading!
Happy Savings!