What do you want from the money you earn?

 

I needed to change

In 2007 my 24-year marriage ended. Naturally, this was a traumatizing event in my life and I can say I learned a lot about myself. The first thing I learned is that I was not in a financial position to support myself effectively. After a lengthy marriage, I was accustomed to a two-income family. Transitioning to a single income was extremely challenging.

I often felt vulnerable about my situation, and decided I needed to make a change in my relationship with the money I was earning. It became clear to me very quickly that my ex-husband would not honor the financial agreement the courts ordered and that if I wanted to have any manner of financial freedom I’d have to figure out how to make do with what I was earning.

Debt was the issue

Back in 2007, I was deep in debt; I had a mortgage, student loans, a car loan, and credit card debt. I was earning under the median income for the area I was living in and I could see that if I wanted to feel financially safe I would have to do something. And I did. By the time 2008 rolled around I was on a path to eliminate all my debt.

Unfortunately, I lost my family home due to foreclosure, but eventually, l was able to short-sell the house for much less than it was worth. The lesson I learned through all the trauma was that you must have clear financial goals and the person who is your partner should also have clear financial goals that are aligned with yours.

What do the most important people in your life think and feel?

I say this because I’ve had two relationships, one with my ex-husband who approaches finances very differently than I do, and one with my current spouse who is well aligned with my (our) financial priorities.

Clear goals

Having a clear goal is the key to having success with finances. My initial goal was to eliminate all debt. I could clearly see how my student loans, car loan, and credit card loans were an issue. I lived in a high-rent area, and I was left with little to spare between rent and debt payments. In fact, there were times when my debit card was rejected from the market when I was making a small purchase due to lack of funds. It was inconvenient and embarrassing

Once I decided that my debt was an issue and that I wanted to never pay a credit card bill again, it was easy to make changes that would lead to the goal I had in mind.

New goals

After my debts were paid off, I had no goals. I just lived below my means and stuck my extra money in a savings account. Traditional savings accounts are not a good investment.

After a while, my spouse and I decided to make a huge change in our life. We decided to move to the Pacific Northwest, but we also decided that if we were going to quit our jobs we should take a year off and travel between jobs. Now I had another clear goal for the money I was earning. That made it easy to manage the expense of not earning, and the expense of traveling to more than a dozen countries.

Setting a clear goal is the key to helping overcome small challenges you’ll have on your way to financial freedom. With a clear end goal in mind, you can say to your friends you can’t join them on a shopping spree because you are (planning a trip, buying a home, or going back to college…) your friends will understand and support you.

Setting goals can be challenging, but here are a few ideas to get you started-

·       Be honest about what you want and why you want it

·       Create an assessment of what it will take to get you from point A to point B

·       Use the SMART goal method to help outline and understand what reaching your goal will take (S.M.A.R.T – Specific, Measurable, Achievable, Relevant, Timely)

·       Visualize yourself having achieved your goal, imagine walking through your world with the financial situation you want

·       Goals that help people you love will be highly motivating, who else will benefit when you achieve your goal?

I can say that becoming debt-free is easily one of the best choices I’ve ever made. I have been debt-free since 2011 and never looked back. I don’t own a fancy car, in fact, my car is over twenty years old and I don’t care what anyone thinks about it. I’ll never go into debt trying to impress someone with my car. I choose not to expend energy on superficial people.

I changed

Many of my clothing items are years old. I just replaced my walking shoes that I used for over five years. I have a pair of hiking shoes that I wore on my first international excursion when I visited Turkey in 2012. They didn’t get a lot of use after that trip, and they are still in fine condition. My clothes aren’t fashionable, but I think I look tidy when I visit with friends or go to the theater.

If I had not changed my approach to money I would still have debt. I doubt my spouse and I would have a relationship because having a big debt load is not aligned with how he chooses to live. We both are committed to frugal living.

What does frugal living look like on a day-to-day basis?

Ø  I cook almost all the meals we eat

Ø  We don’t drive our cars for one-off trips. We wait if we can, and combine trips so we are making the most of the gas we buy

Ø  I mend my clothes. If my sock or sweater needs a repair, I repair it

Ø  I’m careful with laundry; I follow the manufacturer’s recommendations so my clothing and linens last

Ø  I take good care of my health by eating well, exercising, and visiting the doctor and dentist to prevent illness

Ø  I use a seatbelt in cars, and I don’t drink and drive or ride with drunk drivers

As you can read there is nothing earth-shattering on my list. Your list will be different than mine because we all have different priorities.

Keep it simple

Having fewer goals is best. When I was eliminating my debt, I only tried to eliminate my debt. I didn’t try to go back to school, to become physically fit, or to get a huge promotion. I just worked hard, took my time, stopped shopping, and paid off my debt. Can you do it all? Perhaps, but I submit that it is more manageable to do handle your top priority first, then as you become accustomed to your new approach add in other tasks one at a time until you have a good balance of goals.

Mindfulness helped

I found that I was mindful of keeping my shopping and splurges in control, I became more mindful in other areas of my life. I stopped eating expensive take out, and cooked affordable healthy meals instead. This led to better health and weight loss. As I lost weight I became motivated to move more and get exercise. Instead of entertaining myself by lurking around the local pub, I went for long walks in the nearby hills.

Instead of wasting time wandering the mall and buying clothes that I didn’t need, I took up reading more often, painting with watercolor paints, and collaging images that expressed my regrets, my joy, and my hope. The art projects weren’t masterpieces, but they did focus my attention and helped me improve my mindful practice, and that led to emotional growth.

Having a clear goal when you start your debt-free journey is a great way to motivate your actions and keep you on track as the year progresses. Your goals may change and that’s okay, but having goals will be the difference between success and failure. I encourage you to examine your life and create goals that have deep meaning so you can achieve what you truly want.

Need more ideas about frugal living? Buy my book, “Never Worry About Money Again: Gain Financial Freedom By Becoming Better At Managing The Money You Have”