Wednesday, November 7, 2018
My Greatest Money Challenge…. And How I Overcame It
As you grow older you can’t help but reflect on the way things used to be. For me, I look back on the vast amounts of mistakes I made. Money was always a sore point in my life. I had no problem making it, keeping it was a different story. It always seemed I was two steps behind until those two steps turned into 20 steps. I want to share with you the greatest money challenge I had to overcome and how I did it. This challenge is a very common one and I see it in a lot of my client’s lives. My hope is that you can learn from my mistakes and get to a sweeter spot.
So, what was my greatest money challenge?
It’s payday baby, and I am rich! Well no I wasn’t, but I certainly felt like it. My biggest hurdle to overcome was the fact that I was always living paycheck to paycheck. When payday came, the money was gone as quick as it came. In fact, sometimes it was gone before payday. That was a scary feeling. I had very minimal expenses back then. $600 a month for rent, a few hundred for utilities, and food. I wasn’t living a lavish life at all. I also wasn’t poor. I was making good money back then and yet I could never seem to pay bills on time. What the heck was going on then. Well, the biggest problem I encountered was that when payday came, I didn’t properly allocate my money to make my life easier. I spent it on useless crap and being a weekend millionaire. I see this problem in many, many, many of my clients. They just can’t seem to get ahead, and I know how frustrating it can be. Before I show you what I did to solve my problem, let me show you the problems this problem created.
How to Stop Living From Paycheck to Paycheck – The Balance
1) Debt was inevitable
When you can’t pay bills, you go into debt. Now you might be able to just get by. Making enough to pay the bills and live basically. Something will suffer, however. Either you can’t enjoy yourself, which costs money, or you can’t take care of the necessities like food, which also costs money. Throw a couple kids in the mix and you have a recipe for living in squalor. This is the debt cycle. You get paid, use that money to pay bills and then use credit to feed yourself or take care of life. When payday comes again you repeat, only this time with a little interest payment on top. Over time the amounts add up and you are donating a good chunk of each payday to the creditors. It’s a terrible place to be.
2) Anxiety was high
Robbing Peter to pay Paul is gross. You feel completely out of control and money stress will mount. It then wears on you and you start to wear on those around you. I became a bitter person to the ones I love. Not cool. It is no wonder that most marriages that end, do so because of money stress. When you have nowhere to turn, you isolate yourself. Sadly, it is during this high-stress moment that some people turn to self-medication. I luckily did not, but I can see how that may happen.
3) I ran out of options
I literally had nowhere to turn anymore for help. I couldn’t borrow another cent from lenders as now my credit was shot. My family had pretty much written me off financially, not lovingly thank god. Friends weren’t impressed with me at all and I don’t blame them. I owed everyone and their mother money and it was pretty much rock bottom. For me, bankruptcy was not an option, however. The debts that I owed wouldn’t disappear with bankruptcy, including student and private loans. This I think was a blessing in disguise and it forced me to do something about it.
The Turning Point
Enough time had passed from my early 20’s to where I didn’t know who the creditors were, that I owed money to. When you are in the collections game, the owner of your debt changes hands quite frequently. I decided I wanted to know who I owed and how much. I went into the bank and told the guy behind the desk my situation. To be honest, he wasn’t that helpful. One thing I did pull from that meeting was this: I felt good about actually letting someone know about the mess I created, and he also let me know how I could get my credit report. I ordered my credit report and saw that I owed about 15K in miscellaneous debts, along with 25K in student loans along with about 10K in personal loans. 50K was the ballpark and it was a scary feeling. It was also liberating in a sense as well. I knew what I had to do.
Gary Vee vs. Budget Boss: 10 Mental Shifts for Success – Budget Boss
What did I do
Work, work, work, work, work, work. I needed money and a lot of it. I had spent age 19-25 trying to make as much as possible with the least amount of work and that got me nowhere. I had finally realized that I had to dig myself out of the hole that I was in. I realized there was no easy fix, no magic bullet, no help on the way. I worked 3 jobs for 3 years. During that time, I lived about as basic as I could. Pay bills, eat cheap food, no fun, no life. One thing that was great about working 70 hours a week is that it doesn’t leave you much time to spend the money, kind of a double bonus. During those 3 years, I was able to save up that 50K. I didn’t pay off everything yet though. The reason was simple for me. I was still scared straight about my finances. My health was finally on track, but I knew at any moment it could change. What I did was keep on keeping on and kept going for 2 more years. I had grown used to having no life, so why stop.
I took 5 years and at the end of it I was debt free and had 50K in the bank. That my friends is a 100K swing. So, what was the key to that process?
15 Side-Hustles that Can Build Your Bankroll – Budget Boss
Proper Allocation of money on payday
When payday came around, which it did quite frequently because I had 3 jobs, I sent my money to the places it needed to be right away. Large chunks came off the credit card debt. Money got stockpiled for the student loan. Other money got put away for an emergency fund. Other money paid bills before they came up. Before that, I was constantly behind on bills. A weird thing happened. I realized that if I paid them early, due dates didn’t matter. You see, they give you due dates because they know most people wait till then to pay. Why do most people wait till the last minute to pay their bills? They wait because they are broke, and I get it, I was there too. I figured that I wouldn’t stress as much on due dates if I got them out of the way right away. Also, and most importantly, nothing would happen near those due dates to screw up my ability to pay those bills, which ALWAYS seemed to be happening before.
Most importantly, I lived on a budget. Yes, a budget. I figured I could live on $100 a week, all in. That included food, spending money and all the luxuries I never indulged in. Funny thing is, one of my 3 jobs literally only paid me enough for my spending cash. Two 5 hour shifts a week, netting $100 a week. It was my goal to have some of that $100 left over at the end of the week, and I often did. I employed the “pay yourself first” method, which in my case was paying off my debts first and living off the rest. Was it easy? Not at first, but believe me when I say this, you can get used to almost anything. Was it fun? How fun can it be to watch thousands of your dollars go into the hands of the bank or the government student loan program? It felt gross seeing 75% of what you make disappear. Would I do it again? In a second.
So, what was the result?
The mentality I had during that time stuck with me. When I quote people like Dave Ramsey and Gail Vaz-Oxlade it is not because they are famous. It is because they are right. Do I work less then I did then? No I do not and the reason is simple, it is what I am used to. Even better is that now every dollar I make is mine and that feeling is fucking priceless. I was chunking off $1500-$2000 dollars a month to pay off debts. Saving that much a month is easy after that nonsense. The mentality and perspective I gained during those years I took with me.
Frugality
Hard Work
Discipline
Determination
These are just words unless you live them. At the time I thought I would never get to Zero. That number, 0, was to me, the sexiest number in the world. Now the number 0 scares the crap out of me. I want to get as far away from that number as possible. That is my new motivation. Times change, your situation changes, your mentality should too. That was the outcome for me.
Why am I telling this story?
I meet people all the time. I sit at their kitchen tables and discuss their financial situations with them. Debt is a real burden on the middle and lower-class families of our country. We must realize that it is on us to get out of it. We must realize that it is on us to sacrifice whatever is needed to do so. We have been sold easy fixes, but they do not work. The same people who sell you the easy fix are the ones that sold you the debt, to begin with. #truth. It is all about habits. We either utilize our good habits to get out of a bad situation or we utilize our bad ones to get into an even worse situation.
That was my greatest money challenge. I am glad those days are long gone.
“Basically, I chose not to identify with being broke any longer. I realized I deserved a beautiful life, and abundance was something that I needed to welcome into my life.” – Jen Sincero
Email – joe@budgetboss.ca
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