Last week I took you through Part 1, where I shared some great pieces of Financial Advice:
Piece 1
Winners focus on the next play not the last play
Piece 2
Debt will keep you poor
Piece 3
Being poor might not be a choice, being in debt is a choice
And Most Importantly:
Wealth generates Health
What´s Next
Now I promised there was a Part 2 coming and it would contain some more tips to start generating wealth & health.
Tips that will get you the money to pay your debt, and once done to invest.
But let me start with another bit of Financial Advice:
Pain means Growth
Because trust me this is gonna hurt.
Especially if you are in debt, changing your mindset and lifestyle is a painful process.
And if you go for a Budget Coach it is even worse because on top of getting your financial mess under control, you probably feel ashamed as it does feel like you will have to admit your failure and give someone else the control.
And on top of that, you will have to pay that person using your non-existent wealth.
Still, if you fail to slowly start generating wealth after DYOR and taking my financial advice on how to get rid of debt you might want to consider that coach again.
For now, let´s DIY. Let´s turn debt into wealth and better health.
Summary
For those who missed why generating wealth, generates health I will give you a quick summary.
Why Wealth is Health
Debts cause stress, stress makes you sick. In addition, stressed people are no fun to be with, hence you will start missing out on the love of friends and family.
Okay, let´s get on with it. See it as detox, going cold turkey on your spending.
Think about Cost vs. Benefit
Cost vs. Benefit is truly the first step. Society is aimed at making you buy too much useless crap for unrealistic prizes. And the best part, you happily do so.
Just yesterday I met a couple that was 15K in debt, having lots of payment plans for the direct debts they acquired and still they were convinced that buying brand clothes & sneakers was better because they last longer.
Absolute BS quality is one thing, well-known brands another, and some might mix the two. But buying quality does not have to be expensive it just takes some research.
Brands have no real benefit, except to make you feel a bit better because even though you can´t pay the rent, you look damn good in Calvin Klein underwear that nobody sees.
The world around you is aimed at selling you products and you are programmed to consume, Just DOnt It!
Stop that shit, think before you act.
Research before you buy.
That will result in no more impulse buying:
Start by giving yourself 24 hours to think about every purchase that is not mandatory or on your shopping list.
Ordering Out
When I was little ordering food was something you just didn´t do. And if you did you would order and then go and pick it up. Boy does that make me sound old and the world has moved on.
Some people have totally forgotten that you can cook yourself.
It´s insane how much people with little money tend to spend on ordering food. Excuses enough, too busy, too tired, can´t cook.
Lovely little lies that allow you to stay poor, did you ever do the cost vs. benefits on food?
Ordering food for 2 people: $35
Making dinner for 2 people: $7
Hence your laziness just cost you $28 and even when you order once a week, you would spend over $100 a month on food that is less healthy than what you would cook yourself.
So double dip on improving your health, better food & less financial stress just by cooking yourself.
Another Poor Couple Story
Funny story on this one, this is another couple that also is struggling financially. They order food multiple times a month and at the end of the month eat with his mom because they have no money for food, seriously???
Learning to cook is fun, and don´t tell me you don´t have the time. You can cook on the weekend, put half in the freezer and half in the fridge and for those other nights, there are awesome 15-minute recipe sites online.
Oh now someone is gonna cry no Freezer, well cook yourself for four months and buy one from the money you saved.
The Shopping List
Once you learn how to cook or start cooking the next step is the shopping list.
PAUSE!
How often do you go shopping for groceries btw?
If it´s more than once a week, you are overspending.
More than once a week is unhealthy and makes you unwealthy. You will be impulse buying, buying stuff you have to throw away, or buying useless offers.
Shops are there to seduce you, and your kids. So if you have kids, don´t bring them if possible.
Here come the excuses again, I have no car so I need to go every day!
Well, I have no car and I go shopping for two grown-ups once a week by bike.
But if you have no bike or babysitter, order your shopping online. The additional delivery costs are equal to you taking your car, but there are so many benefits.
First of all, you don´t need a babysitter for the kids, kids are not seduced so you don´t have to say NO a million times before you give up and say yes and spend more than you planned.
But above all, it allows you to stick to your list!
Because it´s easier to do the no impulse buying. Sticking to your list does not mean denying yourself everything, it means the opposite.
Buy something to reward yourself for not ordering food, not impulse buying, not giving in to your kids, and sticking to that list (to do so it has to be on the list).
Damn I really sound like a cute-looking but for once they are right
It´s all about the Money and RPI
Such a fun song that was, and she was right you know;
It's all 'bout the money
All 'bout the dumb dumb da da dumb dumb
Because you are kept dumb dumb da da dumb if it comes to money, or at least I was.
Nobody ever clearly told me how much interest you pay on debt.
Nobody told me about compounding on your investments.
Nobody told me that you should start investing as soon as you are pulled out of the womb.
We tend to not get proper financial education growing up because the powers that be like us to stay poor and in the debt trap I mentioned last week.
So we have to RPI!
That starts with the R from DYOR (Do Your Own Research):
Research
Research always sounds a bit professorish, but it means nothing more than Google and finding multiple sources telling you the same thing.
Example
Research how much you are paying on insurance, how many of those insurances cover the same thing?
Almost everyone is over-ensured, now search what is the cheapest vendor with the highest Trustpilot rating, send them an email or call them explaining what you currently have and what their best offer would be.
Don´t take the standard offer, because reaching out allows them to offer you something beyond standard. But be aware of what their standard is so you don´t get ripped off.
These dudes and dudettes often get commission so if you push them a bit they will offer you their best deal, just to make their sale, as many of them, are in the debt trap as well..
So the R is for Research, and P stands for Planning, which nobody has time for.
Planning
Time; we love to waste it, we never have enough of it, and we hate to spend it on useful stuff like planning.
But planning is key to getting your mess sorted, yourself on the rails, and having that money come rolling your way.
Planning starts when you create an overview of your debt, monthly cost, and income.
Once that is done you can start planning.
Did I say Cashbook?
Your cashbook is king,
You can find a template online or buy a cool-looking book to do it old school. Because this is where planning starts.
And the first part of that plan is to make time every day to update your cashbook.
Great you did your due diligence, and now you are keeping track of what is coming in and what is the minimum that should be going out:
If these are in balance at this time, we have a serious problem.
Because your needs(mandatory stuff like rent, food, and utilities) should never be more than 50% of what is coming in.
Who says that?
The rule says that you fool!
There is this rule; 50% for needs, 30% for wants, and 20% for savings or paying off debt.
And of course, I do not agree, as I don´t like rules.
Ideally, 50% for housing, food, and utilities is great, but for many hard to budget, so if that is too little let´s aim at 60%.
Wants, wants, wants; everybody wants to rule the world. but when you are in debt the biggest want should be getting rid of it asap.
The sooner you are done with paying interest, the sooner you can start making money instead of giving it away. But again it´s hard, so you use 15% on wants to keep life fun and use at least 25% to pay debts.
I stands for Interest & Investing btw
Because as soon as you are able to follow this rule of thumb, and are done paying interest on your debt, you can start investing that same 25% and earn a bit of interest on the side.
The best thing is, that you will not even notice the change in your day-to-day life until you see what investing does for you.
Back to the plan
- Planning is everything;
- Planning your budget
- Planning your dinners
- Planning your groceries
- Planning where to buy the best quality for the lowest prices
- Planning when your debt is dead and you can throw a party.
- Planning what to get your kids or partner so you can buy it on sale.
Planning is the most important part of getting yourself out of the debt trap. It is a painful process, it´s hard to stick to the plan, but you will love it when that plan comes together.
Pain is growth, it´s part of the journey. It will hurt not being able to spend as freely as you used to do. It will hurt having to say no to certain things, but no pain no gain. And trust me it gets easier, and probably will become a fun challenge to plan in such a way that you save a bit more each month than you planned.
Back to that I that also stands for Idiot you fool.
Interest & Investing
I explained why these two go hand in hand already but, I like big butts and can´t deny that there is more to this I.
Investing, you need to invest to get the best deals, to make the smartest plans, to save the most money.
You need to invest your precious time, that stuff that you waste lying on the couch watching Netflix, while the next day you do not have any of it to make your shopping list.
Make a plan, plan the time you need to invest, and stick to it.
- Plan time to make that shopping list.
- Plan time to order that shopping online.
- Plan time to look at the best deals for a new insurance company.
- Plan time to learn about money.
- Plan time to see how much interest you pay on your debt, and what you can put in your pocket once done.
- Plan time to learn about investing.
Guess next to that cashbook you also need to invest in an agenda.
Keep in mind that this is a marathon you will be running all your life, so there are no short-term results planned.
You will not become a crypto millionaire as soon as you´re done with your debt. But if you plan well, that wealth will start increasing at the same rate or faster than your debt used to grow.
Because having money makes you money.
If you do not need to borrow to pay for something, if you can buy something when it´s cheap because you have planned for it you will make money.
E.g your friend is in debt and needs to sell his TV, if you have the money you can help out your friend and get cheap TV.
The same will be the case with investing, if you have money on the sideline you can jump in during times of crisis. Because the best time to buy is when others cry.
Bottom Line
When there is blood in the streets, that is when you want to invest. But to do so, you need money.
Having money, makes you money and that is why the rich get rich and the poor stay poor and caught in that debt trap.
Now I still have a whole list of suggestions on where to cut down on your spending but I bored you enough for one week.
Next week the third and last part of this series, where I will tell a bit more about my personal struggle to overcome the Beast of Debt.
That and at least 10 useful tips on how to change your spending patterns. So if you are interested keep an eye out for next week's post!
On A Personal Note
Like I said last week, I have been there up till my baby balls in debt. And I flipped the switch six years ago.
It was not easy as I had been in a debt trap for as long as I could remember. It totaled $15.000 when I changed my mindset, or so I thought until I got reminded of the student-loan I so happily forgot.
So Total Debt 25K six years ago, now my net worth is over 50K hence a $75K increase.
Do I feel rich? Not at all.
Do I feel wealthy and more healthy? Yes 100%.
WHYWHY?
I am no longer worried about unexpected bills.
I don´t stress when my kid has a school trip.
And I only have to do overtime when I feel like it.
I still have my cashbook, I still make a shopping list and I even started investing a couple of years ago.
More on my personal uptrend next week!
Thank goodness you made it till the end Pees, Love and I am out of here!
PART 1Best Financial Advice Ever (Improving Health & Wealth) - Part 1
*[Source Pic](All pictures are by Meme, MyI & AI unless source is listed]