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My Journey to Financial Freedom | Part 2: The Climb

fleurs // livelovesimple.com

Three years ago, I was nearly $60,000 in debt. I had a Bachelor’s degree that didn’t appear to be worth its weight in salt and a job that couldn’t cover a fraction of my monthly bills. I was terrified.

Today, I am closer to complete financial freedom than I ever dreamed possible. Last week, I paid off my last remaining credit card balance. This two-part post is a celebration of this incredible milestone in my journey.

In part one, I explained how I got to that terrible place. In part two, I will explain how I’m getting out of it (and how you can do it, too).

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1. Change the way you think about spending money. For most of my life, I believed that money was made to be spent. I believed that I deserved to spend every dollar that I earned on some material thing that would “make me happy.” I coveted material possessions—clothes, jewelry, electronics, cars. What I realize now is that money is not meant to be spent. You only need to earn enough money to survive. You should have enough money to buy only what you need. There is no need for excess.

“You’re not your job. You’re not how much money you have in the bank. You’re not the car you drive. You’re not the contents of your wallet. You’re not your fuc*ing khakis.” (Fight Club)

This shift in mindset is hard to adjust to at first. You may not like the reactions that you receive from people. Believe me, I’ve been called cheap a few times, but I pay no mind to it. I would choose cheap over poor any day.

2. Keep a budget. I highly recommend using Mint.com. I started using it in September and it has been one of the most transformational and useful tools throughout my journey to financial freedom. It allows you to sync up all of your accounts (loans, checking, savings, etc.) in one place. Then it keeps track of every transaction that you make and sorts/organizes all of the data for you. It allows you to track your spending over time and by category. It gives you incredible perspective and insight about where your money goes each month/year. It has been a truly eye-opening experience for me.

If you’re unwilling to try Mint, you can keep a budget on a spread sheet or even by hand. However, the important thing is to be completely conscious about where every dollar you spend is going.

3. Use a debit card. To reap the full Mint.com experience you should use a debit card for every purchase you make. Using the debit card will automatically flag each transaction you make into the appropriate category. So if you go to Shoprite, it will get marked as groceries. If you go to Home Depot it will get marked as home. If you stop at the gas station it will get marked as automobile, and so on.

I use my debit card (linked to my checking account) for almost every single transaction that I make. I also have all of my monthly bills (like my auto insurance, utilities, and gym membership) automatically debited from the same checking account each month. It makes keeping track of my spending that much easier. Plus, I do not like dealing with cash. The debit card is quick, easy, and is accepted almost everywhere now.

Whether or not you use Mint.com it is a good idea to use a debit card simply because you can review all of your purchases and purchase amounts on your monthly statement. Trying to keep track of receipts is a hassle that I don’t have time for.

4. Pay off credit cards and cut them up. Paying off my credit cards was my first priority. For awhile I tried “credit card surfing.” Let me just tell you from experience, it’s overrated and it really doesn’t work. The idea is that you surf from credit card to credit card by transferring balances. A lot of companies will give you 0% APR for 6 months if you transfer your balances over to them. After the 6 months, you “surf” to a new card with another promotional rate.

The problem with this tactic is that it gets messy quickly, it becomes difficult to keep up with, and if you lose track you will end up getting burned by high APRs, finance fees, cancellation fees, etc. Also, it probably doesn’t look great on your credit report if you’re opening up a new card every 6 months or so.

It is much safer and wiser to just stop using credit cards! My theory is simple and has taken me very far: If you can not afford to buy it, then you can not afford it. Period. It is simple logic.

5. Eat in. This is one of the easiest changes to make, but it also comes with an enormous, positive impact. When I started closely tracking my spending habits, I was shocked to see how much I was spending on eating out. A meal at a decent restaurant goes for about $25 per person. If you eat out twice a week, that is $3,120 a year. If you grab lunch out during the work week, it’s about $8 a day. That’s $2,080 a year. Put those together and you could be spending $5,200 a year or more on dining out! That is outrageous and completely unnecessary.

Since I started eating in and packing lunches, I’ve taken my monthly food spending from $500 down to $200 or less! Over time, that means enormous savings. Check out 5dollardinners.com for some awesome, inexpensive recipes. I love it! Also, investing in a crock pot was one of the wisest decisions I ever made—chili, sausage & peppers, and goulash will be your new (delicious, cheap) best friends. (Here are some more tips for eating healthy & mindfully.)

6. Direct deposit money into savings every month. This is my final—and perhaps most important—tip. When I began my journey to financial freedom, I opened a savings account with ING Direct. It is an easy-to-use online savings account and it gives you interest on the money that you save. It also allows you to set up easy direct deposits.

I started out small, depositing $50 a month into my savings. As I learned to keep my budget tighter and tighter, I increased the amount that I put into my savings each month. Currently, I am putting away $500+ per month and hope to get closer to $1,000 per month in the very near future.

When you direct deposit the funds, it comes out automatically. It is painless because you don’t have to do a thing. Because it’s automatic, after awhile you don’t even notice that it’s missing. (I remember reading that on another blog several months ago and thinking, “Are you out of your mind?! I’m not going to miss it? Yea right!”) But I can honestly say that after a few months, you adjust to the missing money. You truly do not miss it once it becomes normal for that amount to be deposited into savings automatically each month.

It has been one of the best decisions that I’ve made and because I’ve worked so hard to get to this place—I don’t touch that money! I am keeping it there for a rainy day or to pay off my student loans someday in one fell swoop.

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As I stated at the start of this post, three years ago I was almost $60,000 in debt; I was twenty-three years old; and I was scared to death. Today, I have my finances under control! I am on the road to financial freedom and you can get here, too. Truly, it is not as hard as it seems. With common sense and a bit of dedication, it will happen. Paying off my last credit card balance was like taking chains off of my wrists for the first time in seven years. The feeling was completely priceless. If I can do it, anybody can.

So, what are your financial goals? Have you ever been in financial prison? How did you free yourself? If you’re still there, what are you going to do to break free?

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    Review: Tribes by Seth Godin

    On a recent flight, I began reading Seth Godin’s Tribes. On the return flight, I finished it. It was my introduction to Seth Godin—no idea why I hadn’t found him sooner!—and what an introduction it was. The book blew me away. It is the best book on leadership and change management that I’ve ever read. While the content is sure to inspire change of the greatest sort within any organization—from business to church, non-profit to learning institution—it is also of incredible value to individuals.

    In this post I want to share some of my favourite pieces from Tribes as well as some of my own insights.

    Whether you want to create positive change in the world, in the workplace, or simply in your own, I recommend that you read the book for yourself. It is a relatively easy read, spliced up into short, digestible chapters. I got through it in a few hours. But it is absolutely packed with revolutionary ideas, suggestions, and real-life examples of people making a difference and leading tribes in today’s world.

    Many people are starting to realize that they work a lot and that working on stuff they believe in (and making things happen) is much more satisfying then just getting a paycheck and waiting to get fired (or die).

    I’ve begun to think of my generation as the Fight Club generation. Tyler Durden said it best, “We’ve all been raised on television to believe that one day we’d all be millionaires, and movie gods, and rock stars. But we won’t. And we’re slowly learning that fact. And we’re very, very pissed off.” I think Tyler and Seth’s sentiments are one and the same. Our parents (or maybe you) were raised to believe that you needed to grow up, go to school, get a job, and stay there. Work hard, save money, vacation once a year, and retire as soon as possible.

    Well, the Fight Club generation doesn’t want to hear that nonsense. We want gratification now. We don’t want to spend 40 hours a week miserable just so that we can collect a paycheck twice a month. We don’t want to spend half a lifetime at a job that we hate just so we can get fired or die one day! We believe that we can be happy now. We can pursue our passions, make a difference in the world, live out our dreams, and be successful all at once. And… we are right. We can do it. There are people doing it every single day. I love Tribes because it tells the stories of those people and more importantly, how they got there and how we can do it, too.

    Somewhere along the way, perhaps when twenty thousand Ford workers lost their jobs in one day, or when it became clear that soft drink companies were losing all their growth to upstarts, the factory advantage began to fade.

    The reason why the “school-job-suffer-retire” model worked for so long was because it was safe, it was comfortable. Human beings like to feel safe. It feels good to know that you will get a check once every couple weeks. It feels safe to know that you can walk into the office every morning and the lights will turn on and the computer will turn on. The peace of mind in trading your hours for dollars seems worth it when you have to put food on a table and a roof over someone’s head. But, guess what, that model isn’t really proving to be so safe after all.

    The recent tanking of the economy has really shaken things up. People are losing their jobs at rapid rates, unemployment is way up. Ethics have been violated, corruption runs rampant, and people don’t feel safe anymore. We want to take matters into our own hands. We want to create the lives of our dreams and be completely independent. We are doing it every day.

    In unstable times, growth comes from leaders who create change and engage their organizations, instead of from mangers who push their employees to do more for less.

    Now, more than ever, each of us has an opportunity obligation to become a leader, to create change, and to make a positive difference. The ever-evolving world of social media and the Web—Facebook, Twitter, LinkedIn, Wikipedia, Google—give us instant access to an unthinkable quantity of information and resources. When we learn how to leverage those resources we can become unstoppable. When we teach others to leverage those resources our tribes can become unstoppable. It is a great time to be a leader, and it is also the right time.

    Leadership is scarce because few people are willing to go through the discomfort required to lead. This scarcity makes leadership valuable. It’s uncomfortable to propose an idea that might fail. If you’re not uncomfortable in your work as a leader, it’s almost certain you’re not reaching your potential as a leader.

    Change = pain. If there is anything that I have learned over the past three years, it is this. Human beings are creatures of habit. When asked why things are done a certain way, most people will always respond the same way: “Because that’s the way we’ve always done it.” It is safe, it is comfortable. Our profits may be plummeting, our staff may be miserable, our customers may be disgusted—but this is the way we’ve always done it! Don’t try to mess with our traditions! Right? Wrong!

    Success takes dedication, hard work, persistence, and change. Dedication, hard work, and persistence can be painful. Some people are cut out for it and some people aren’t. The people that are, are the leaders. Being a leader is not comfortable and it’s not supposed to be. Being a leader takes character.

    Believe it or not, anyone can do it. “No one is born charismatic. It’s a choice, not a gift” (Tribes).

    Change almost never fails because it’s too early. It almost always fails because it’s too late.

    The time for change is now, my friends. If not now, when? There has never been a time where the need for positive change was more urgent. If you do not realize that this moment is all you have, then you do not have anything. This is it. After this moment, nothing is promised—not tomorrow, not next week, not your 81st birthday. You have this moment and you alone get to decide what you do with it. Yes, you can surf Facebook for a few more hours and stalk out your ex-boyfriend’s life for awhile more. You can also sit on the couch with a six-pack and watch The Jersey Shore marathon on MTV. …But if you asked me, I’d tell you that you’ve got more important things to do. Whether you’ve been waiting to pitch a great idea to your boss, waiting to take a proactive approach to your health, or waiting to embark on that 6 month “vagablogging” journey; stop waiting!

    There is really nothing in your way. There are no problems and no obstacles. Any anxiety that you might have stems from your past or your future; but your past and your future are not real! The only thing that is real is this moment, right now. The past and the future are in your head. No matter what you think is standing in your way, you can find a way around it. If you can’t get on the next flight to Melbourne (to start your career as a kangaroo-catcher) then sit down and figure out how you are going to make it happen. Right now.

    I’m frequently asked about getting credit. People want to know how to be sure they get credit for an idea, especially when they have a boss who wants to steal it. Or they want to know how to be sure to give me credit for an idea in a book or a blog post of their own.

    Real leaders don’t care.

    If it’s about your mission, about spreading faith, about seeing something happen, not only do you not care about credit, you actually want other people to take credit.

    There’s no record of Martin Luther King, Jr., or Gandhi whining about credit. Credit isn’t the point. Change is.

    Stop worrying about the obstacles and start taking action. Stop worrying about who is going to get credit and start making a difference.

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    What I loved most about Tribes is that it left me feeling like anything and everything is possible. The book is full of stories about ordinary people who did (and do) extraordinary things every single day. These people don’t let fear stop them. They become leaders and they create & inspire change. Every person is capable of this. You are capable of this! What do you want to do? Are you ready to become a leader? I say yes. Yes you are!

11 Comments

  1. Love this, D. It’s all about being aware and conscious of the choices you’re making. People still ask me every day how and why I’m working a full-time job and only going to school part-time. To me, it seems like a no-brainer, but most other people are dumbfounded. Loans aren’t free money!

    I’m proud of you, lady.

    1. Exactly, Jenna! I am so inspired by what you are doing. It is NOT EASY to go to school part-time and work full-time the way you are. But, you are doing it. You are living proof of what it means to follow your dreams & be responsible along the way. Thank you so much for the comment, love.

  2. Using a debit card is not very safe, so I wouldn’t recommend that for the majority of purchases. I stick with using 1 credit card and pay it off in full each month. You’re also more protected by making purchased this way when it comes to fraudulent buyers or if your cc is stolen. A debit card unfortunately is very risky.

    1. Thank you for the comment, NS. You make a great point. I don’t know if debit cards are right for everyone for the reasons that you’ve mentioned. Fortunately I have been extremely lucky with mine and I have a great bank that protects me against fraud. However, I would definitely advise anyone using debit to inquire with their banks about their policies in the the event of fraud.

      Also, it is best to always practice “safe spending” and only do business with reputable businesses.

      Thanks again for your thoughts & the tip.

  3. Oops, didn’t realize you replied so quick. Good, glad if it can work out for you. It does keep things much simpler having only 1 card.

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