After the last 2 months of focusing on implementing more pleasant things in my life, June became one of self-induced stress. I had a nightmare for the first time in a long time, I hadn't been as enthusiastic about much, and I started biting my nails again. After only a week into June, my motivation for this theme was weaning, but I knew that I needed to set some long-term financial goals, make a plan to reach those goals (including the math), stick to a budget, track where my money was going, and learn what I should be doing.
Before implementing a plan, I felt as though the focus on money was too much for me. Finance is still not my strong suit and I would much rather spend more time doing just about anything else, but I got better. What really helped the most was rediscovering Dave Ramsey's Financial Peace University, his free app called Every Dollar, The Minimalists’ blog post on financial freedom (there is also a related podcast), and The Financial Diet on YouTube. (See links below) These inspired me to start asking myself some surprisingly tough questions and be honest with myself.
"Where is my money going right now?"
I used the previous month in the Every Dollar app to see what my budget would have looked like had I planned to spend my money the way it was spent. Ouch. I spent way more on eating out and on miscellaneous items than I would like to admit. I couldn't even be one hundred percent honest with my husband about what I was spending money on.
"Are there better ways I could have spent it?"
For the actual month of July, I intentionally put each dollar somewhere using Ryan Nicodemus' “Need, Want, Like” system. I need to pay my bills and put money away in an emergency fund. I want to continue taking a weekly belly dance class. I like having extra money for food and random stuff. Figuring out what my priorities actually are was surprisingly challenging, but even more so was sticking to the budget I laid out.
"Could I do something now that would greatly help my future-self?"
Dave Ramsey's 7 Baby Steps start off with putting away $1,000 into an emergency fund, so that when an emergency happens there isn't a financial crisis at the same time. The next step is to pay off your debts using the debt snowball. By paying off your smallest debts first, you get a feeling of achievement as you work on tackling the larger ones. For me, these included my fancy cell phone and credit card debt (that we used to pay for moving expenses). The 3rd Baby Step is to bump up your emergency fund to include three to six months worth of expenses. This would be great if you lost your job for example. The next is to invest in your retirement. If someone in their early twenties put away even a little bit today, with compound interest over the years it would greatly multiply. Steps 5, 6, and 7 don't quite apply to me since I don't have children to save college funds for, I don't have a mortgage since we rent, and I'm not financially ready to contribute beyond myself yet.
After talking with the financial advisor at my credit union, I decided to open a Roth IRA (aka retirement account paid post-taxes) once I got together my $1000 emergency fund. If all goes as planned, I will have the money by the end of the year and can open the account in January. I haven't talked about this with my husband yet since he thinks my emergency fund is a silly idea. I also did some math to see what it would cost me monthly to save up for a newer car over the next 5 years. Where my current budget stands, saving up for a car wouldn't be easy, but it would be doable. Future me would love to pay cash for a newer Toyota Corolla.
"What do I do when I want something, but it's not within the budget?"
As I learned more about my spending habits, I started wondering why I wanted certain things. New makeup is a good example of this. I have plenty of makeup, but I was watching YouTube makeup tutorials almost daily and wanting more. In an effort to combat this, I stopped wearing makeup most days, stopped watching makeup tutorials, and saved links to thinks I thought I wanted. The latter of these worked surprisingly well. I found that I didn’t have as strong as an impulse to buy things and didn’t feel as though I would miss out on it if I saved it somewhere. This lead to taking photos of things I found in person, which in turn led to an epiphany:
I don’t have to own it just because I like it…
While I know this journey isn’t over just because June is over, I did not expect this theme to overflow and mix well into July where I was trying to focus on Intentionality and Minimalism. Seeing as a theme of intentionality pertains to being intentional with your money, maybe I shouldn't have been surprised.
Hope y'all have an amazing week!
Links:
Dave Ramsey’s Financial Peace University (ex: Videos)
Every Dollar app = EveryDollar.com
The Minimalist's blog post on "Financial Freedom" and related podcast
The Financial Diet website and YouTube channel
PS. If you are young and just starting a line of credit like me, take Dave Ramsey's advice with a grain of salt. Think twice about cutting up your credit card. Instead use it to only pay bills that you know you have money for and already have to pay. I currently use mine for gasoline only.
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