My Money Movement: Recent Episodes

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No one is an island unto themselves. You may feel like you are alone in this process but there are resources available to everyone. When my wife and I began this process we felt isolated. It felt as if everyone around us was in debt so it must be normal.

Well, sadly, it is normal but that doesn't make it right. We were told by professionals that debt was essentially the only way to get a degree, a car, a life. Luckily only one of us, me, fell for this illusion. My wife had debt but she was smart and resourceful and only borrowed what she absolutely needed. I did the opposite: I took out maximum loans, didn't work, didn't take it seriously.

The only benefit to me being irresponsible was that I was equally irresponsible with my coursework. The college I went to put me on academic suspension, twice. This was the only time in my life I don't regret quitting. Quitting college at the time was the best decision I made. It stopped me from continuing my debt acquisition and made me focus on getting my life right.

Once I was in a better, more academically responsible place I made better decisions. I went back to school and applied for grants and scholarships as my wife did. I also reached out for help from VocRehab with the VA. I found as much help as I could. I graduated 5 years and four schools later.

We used this life lesson to assist us in our quest to be financially independent. We looked for help, read books, asked advice, adapted to our situations and started to create the process we are sharing with you.

There are countless ways to get support. Whether it's the local library, the internet, or a professional financial advisor, don't be afraid to get support, Money Movers.

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Finding fulfilment in hobbies and in life comes down to finding your passion. Your passions will take on many different forms. For me finding my passion meant looking internally at all the areas in my life that I spend my time and money. I wrote down every hobby that I have spent money on and continue to store in my home. If you are like me, the list was extremely long and there were hobbies I forgot I had. The realization that I only spend my time on a select few gave me a wave of sadness. The reality is that every day I walk by a forgotten hobby an urge of regret or anxiety floods my system because I remember how important that hobby was… and by removing the items that no longer bring me joy helped to eliminate this unwanted feeling. By letting go it has set me free and given me more time to focus on my true passions. Making a list of what I am truly passionate about has allowed me to lead a more fulfilling life.

Finding your passion and being intentional and mindful every day to focus your time and money only in this area. Very similar to step 1: list your goals. Finding your passion is an extension of these goals and is a mindset you can refer to when questioning a new purchase or time commitment. Understanding and making a precise list of exactly what brings you the most fulfilment in life and focusing your time and energy only in these areas. It is easy to hold onto multiple hobbies and to be stretched thin by activities and invites from friends. Knowing what drives you as an individual will help you know when to spend money and time or to simply say no or decline an invitation.

Exercise:

Step 1: Make a list of all hobbies you currently own or participate in. Circle all hobbies or activities that you have participated in the last year. Circle any hobby or activity that you have participated in the last month. Star any item that you have participated in the last week.

Step 2: Write in an estimate of dollars spent on that hobby or activity. Total the entire dollar spent and total the amount spent on the items you starred.

Step 3: Donate or sell any old hobby that is no longer your passion. Doing this will free your mind to focus on the areas you are most passionate about. This will undoubtedly bring you more joy and a sense of fulfilment in your life.

Ask yourself if there are hobbies or activities that you can remove?

Am I spending my time and money on things that bring me the most joy and happiness?

Are you spending most of the money on the hobbies you make time for every week?

If not, it’s time to reevaluate.

Knowing your passions and being able to focus your time and energy on pursuing them is important. It will help answer the question of need vs want and aid in making financially sound decisions. Your passions will change and adapt over time and know that it is okay and part of development. Being able to let go of an old idea or hobby will set you apart from your peers and help you live a more fulfilling life. You will easily be able to remind yourself of what motivates you and what your money movement is all about.

This step can be challenging, so stick with it and stay positive.

You got this,
Travis

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Step 6: Budget for Fun.

I know budget and fun are rarely put into the same sentence but it is important that some of our wants are fulfilled. This process must be maintainable for the long term. So budget for fun and budget your fun. These are very different concepts and it is important to know the difference

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Step 5 is to create a buffer. This buffer is important and should be treated as a lifeline. Not to be spend on a vacation or to be used in any situation other than an emergency. The goal id set for you is to save 6 months living expenses in your buffer account. This will be used in a time of need like, job loss, medical emergency, or your car breaks down.

How to create your buffer target: from step 1, total your essential expenses for a month. Times this number by 6 and you now have your 6 month buffer target. (Reminder: essential expenses are rent, mortgage, insurance, basic food, ext…) Open up a money market account from your bank or another institution. This account will pay higher interest rates than a traditional savings account. Typically, you can expect to receive between .5% - 2%. Not great but better than the .03% some savings accounts yield. The intent is not to get rich off this account but rather have available in the event of a major emergency/expense. Just know that money market accounts are less liquid, and many will let you withdraw money as needed within 3-5 days of requesting.

How to create a buffer: Start small, save a $1 a day for a week or $7 and put it into a separate bank account. I know this sounds small but stay with me. Next week save $2 a day or $14. Following week save $3 a day or $21 and $4 or $28. This first month you will have saved $70! Continue to increase and do this for as many weeks as you can. At some point you will reach a peak amount that you can save. This will now be your goal for every week until you reach your 6-month buffer.

Let’s say that your 6-month buffer target is $6,000. If you save $17 a day or $119 a week you will have $6,205 by the end of the year! If this sounds difficult, just know that this number will snowball and a few dollars a day can turn into a fully funded buffer if you stick with it.

Look at things you are buying every day or every week that you can eliminate. Does buying a $6 coffee help you reach financial security, or would that money be better spent by putting into your buffer?

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Need vs Want: This is a step that requires a lot of patience at first. Most of us make excuses about our needs so that they can encompass our wants as well. The example I use in the pod cast is a car. Often In America a personal car is seen as a need and in many places that is true. What we need to look at when deciding on these purchases is the absolute basic idea of the need.

The need we are fulfilling is transportation, we want a brand new vehicle. Looking back at the last step, sacrifice, we must try to think critically about the acquisition of debt. The same goes with any purchase: we must boil the idea down to its basic principle in order to separate the need from the want.

As with all of the steps, practice makes perfect. In my experience when you go to buy something you need there is always temptation. Temptation to upgrade or " treat yourself" to use a pop culture reference. This can be where we stumble during our journey to financial freedom.

In my life there have been times where I buckled to this temptation and times I baulked at the ludicrous opportunity. I hope my experiences can help you achieve your goals.

The time I buckled, I was 19 waiting for my sister to get off work at the car dealership when a man pulled alongside my beat up pick up and motioned for me to roll down my window. He offered me 1000 dollars for my truck on the spot. I failed to see the value in my reliable, debt free truck and shook his hand. When he gave me the cash and I gave him the keys I looked back at the dealership and thought it's time for a new car.

I was excited and test drove a couple vehicles. I settled on a used car that in my infinite wosdom, at least to me, seemed to be a great deal. My credit was garbage at the time and I did not have a cosigner so my rate was high and I knew it. Unfortunately I didn't have a vehicle to even get home so I signed and drove home happy with my purchase.

I purchased that car for 6500 I paid nearly 9000 when I paid off the loan. The worst part was that the "old beater truck" was still on the road in my hometown and I was again vehicle less. In my eagerness to appear more financially well off I became more and in debt.

Flash forward 6 years when I was looking to buy my first home. My wife and I found a modest home that needed some work. We were 4 years into our foray into paying off all of our debts and feeling accomplished at avoiding temptation. We knew what we could easily afford for a monthly payment and had a maximum budget of 170,000. We found a house for 108,000 that met our needs. We went in to get pre- qualified hoping we could at least get to 120,000. The bank called us back and said we qualified for a loan of 270,000.

We were aghast. We could not believe that we would qualify for so much. The temptation to upgrade was there but after paying off all of our debts prior to this we had the experience and knowledge to baulk at this new figure and bought our fixer upper.

In the moment we wanted to splurge, we told ourselves we had earned it, after all we needed a house. However, what we needed was a monthly payment we could afford within the lifestyle we wanted. That lifestyle was living with as little debt as possible...

Entire article posted to www.mymoneymovement.com

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Step 3 in the process is Sacrifice. This may sound scary, but the reality is that it is more of a lifestyle developed over time. Sacrifice doesn’t mean some big area of change that will lead to a lesser life. However, it is just the opposite. Sacrificing now will bring you overall joy and financial freedom in the future. To sacrifice can be something as simple as making coffee at home vs buying coffee from Starbucks in the morning. Packing lunch instead of going out to eat every day. Buying a smaller home so that you can pay off your debt faster. This step is all about making smart decisions. You got this!

What has helped me stay on task financially is thinking; does this fall into my goals; do I need this or do I want this? If the answer is no it doesn’t fit into my top goals and I want this item… The answer is simple, I shouldn’t be spending money on this or if I do; how can I spend the least amount of money on it.

You are going to be constantly bombarded with decisions to spend your hard earned money. Deciding not to buy something should empower you to stay on task and save more.

Example 1: I am going out with friends to a bar. I want to order a $15 craft cocktail; but instead I order a $4 beer or some item on special.

Example 2: I am approved for a $500,000 mortgage to buy a house; but instead you buy a $250,000 home and pay off the mortgage in 10 years instead of 30.

Example 3: I need a new car and can afford a $400 lease payment; but instead you buy a used car that you can afford with cash. Paying no interest and acquiring no debt.

Example 4: Cell Phone plan; I am paying $100 for an unlimited plan; but instead buy a $100 phone from best buy and a version monthly plan for $25 a month with 4GB data. Let’s be real, how often are you using data not on wifi?

Example 5: Eating out; I am eating out every day during the week and grabbing brunch with friends on the weekend; but instead pack a lunch during the week and grab brunch 2x a month instead of 4. Or maybe you just enjoy a cup of coffee and conversation with your friends during brunch.

Example 6: Buying generic; Name brands cost more solely because they pay millions on advertising. Store brand items are often made by the same manufacturers but come to you at a lower cost.

Sacrifice will become something you just do and no longer think about over time. Make it a game and give yourself a pat on the back each time you make a sacrifice. No matter how big or small, these changes will make a dramatic impact on your journey to financial freedom.

Stay strong; you got this!

-Travis

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Knowing your expense to income ratio is essential to your financial well being. Without this knowledge you are lost in a dark maze without a light, constantly guessing and checking as you go. When you know how much you spend and where, you can begin to see the areas where changes can be made.

The other side of spending is knowing what you make each month. For those of you that make a set salary this will be simple. Add your paychecks for the month. If you work on varied income like a server or you are in sales this is more difficult. For those of you with a varied income you will need to look back at previous months and come up with a high and a low for monthly or weekly income. Always base your budget on your lowest income time frame so any extra can be used to help meet your payoff goals.

My wife and I never had credit cards, which was a blessing, we did have student loan debt. We knew we wanted to be debt free so we could travel more but were unaware of how we were going to get there. The problem was that we were barely making ends meet. My answer was I'll just get a better job(I know I am a Genius). The big problem with this plan was this was in 2009 just after the housing crash and no one was hiring. I applied for 10-15 jobs per week for a few months and was only able to get a call back at a big box store for seventy five cents above minimum wage. Luckily my wife was a teacher and we rented an apartment we could afford within only her salary. After a few months I found a job serving where I was making more money. The problem was we were still living paycheck to paycheck. I was confused by this because I was making almost twice the money serving as I did when I was pushing carts. Something wasn't right and we wanted to know what it was so we could fix it.

When my wife and I first stumbled our way into this way of life we tried to use an average of my tip based income to do our monthly budget. That turned out to be a mistake. In slim weeks we would assume more would come and that wasn't always the case. We found that if we budgeted with the worst case scenario as our guide we were more prepared and less likely to over spend.

No budget works if you are unaware of your expenses. Sitting at the kitchen table going through bank statements with different colored highlighters was my first foray in knowing my numbers. I was shocked at how much we were spending on non-essentials like eating out, trinkets on amazon, casino's. We started to realize that it wasn't our income that was the problem but our spending.

The only way we discovered this was by knowing our numbers. Armed with this new knowledge we started to make our spending fit into our goals of living without debt.

It was difficult of course but with our budget set for the worst of times we used all of the extra money that came in paying down our debts. In good months we manage two or three hundred dollars, in slim months we just paid the minimum. After three years we had managed to completely pay off my student loans and were well on the way to paying off hers. None of this would have been possible if I hadn't figured out where our money was going and how much was coming in. When you know your numbers you not only light up that dark maze but you give yourself a map to freedom.

Stay positive, you got this!

-Zach

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LIST YOUR GOALS

How often have you gone to the grocery store without a list or worse went hungry? What happened, did you come home with only the essentials you went in for? Or did you come home with several items you know you did not need. If you are like me, you came home with a bag of Oreos, Tostitos chips and a Twix bar because… you deserved it. Well, this step is similar to that example. If you go into each day with a plan, you have much higher success keeping on task and achieving your overall movement. So, what if I told you that starting your journey to financial freedom is as easy as making a grocery list?

Listing your goals is an especially important step to understanding what truly gives you fulfillment in life. The intent behind this step is to keep you focused and spending most of your time and money on items that bring you fulfilment. Cut out the bullshi$# and stop wasting money on items that do not fit our goals. It is that simple!

Now, do not think of these GOALs as “save more money, save for a new house, or retiring early” that’s why you are here. These goals are personal drivers and things you want to spend time and money doing.

Start by grabbing a piece of paper. Make a list of the top 10 most important things in your life. Here is my list as an example:

1. Spending time with family

2. Spending time with my friends

3. Spending time with my dog

4. Staying fit / Working out

5. Cooking / Eating healthy

6. Photography

7. Art and creativity

8. Skiing

9. Golfing

10. My Career

I have done this exercise with several friends and family members. What is surprising is that almost always the first items are related to spending time with family, friends or some type of social activity. (Hint: these are all things we can do for FREE) Think hard about the items on your list; how much money did you spend on these areas this past year, month, week? When I first did this exercise, I was spending only 20% of my money toward these top 10 things. The other 80% was going toward things that did not truly bring me value and fulfilment. That is where you need to focus your time and energy eliminating. In the long run will help you save more money and live a happier more fulfilling life. It sounds simple, doesn’t it? Well, it is… and it isn’t. You will hit bumps in the road and make mistakes but know that it is okay and part of the process. Stay focused and keep this list at the forefront of your thoughts each day, week, & month.

The key to success will be going into each day thinking “does this purchase fit into my top 10 goals?”. If it doesn’t, try not to spend money on it. Achievements will come from small wins, getting better every month, and staying positive/focused for a lifetime.

You got this!

-Travis

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Zach and Travis discuss their reason for starting the My Money Movement podcast & Blog. The goal for my money movement is to provide a guide to financial freedom that anyone can follow. We are a personal finance podcast.