As counter-intuitive as it sounds to all of us instant-gratification folks, there is actually a big reward for being responsible with your money. Having funds to decide what to do with will make you less desperate, and you will be able to make better decisions. I never understood that and just wanted to buy, spend, do, move quickly. It’s been a very different tone since I’ve paid off my debt. There are a lot more “honest moments” I have with myself. I have to ask myself, “Can I afford buying this at the moment and still pay off my credit card balance in full this month?” Of course, the answer is still usually no, but the difference is that I listen and will resist the temptation to spend. I’ve set up a few paths to make this previously unheard of responsibility possible.
Give Everything Plenty of Time
This is the best lesson I have learned so far. Time is magic. It’s changed the way I look at my day. I prepare for my work day the night before by packing my lunch and my workout bag. That saves me money instead of buying lunch and pushes me to get up and go to the gym before work. Plus, now that I work out in the mornings, it frees up my evenings for reading, hanging out, and whatever else. I give myself time to plan my day and this makes the next day so much better.
You also need to give yourself time to become better off financially. You just paid off debt or bought your first place or some other big financial milestone. That’s awesome! With the debt, you need to give yourself time to start growing your savings. With the house, you need to give yourself time to figure out how much you will now be spending each month, and how to deal with repairs you need, or renovations you want. You can’t do everything at once. Everything is step by step, and as simple as that sounds, if you apply it in your finances, you’ll be surprised at how it can make things more comfortable and achievable.
Be Committed to Staying Out of Debt
Everyone worries about lapsing into old habits. Debt was a habit and I fed that habit for almost 10 years. This month was tough because I had to pay a big credit card bill in order to stay out of debt. But I incurred it, and I am responsible for paying it off. I don’t want to pay any interest on consumer debt ever again. That’s going to be hard because I feel like we have a very spendy lifestyle and our income just doesn’t match it. Oh for now it does, but it’s definitely a squeeze. We need to figure out how to spend less. On gas, eating out, rent, everything. It sucks to say that I still feel squeezed even though I am not paying off debt. But I am saving a lot, so it feels like I am living on less.
Decide on a Certain Percentage of Savings and Keep Growing That Number
Right now I am at just over 31% of my income being automatically saved in investment accounts. My goal is to get that to 40% by the end of the year. I’d love to do it right now, but I may jeopardize my cash flow for everything too much, so I am going to work hard to make it happen by the end of the year.
Do you have any rules that help keep you in line?