Hey, wonderful soul!
Welcome to your space to talk about all things related to money & finances (calmly)
Financial freedom is possible!
But you need to redefine what ‘financial freedom’ actually is. It means that you have the basics: food, shelter, transportation and education covered. You also need to accept that you need others to help you (collective support) and that comparison is the thief of joy. Unlike professional financial advisors (I am not one btw), I prioritize peace of mind over dollars in the bank. To me, debt is not bad if it keeps you fed, safe and warm.
Have an honest accounting of your relationship with money
Change your mindset & expectations
Money is just a tool. It is not the end all, be all. It is not a reflection of your worth as a person. It is positively correlated with things such as education and opportunity. But let’s face it — not everyone has equal access to these things. Keep in mind that there are billions of people on this planet who live on a nutrition deficit. But don’t take my word for it…
Focus on increasing your income
Unfortunately our society has put too much of an emphasis on ‘do what you love – the money will come!’ The reality is that you do need a minimum salary to support yourself. We all have the same 24-hours in a day. Be mindful of the work you do and the salary that it will command. You can’t get water from a stone. Before you can pay off debt and invest, then you need to have the money to do so first!
Do your best to not spend full price for anything
If there is something that you want/need – acknowledge it; then pause. Exercise the ability to not impulse spend. Do some comparison shopping. Wait for sales and clearances. Purchased used items (especially cars). Rarely will anyone know when you don’t purchase something brand new and/or at full price.
Realize that money doesn’t buy joy
Seek out experiences that do not break the bank. Make a ‘date night’ in the back yard under the stars. Take the kids to a beach or on a hike. It is the experience that you remember — not the dollar amount that you spent.
Track your spending
If making a budget makes you shut down into a ball of anxiety, you are not alone. Get an app like Monarch and connect your bank accounts and let it capture all of your spending. Start categorizing. Once you have tracked your spending for a month, start building a budget from there. Awareness is the key!
Quick Tips
My number one suggestion on banking is to not just have one bank account. In our family, the diversification looks like this:
- A local brick & mortar bank
- An online/fintech bank (I have Varo – they have a high-yield savings account, which is very nice)
- A joint account with your spouse (if applicable)
Most employers make it very easy to split your direct deposit pay into multiple accounts. If you don’t see it as an option, ask HR if it is possible (it usually is). Unfortunately things happen where accounts get hacked, debit cards get lost and/or funds get put on hold. It is terrible to have all of your money off limits to you — even if it is for a short amount of time.
As a woman, car buying is a pain. Most car dealers (new and used) see you coming and just assume that they can tell you anything and you’ll go for it.
So for me personally I prefer these two things when it comes to car buying. They are:
- Buy a used vehicle. A ‘new’ car loses its value the moment you drive it off the lot
- Buy a car online. You can do so at Carvana or Carmax.
Be mindful of the APR on any car loan that you take out. If you absolutely have to buy a car at one of those guaranteed financing lots, then get a lower cost car and pay it off early if you can.
If you are pursuing higher education in the U.S. then you want to stop, right now, and fill out the FAFSA. Do this early and do this even if you do not think you will qualify for any financial aid. Don’t let issues with you federal taxes delay you on getting this done.
Federal financial aid is currently capped at the following:
- Pell Grant: $7,395/year
- Dependent Undergrad: $31,000/lifetime
- Independent Undergrad: $57,500/lifetime
- Graduate: $138,000/lifetime (includes any loans from undergraduate studies)
Understand that more financial aid is often available from your state of residency and the schools themselves.
For private primary education, talk to the admissions office early on to discuss financial aid options. My children are all in private school. Due to sibling discounts, state vouchers, community and institutional support, we only pay around 20% of the sticker price of the school.
Health insurance premiums climb every year, so there is no way around that. However if your employer offers either an HSA or FSA option, take advantage of it! The money that you put into them will be taken away from your taxable income. You also have a lot of options in regards to how you can spend those funds. If you have a DCFSA, then you can use the account to pay for child-care expenses (you can’t get a tax benefit for both DCFSA income reduction and the Dependent Child Care tax credit; but if you are in a certain income bracket, you can’t get the later anyway, so not a big deal).
I use my HSA to pay for all co-pays, medications and things like vitamins, feminine hygiene products, oral care and bandages for the house at Wal-Green’s and CVS. Many grocery stores also accept the cards (if they have a pharmacy and/or sell health products). Additionally if your employer has high deductible health plans, then they will often also contribute to your account. So free money pretty much!
This may be a tough pill to swallow, but not everyone can afford to live everywhere. One financial rule that I really do try to live by is not to spend more than 30% of your gross income on housing. Right now, we are only spending 22% (yey!). We also live in Cleveland, OH. Would I be in this same position if I were still living in Miami (FL)? Probably not!
The United States is a big place. Check out this list of affordable metropolitan areas. It is true — none of them are especially glamorous. But you can always take a vacation to a more exciting place. Especially when you have the money to do so.
Also if you are teetering on the line between poverty and working-class, look into the social services that the state offers to low-income people. For example, Pennsylvania has a higher income cap for things like medical and child-care assistance. Don’t be fooled by states that do not have a state income tax. Many of them (yes, I’m looking at you Florida) do not provide a lot in the department of social services.
What are some other ways that I can ease my money woes?
Here are some other things that have helped out our household’s finances