HAPPY FRIDAY, Y’ALL!
I’ll write more about it next week, but this week I made a few financial decisions that have re-kindled my love for talking about debt repayment.
I’m starting to kind of give everyone in my life unwarranted advice, because it was Ernie’s unwarranted advice that eventually pushed me over the edge to start thinking about  money differently. Recently he sent me this text:
Changing your thinking.
SO TRUE.
The catalyst for my whole debt repayment journey was realizing that money was meant to be utilized, not spent. Money is a TOOL, not a TREASURE.
[bctt tweet=”Money is a tool, not a treasure.”]
and I want everyone in the world to get it. I’m not anywhere near perfect in this matter, so I’m not saying “do what I do,” I’m just wanting everyone to shift how we think about money so that we can really truly live free of the ball + chain of money problems.
This post isn’t for someone who writes posts like “How I paid off $34K of debt in two months.” This post is for the everyday average human being with an average amount of debt and the ability to make on time payments and even every so often make additional or extra payments, but we’re used to the debt.
ONE //Â Money is for utilizing, not spending.
I pay my dentist a LOT of money. It’s just what we do. When I first met her, I maxed out my insurance within two months. Then I took out a $2500 credit at 20% interest because I hadn’t been to the dentist in a very long time and we had some business to take care of. I remember looking at the piece of paper that said (basically) YOU ONLY OWE $75 A MONTH… FOR FREAKING EVER! and I got upset about not having the money to pay it off.
but I did have the money. I was EASILY dropping $75/month at thrift stores buying clothes or books or CDs. I was just wanting to spend my money on things I wanted instead of using money as a way to get what I NEEDED. Once I decided “I don’t really NEED anything except for the occasional new bag of cotton balls or hand soap for my bathroom,” I saw the $250 left over after payments as money to utilize, not money to spend. The money left over after you’ve paid the minimum payment on your debt isn’t what you should take to the mall and go crazy, it’s money you should strategically put back into paying off your debt more quickly.
TWO // Pay one thing off quickly.
The Dave Ramsey method talks about the snowball method; paying off the lowest balance first to get the momentum to keep going. I like the idea of it, but I say just pick one thing and go all out. I chose to throw my money at my Dental First credit because I’m paying off past dentist visits which annoys the crap out of me AND the interest rate was 20% which also annoys the crap out of me AND since it’s not an account where the balance fluctuates (except for the stupid interest charges), I just want to get rid of it. It serves me no real purpose. I actually hate it so much. I just want to be freed of it. So that’s my one thing I’m paying off quickly. Sometimes I look at my bank account and go “I have $175 in my account and I get paid tomorrow… I don’t need that much money in my account.” and then I make a $50 payment towards my dental first debt. Because I HATE THAT THING AND WANT TO GET RID OF IT SO BAD! Pick one debt that you hate and want out of your life and then just WAGE WAR on that thing.
THREE // Only spend what you have.
First, let me say that before I start feeling all guilty about this… I put my $5 mocha on my credit card because I left my debit card at home. But luckily this credit card is connected to my bank account so I just paid it right away. Life happens. But I had the money for the $5 mocha. You know what I didn’t have the money for? The $800 camera I bought at the beginning of the year. Still paying off that one, but with 16% interest. Save up your money, and when you have enough.. buy it. Obviously things happen like your dentist costs you a lot of money or whatever, but putting money on credit should grieve your soul. Ernie bought two microphones and had to put it on his credit card briefly and he went straight to work paying it off as fast as possible because he doesn’t want to carry a credit card balance for any longer than he needs to.
FOUR // Figure out what motivates you.
When I do my debt repayment recaps, I focus less on the dollar amount I put towards my debt and instead focus on the percentages. For me this works because even paying the exact same amount of money each month will slowly increase the percentage I’m paying off. An example.
The $400 car payment decreases my $20,000 car loan by 2%. Four months later when I pay $400 on an $18,400 loan, that is 2.17% of my payment. As the debt decreases, my normal payment puts a bigger dent in what’s left. As I free up more of my money by adhering to #2 up there, I’m able to do more than just the normal payment, because I can take what I was paying on other things and keep utilizing it even when it’s freed up from a certain payment. Â That motivates me, and it even weirdly gets me excited to speed up the process. Next week I’ll give you a very clear example of this.
FIVE // Don’t completely deny yourself.
Wow, it kind of sounds like I’m writing about a diet plan or something, doesn’t it?
The point is; this is all about shifting your mindset. If you become masochistic about it, you’ll end up binging. It’s like “eat the cookie if you want it, just don’t eat the whole cake.”
For example… Kristen got me a really super cute Kate Spade pencil pouch for Christmas. and I have NEVER done this, but I left it on an airplane. I filed a lost item report with Southwest and everything. Obviously it’s the cutest thing ever but so much of why I was sad was because it always made me think of Kristen. So when I was at Papyrus and saw it, I picked it up and hugged it and said “you are mine.” I didn’t think twice about the money I was spending, because I knew at that moment that replacing it transcended the financial cost of it. If I’d stood there debating or justifying it or anything, I think I would have been so frustrated. But because I don’t walk around dropping money on anything I think looks cute, I didn’t have to worry too much.
Eat the cookie. Don’t eat the whole cake.Â
Okay this makes me want to only use my money to put into savings and for essentials (and non-tangible things like date nights and such)…and also throw more money at my student loans. I think since I just spent more than I normally do on the Nordstrom Sale (and now reading this) I’m definitely going to be more strict with my money. Just no shopping bans. Because we know how that turns out for me.
NO JOKE, i thought about you when i was writing this post! maybe you should just push yourself to tackle your student loans a little bit more, and put some money in savings and then let yourself be a little more free with what you have? it’s SO HARD to shift your mindset, so don’t be too hard on yourself.
This is so, so good and inspiring!! I’m going to text you my most exciting email I’ve gotten in awhile – a really old credit card of mine that’s finally at a lower balance!
YAY! i’m so proud of you + excited for you!! light at the end of the tunnel!
The are great! If you know that you can pay everything off that you put on a credit card, it can be a really great way to earn points and free travels. My hubby and I are flying to Europe for free because we paid our bills!
absolutely! I cannot wait to be at that point! Right now I’m trying not to spend much AT ALL and i’ve not really gotten into the habit of buying on credit + paying off immediately, but i can’t wait to do that and get free flights soon!!! ;D
There is so much wisdom in understand that money is not a treasure but a tool! I love this idea. Your advice works. I know because I’ve learned it firsthand. Figuring out what motivates you (and setting goals) is so important to success. When I am tempted to spend money I probably shouldn’t, I ask myself what is more important; the thing I want to buy or the goal I want to reach. 9 out of 10 times, I’ll choose the dream over the impulse purchase. Thanks for sharing your wisdom!
hi heather!! thanks for the comment! you know what i do? if i was going to spend money on something i don’t need… i then go and make a payment on my credit for that amount. once i was looking at a pair of yoga leggings that were ‘on sale’ for $27 and thought “wait, if i’m willing to spend $27 on something i absolutely don’t need, why don’t i spend that $27 to help me be freed from my debt?” so i did. i felt so much more in control of my finances than ever! and i felt like a grown up, haha. 🙂
Such good advice!!! We’re trying to stay the course of being out of debt as much as possible…….but we always have a credit card balance and our house will be paid off when I’m like 55 years old and mostly gray (bc people in their mid50s have almost all gray, right??). But the whole idea of not spending extra, tracking your spending habits, and paying stuff off quick is definitely the way to go!
and now a baby!! life happens. i think as long as you’re being as responsible as you can be in any moment, that’s what matters the most, you know?
Haha exactly, a brand new expense (but adorable expense!). 😉 and about responsibility, I totally agree!!! Although the whole attitude of responsibility is something I become a Pharisee about. (Just this morning I took the speck out of my husband’s eye because he wasn’t including his iced coffee purchases in his portion of Fun Money for the month.)
Angiehttp://www.godsgrowinggarden.com/2015/07/time-to-link-up-tuesdays-with-twist-119.html
Angie
Angie
Oops – I’m sorry – the entire message did not show up below – this is what I meant to say:
This wonderful post is being featured on my blog today as part of Tuesdays with a Twist: http://www.godsgrowinggarden.com/2015/07/time-to-link-up-tuesdays-with-twist-119.html
(sorry about that – hahaha)
You have some great points and advice and I appreciate you sharing it with us at Good Morning Mondays. Blessings
This is fantastic! I especially like the first and last point. This year has been one for changing my perspective on money for sure. I definitely could benefit from adopting some of these ways of thinking. Thanks for sharing them with the Wednesday Showcase!
Such great advice! It really starts with changing your mindset and then it all goes from there! Focusing efforts on one financial goal can help you tackle it more quickly, which can be very motivating! Love it!
I definitely make a few purchases just for the sheer joy of the item. I will once in a while fall in love with a new dress or pair of shoes and i ask myself the question, “Will I regret it for the rest of my life if I don’t buy this item?” if the answer is yes, I will regret it, then I buy the item. (I’m very dramatic).
We try to do a lot of saving in advance and doing without an item until we have enough to buy it outright. (this works for purchases…emergency or medical stuff is a different ball game of course). We’re having a ridiculously expensive month since we just moved–we just bought a car, and will need to spring for a new point-and-shoot camera (because my battery in my 5-6 year old hand-me-down is holding a charge for approximately long enough to take 5 pictures…why???) and a computer and a phone (because everyone is finding it inconvenient that my husband and I share a phone…but I don’t find it inconvenient at all. ha!)
It’s a little overwhelming, but thankfully, we spent the entire last year buying almost nothing other than groceries since we knew we’d have this expensive season coming up–it’s nice when you know in advance that you plan to buy big stuff someday!