Sunday, August 23, 2015

Bad Habits

I'm continuing to keep busy with work and earning extra income. And when I say busy, I mean I've been working a minimum of 2-3 jobs every day. Between dog sitting, resume writing, and helping out at our office's front desk, my work is paying off. 

I'll have a separate post on my latest goals soon but for now, know that I'm currently working to save $6,000. In the past few weeks I've been able to get my savings up to $2,000 so I'm ahead of schedule to hit my goal by December 1st. 

But I realize that it is still my habit to spend too much money. For example, as I was working the front desk today, I hadn't brought my lunch. My first instinct was to have Jimmy John's delivered. With tip, that's $10. The more I thought about it, the more I realized I had everything in the fridge to make the same kind of sandwich at no additional expense.

2 weeks ago I brought sandwich fixings for my daily lunches. I had some bread and mayo remaining that I kept at my desk. Then for book club last week I made these yummy sliders that left me with some extra ham and swiss. Voila! 

It frustrates me that this wasn't obvious to me from the start. Using what I have rather than buying more and eventually throwing away the food that would have gone bad. It's habits like this that are keeping me in debt. But I'm aware of it and am working on this. 

It doesn't matter how many jobs I have or how much extra income I bring in if I don't control my spending. This isn't anything new and I just have to be more mindful on every single purchase I want to make. 

I'm starting the Mindful Budgeting tracker today so I have to think about it each time I make a purchase. Before I write it down, I'll ask myself if I already have something that would make do. It will take some extra effort until it becomes a habit but I look forward to seeing the results! 

Wednesday, August 19, 2015

Conditioning

I was on a resume call with a client last week and we were talking about his volunteer experience. As he described his responsibilities as a soccer coach, he mentioned team building, game strategy and conditioning. Now, I grew up playing basketball and have done plenty of conditioning drills. Have you ever had to do a killer? Offta!

Anyway, despite the concept of conditioning being an old term for me, it gave me an ah ha moment. As you work towards a goal of better fitness, you don't just start off that way. You have to work hard at it with smaller exercises until you become stronger and faster. As your strength grows, you are more capable of doing harder work more easily. I'm sure you can see where this is going...

The same is true for money habits.

You don't just wake up one day and stop spending money. Habits don't break easily and you can't just wish yourself into great financial shape. You have to do smaller exercises daily and rigorously so you can take on the bigger challenges more easily.

As I'm trying harder to live within my means, I find it's easy to be lazy. It's so easy and comfortable to lay on the couch or be able to buy whatever you want when you want it. But if you want to be successful, it takes a lot of hard work and conditioning.

I realize how obvious this sounds but somehow it registers with me. I used to compare my budget to a diet. Cut calories, lose pounds. Cut spending, lose debt. But it felt restricting and like most diets, temporary and unmanageable.

Conditioning, however, makes me feel stronger and productive. I'm building up to be in great financial shape. Who wouldn't want that? Yes, it's hard work but it's the only way to beat the other team (or my financial struggles in this case). When I think of taking the time to meal plan to avoid eating out, I think of it like doing a killer in basketball. Sure, we all complained when we had to do them because it's painful and exhausting. But how great did it feel to win our next game? We couldn't have done that if we had just been lazy.

Now of course there's a line between conditioning and pushing yourself too far. It can cause injuries and burnout. Trust me, I work 5 jobs at the moment so I know the feeling. I'm trying to find a good balance of really getting the most of my working hours and the money I make, while still maintaining some fun and relaxation time. If I wanted to, I could work 24/7. And some days, like when I'm dog sitting, I actually do.

You know when you go to the gym and workout way harder than you have in a long time? The next day or two or three you're so sore you don't want to go back to the gym, right? Then you lose momentum and all the hard work from day 1 is gone. I'm trying to avoid feeling like that while still building as much muscle (savings) as I can. So I have to remind myself that it's ok to take breaks or I'll become lazy again.

When I wear myself out with working too much, I go out to eat too often due to exhaustion. Or I feel like I can afford to splurge on things when the point of all that work is to pay off debt, not add more.

I'm still trying to find a good balance because right now, I really do go in spurts. I want to find that sweet spot of bringing in extra income and not being so exhausted that I spend it outside of my priorities. It's a tough spot that many people deal with, athletes and clueless cash carriers alike. But I'm aware of it and I can use the conditioning mindset to push me when I'd rather lay on the couch.

Monday, August 10, 2015

Contentment

Recently I heard "Debt is a sign of discontentment." And of course it struck a chord with me. I grew up with parents in debt constantly. Big mortgages, car payments, and LOTS of credit card debt. In addition to the debt, I was regularly reminded that we still couldn't keep up with the Joneses. We never had "enough" and money was always tight.

I carried that mindset for a long time because I didn't realize there was another way to think. The more I learned from people who weren't in debt, it was still a hard habit to break, especially when I felt so behind in both income and debt payments.

But hearing "Debt is a sign of discontentment" explained so much to me. It wasn't a numbers game anymore. It was personal. Mental and emotional discontentment has spurred so many trips to Target or the mall or Amazon.com. So it didn't matter how many jobs I worked to get out of debt, I was always going to stay in debt if I was discontent about areas of my life.

I felt a shift in mindset when I listened to Dave Ramsey speak those words on his radio show. What would it take for me to be content? Oftentimes I had what I NEEDED but I still wasn't where I wanted to be so I would spend to fill the gap. And sometimes what I was missing wasn't material, yet I'd go shopping to fill the void. It ended up being counter-productive and set me back with credit card debt.

I got a new job in July and that came with a new paycheck that provides the cushion I needed to live within my means.

And the more I focus on the mindset of having what I need, I am finding several ways to make sure that my life fits into my paycheck, rather than trying to expand my paycheck to fit into my life. 

Now every day I remind myself that I have everything I need and a lot of what I want. Life is far from perfect but I am very fortunate and spending more than I have is not going to make me more fortunate.

Friday, August 7, 2015

Subtle Changes

I mentioned in my last post that not much has changed financially in the past 8 months. However, the reason I'm back to blogging is because my motivations have changed and I don't want to discount the small steps I've taken so far.

1. I shrunk my wardrobe. And I haven't wanted to replace it. 

My new closet is small. Like really tiny. And I have always had a lot of clothes and always enjoyed buying more. Not a great combination. Eventually it wasn't fun anymore and making simple decisions on what to wear each day were exhausting. Keeping up with laundry, putting away clothes and maintaining a clean room was nearly impossible. And that's not what I want to be spending my time and energy on either. So I noticed a shift in my priorities. While I haven't gone to the extremes of Steve Jobs or Gary Keller who only wear/wore black, I have some simple go-to outfits that I rotate, mix in a few fun/colorful pieces and voila. I really don't need more than that and I don't have the time or money to invest in clothes anymore. Seriously, that's a big deal.

2. I adjusted my eating habits.

Food is another category that I always seem to overspend on. Living in Minneapolis and having a healthy group of friends that love to eat can really add up. The list of delicious restaurants to try is endless and it's so easy to meet up for brunch, dinner and drinks. While that is fun, it usually ends up eating my food budget. On top of that, I have used take-out as an excuse for busy days where I'm working multiple jobs or on stressful days where I'm too tired to cook or I want Chipotle to make me feel better. But it finally occurred to me that I can't do both. Obviously. If I want to join my coworkers for lunch, I can't also go out to dinner. If I plan on doing brunch on the weekend, I should make a cheap dinner at home a few nights that week to balance it out.

I'm currently on a 66-Day challenge to bring my lunch to work so it becomes a habit. And I passed up take-out for egg sandwiches for dinner last night. Thanks to a dog sitting gig, I'm actually coming in way under budget this pay period. Normally I would use that as an excuse to splurge on takeout or blow the money on something else or even transfer it to savings. But I'm realizing that I can just leave the money there to use on a particularly pricey food week. There will be weeks of birthday dinners and special occasion brunches where I'll go over budget and rolling over money will allow for that when necessary. It finally sunk in that I can leave that money there for the future. It won't disappear if I don't use it. Novel concept, I know.

3. On a similar note, I became more patient.

Not only did I realize that my food budget didn't have a 2-week expiration date when the pay period ended, my extra income didn't either. If I earn extra income, it can sit in my bank account until I decided what to do with it. I was always eager to put any extra money towards something the minute it touched my bank account. Understandably, I didn't trust myself to leave money hanging out because I would justify a way to spend it on things I shouldn't. I'm really good at justifying any and everything. However, I started bringing in extra income from several sources and it was hard to tell it where to go. I didn't know if I should save or pay down debt or a combination of both. I didn't have a goal in place or a plan to work towards it. But that wasn't stopping my side hustle.

So I let it sit. And guess what? It's still there. Not only did that help me establish some trust with myself but it has given me some time to really think about a game plan. I can think through my options and eventually put that money towards whatever will help me reach my goals fastest. I have always struggled with patience so it's exciting to see there might actually be hope for me after all!

It's the principle of not accommodating every whim. If I wanted a new outfit or a meal I've been craving, it always trumped logic. I caved every time, even if I didn't have the finances to back it up. But now I have learned to use my justifying skills to my advantage. When my brain starts to dream about how great Chipotle would be or how nice it would be have new shoes, I can justify why I don't need it. I can argue with myself and eventually convince myself that I don't need the immediate reward. Now, that doesn't mean to deprive myself. It just means to really weigh the decision before swiping that card. 90% of the time, it's something I don't really need to get and a more affordable option will be just as good.

These changes seem obvious and minor, but to me they're huge. I work too hard to frivolously spend my money on food and clothes I don't need. I've spent thousands of dollars on excessive food and clothes and it kills me to think of the different financial spot I'd be in now if I had learned to tell myself no earlier. Now I'm singing a new tune...I can't wait to see what the long-term payoff of these changes will make.


Thursday, August 6, 2015

Motivation Is A Funny Thing

I let 8 months go by without blogging. And guess what? You haven't missed much. Sure, life continues to have a lot going on and in typical Katie fashion I continue to make huge changes on the regular. But when it comes to finances, I don't have anything exciting to show for my blogging absence. I wish I could tell you that I won the lottery in January and had no need to worry about money anymore. But honestly, I just got sick of writing about financial stress and stupid mistakes that kept me there. Every post started to feel the same year after year and I needed a break. 

Quick recap: 
  • I still write resumes as a side job and it continues to have growth. 
  • The salary I'm making is very comparable to what I was making so that part is still pretty much the same.
  • I still have a bit of credit card debt. However, it's on a 0% interest credit card for now. 
  • My student loans and car loans are still very much there and still annoying. 
  • I still babysit and dogsit and wear myself out with side jobs. 
  • I still spend too much and save too little. 

What's new:
  • I got my real estate license and joined a real estate team. I'm working on a salary and saving my money until I can build a savings to switch to a commission only position. The income potential is very exciting and scary. 
  • I moved to the other side of my duplex with people I don't know. The rent went up only slightly, which is still a good deal for this area. However, I don't recommend moving in with people blindly. I signed a year lease and can't leave until May. 
  • I recently started listening to Dave Ramsey's podcasts from his radio show. Not only do I learn more about financial situations, it keeps smart advice in the front of my mind. 
  • I started reading The Financial Diet blog and it feels like such a smart community of financially like-minded women and it helps me realize I'm not alone with my mistakes. 
  • I very rarely use credit cards anymore and I'm getting much better at not buying things I don't need. There's a LONG way to go here but I have noticed a decent change. 
  • I've always been one to work a lot of hours. I'll pick up odd side jobs and work as many shifts as possible all to throw that money away on stuff I probably don't need. Then on Tuesday I read Bridget's article and it shifted things around for me. I work too hard to be dumb with my money. 

So why am I back to blogging? My motivation is back. My financial situation has become dire enough that I have no choice but to change. My posts are finally going to show some results.  

When I turned 27 in June, I looked at my finances and realized I'm way too old to be making these dumb decisions. I have no one else to blame but me and I'm the only one that can get me out of this mess. It's time to grow up and it's about to happen in a big way. 

Monday, January 5, 2015

What would you do?

Now that my credit cards are paid off, a new question has popped into my head and I'm looking for advice.

I currently rent a room in a duplex with 2 other roommates. The location is great and the rent is roughly $500, which is fairly cheap for this area. Our lease is up at the end of April, both roommates are moving out and I find myself at a crossroads.

Do I use these next few months to save for a downpayment and buy a house? The housing market is still good and interest rates will only be getting higher by next year. I would find a 3 bedroom with 2 roommates to pay the mortgage for me. My current $500/month would go into savings/home maintenance expenses.

OR

Do I find 2 new roommates and stay where I am. Continue to pay $500/month and continue to pay off debt for at least another year? I may miss out on equity on a house and cheaper housing costs down the road but I avoid unexpected expenses that come with home ownership and I would have more time to save for a stronger down payment maybe next year.

What would you do?
December 1st Balances
Amex: $1,545.79 $0
Mastercard: $5,714.27 $3,646.73
Sallie Mae: $14,123.57 $11,451.11
Chase: $19,907.33 $19,723.04
Sallie Mae: $24,754.52


January 1st Balances
Amex: $1,545.79 $0
Mastercard: $5,714.27 $0
Sallie Mae: $14,123.57 $11,410
Chase: $19,658.65
Sallie Mae: $24,735.87



That's a total of $3686.73 this month.

Thanks to my 401K learning experience, I was able to pay off my credit cards fully, which feels great. And I won't be using those again for a very long time. However, the rest of December was a wash and if I'm being honest, I'm ok with that.

The hardest part about the challenge this month was: 
The holidays. Hands down. Between presents and holiday parties and going away parties etc, I couldn't do the spending challenge. I felt guilty about it for a while but eventually I forgave myself. It's the holidays and despite my goals, spending time with loved ones is more important than money. Sure, I could have asked to adjust plans that were more affordable, but I didn't.

Instead I soaked up time with my favorite people and was nice to myself during a challenging time. My parents moved to South Carolina on December 22nd, leaving me to be without family in my home state anymore. It was a tough transition but now I'll have a warmer place to visit.

What I learned from the challenge this month was:
I have so many people to love in my life! That probably sounds ridiculous and obvious but it's apparently something I learned. When I started the challenge, I didn't factor in holiday expenses or Christmas presents for anyone. In August I bought my family their Christmas present, a family photography session since we were all in the same state at the same time, a rare occurrence. And with that, I thought I could get away with a skimpy Christmas.






Last year at this time, I was living alone, working from home, and didn't have too many friends nearby. So this year I told myself I could skip all the hoopla and be a bit of a scrooge. I was so wrong. Since last year I now have roommates, a job full of wonderful people I love, a great book club, and an amazing group of friends. There was no way I was going to skip out on giving presents and getting into the holiday spirit with them, just because of money. I didn't go all out on anyone's present but doing something small to show I care really added up. There were Secret Santas, Favorite Thing parties, cookie exchanges, and presents for the family that took me in for Christmas after my family left. Sure, I could have skipped presents this year or found ways to make presents for cheap/free, but I didn't. None of them needed a present from me to know how much I care but I didn't want to skimp on others just because I wanted to focus on my selfish goal.


Being ok with adjusting the challenge to work for me was another great lesson. I didn't beat myself up over not saving anything extra in December. It was actually a good break for me. And now I'm ready to bounce back and get intense with my finances over the next 8 months!

The best part about the challenge this month was:
Paying off my credit cards! Seeing a $0 balance and knowing that the only debt I have is from student loans and my new car loan feels great. It was just the push I need to kick off the new year with a strong foot. And let me tell you, it's going to be a good year! 

4 months down, 8 to go!