Let’s Talk About Money
Ever wonder where all of your hard earned money goes after pay day? Do you often fantasize about financial freedom but have trouble escaping the shackles of DEBT? Do you take pride in looking rich while truthfully being BROKE ASS? If you answered “yes” to any of the questions above, you should seriously consider taking control of your finances today!
According to the “Habit Formation and Learning in Young Children” study, a child learns their spending habits by the young age of seven years old. Think back to all of those toy commercials on Nick Jr. that had you screaming “Mommy, I NEED that toy!!!”. Today, an average child will accumulate 238 toys by the time they are 10 years old, but only play with about 12 of them. Meanwhile, roughly 1 in 5 children in the United States are living without a roof over their head.
Poor Education: We never stood a chance…How in the world can an adult understand the importance of saving money after being brainwashed for decades to spend it all on BS? The sad reality is that we live in a country oozing with greed and ultimate deceit. Not only does our educational system make most kids afraid of numbers, but they don’t even bother offering a class teaching the basic fundamentals of personal finance.
Society pollutes the airways with “BUY NOW” and “MAKE IT RAIN” while only 1% of our nation actually follows these 3 rules for financial success:
Make more money than you spend
Invest the difference
Understand where you are and where the money is going
Price vs Value: How can a broke surfer dude living on just enough money to handle shelter and 2 meals a day be happier than an Atlanta house wife who sits on a 24k golden toilet? Simple, money doesn’t define happiness. It gets tricky though, if money doesn’t buy happiness then how come we feel happy when we buy stuff? To find the answer to this question we have to understand what fake happiness is versus real happiness. One is temporary and often used as a front, while the other is permanent and abundant.
Without a doubt the entire entertainment industry is responsible for some of the worst brainwashing to date. Who grew up watching TV thinking “Man, I can’t wait to be RICH so I can spend it all on X,Y, and Z? Truthfully speaking, a huge part of measuring success in the United States is done by tallying up how much stuff we own. If you compare our spending culture to other parts of the world, the amount of things belonging to each person is extremely excessive. We waste our hard earned cash AND our borrowed money on depreciating values such as sneakers, clothes, electronics, alcohol, albums, concert tickets, cosmetics, cars, take-out food, fake jewlery, tattoos, weave, etc. We do this without thinking twice because we are programmed. We are taught the price of things rather then the value of them, and in turn we worship other peoples creations rather then creating our very own.
“It isn’t what you earn but how you spend it that fixes your class.” ― Sinclair Lewis
Unless you had the luxury of growing up in a financially savvy home where creating a budget was taught by your parents, you might not know where to start. Despite the lack of education, each individual’s financial health all depends on a well thought out strategy. I think we can all agree that one needs motivation, structure, and discipline to overcome any major obstacle in life. Waiting around for that fat to magically disappear off your body without changing your diet or hitting the gym will not work. Ignoring a problem now will only bring disaster in the near future. In order to make a change of any sort you must first admit you have a problem, and secondly take action. With that being said, whip out your pen and pad folks cause we’re about to get deep! Allow me to explain the 6 fundamentals of creating a solid budget.
1. Check Your Credit Report
Before you begin a proper budget it is crucial that you know exactly where your credit stands. Even if you’ve never owned a credit card, don’t have student loans, are not the owner of your vehicle, or have never opened up an account in your name, it is STILL important to run your credit report every year. Why you ask? People are SHADY that’s why. I can’t tell you how many times I’ve heard of someone suffering from identify theft. Their biggest regret? Not checking their credit report sooner. Don’t be that guy! The Fair Credit Reporting Act (FCRA) requires each of the three nationwide credit reporting companies (Experian, Transunion, and Equifax) to provide you with a FREE copy of your credit report once every 12 months.
What’s On Your Credit Report?
Identifying Information: Your name, address, Social Security number, date of birth and employment information.
Trade Lines: Your credit accounts. All lenders report on every account you’ve established with them such as an auto loan, bankcard, mortgage, etc.
Credit Inquiries: When you apply for a loan you are authorizing a specfic lender to receive a copy of your credit report. The inquiries section contains a list of everyone who accessed your credit report within the last two years.
Public Record and Collections: Credit reporting agencies collect public record information from state and county courts. Public record information includes bankruptcies, foreclosures, tax liens (failure to pay your taxes) and civil judgments (debt you owe through the courts as a result of a lawsuit). Information on overdue debt from collection agencies is also included.
2. Figure Out Your Net Worth
A net worth statement is simply a personal balance sheet showing where you stand financially. It provides a summary of your assets minus your liabilities. Said in another way, your personal net worth is calculated by listing everything that you own, and then subtracting that from everything you owe to get a net number.
Assets vs. Liabilities
Assets: Things that create cash-flow directly to your pocket. It’s something that gives you money.
Examples: Income generating properties such as cash, stocks & bonds, property, jewelry, and equipment.
Liabilities: Things that take money out of your pocket. These are things that you need to pay for, things that you owe, and things that you need to buy.
Examples: Your car, student loans, house, clothes, gym membership, cable tv, car insurance, cell phone bill, etc.
So How Much Do You Owe?
The first step in calculating your net worth is to gather all the necessary financial documents including your recent bank and loan statements. Once you have all the required information, visit the Net Worth Calculator and start the calculation by listing all of your assets with their values. Once you’ve received the dollar amount of which you owe, you should work out a plan to pay off your debt. Which ever obligation has the highest interest rate, pay this off first while making the minimum payments on your other accounts. If you have student loans, you may want to be on an income-contingent repayment plan. Call your student loan servicer an explain your situation in order to find the best option for you. Keep in mind that there is such a thing as federal student loan forgiveness. 😉
3. Organize Your Finances
They say you can’t know where you’re going until you know where you’ve been. Well gosh darn it I’ve been broke and sure as hell ain’t going back! Fact: The people who remain wealthy in this world constantly stalk their finances. Label me weird but I seriously get a high every time I pay a bill ahead of time, check my checking/savings account, and view my investment portfolio. In order to keep tabs on your finances, I strongly recommend downloading these free Apps below. Each one is a true game changer, get use to opening them up on the regular. 😉
Mint Bills is an award-winning app that stays on top of your bills and money for you. Just set it up once and the app goes to work – proactively staying on top of your bills and monitoring your bank accounts and credit cards, all in one place.
Daily Budget is a clean and easy budget app that also helps you save money and is actually fun to use!
Once you enter in all of your reoccurring expenses, the app will give you a daily allowance on what you’re allowed to spend before seeing red!
Free .XLS Budgeting Templates
4. Negotiate Your Life
One day after listening to an episode of the Tim Ferris Show I decided it was time to ask for my money back. How so? Through the power of NEGOTIATION. First up was attacking my ridiculous car insurance rate. From the car accident I was involved in late 2015, my insurance policy went up to a whopping $335 per month! Why was I so content in paying this absurd rate for 18 months? It was because I had no idea I could negotiate such a service. Action: With a ton of confidence and politeness I made two 5 minute phone calls, one to my current provider, and another to a competitor. The results? I am now currently saving $1,718 a year on car insurance! After crying tears of joy I was excited to continue this effective process. Next on the list was my cell phone bill. I called T-mobile and asked if there was anyway we could lower my monthly bill down from $110.76. This was “due to hard times“. The lady over the phone was nice and even expressed sympathy for my situation. In under 5 minutes my new rate was $97.50! After completing this identical process for all of my bills, credit cards, and loans, I was on a high. I called up my Bro and asked if I could negotiate his bills for him. Due to the shocking results we received we decided it was time to spread the word. You a reading this paragraph today because I learned first-hand just how powerful negotiating can be! This skill is everything when it comes to respecting your worth, time, and money. Take control of what’s rightfully yours today! Click here to read from the exact same negotiating scripts ya girl used. Big shout out to Ramit Sethi!
5. Shop Smart
If you are going to make a purchase of any sort, it is imperative that you spend the least amount of money doing so. This doesn’t necessarily mean you have to take up coupon cutting as a new hobby. Costco is awesome if you’re buying things in bulk such as water and toiletries. Aldi is absolute LIFE when it comes to the best deals on groceries. Your local dollar store is great for dish soap, sponges, toothpaste, cleaning supplies, etc. The more minimalistic you live, the more money you will start to see in your bank account. Lucky for us there are plenty of Apps and websites out here dedicated to helping us save. Ever since I adopted the discount lifestyle, I roughly save about $235 a month! Checkout the list below and save big time.
Get $10 for FREE here after downloading Ibotta! This app is my baby! They save you cash on things you buy everyday by having you scan your products barcode and your grocery receipt. It’s simple to use whether you’re buying groceries, shopping, dining out, or even using your favorite apps.
Get another $10 for FREE here when you sign up with Ebates! I no longer purchase anything online without going through Ebates first. Why you ask? You can earn up to 40% Cash Back when you shop at your favorite stores such as eBay, Bed Bath & Beyond, Nordstrom, Sephora, JCPenney, Home Depot, Walmart, GNC, Macy’s, Office Depot, Overstock, Under Armour, Walgreens and many more.
Boy oh boy did I use this app religiously while driving Lyft in the expensive streets of San Francisco! With GasBuddy you can find the cheapest gas near you, search gas stations by distance or price, report gas prices to help others find cheap gas, and earn points and achievements for participating. You can also enter to win $100 in free gas every day!
If you don’t have a car but want to shop for bulk items like detergent and paper towels, Amazon Subscribe&Save is legit as ever! I recommend this for the average college student because the annual fee of Amazon PrimeStudent is free.99!
College kids where ya at? Sign up with Amazon Prime to get free two-day shipping, unlimited access to over a thousand audio books, original audio series from Audible, and instant access to thousands of movies and TV shows at no additional cost.
6. Automate Your Savings
People who make a habit of living paycheck to paycheck will spend their entire life throwing away money instead of saving it. Why? Simply because they lack structure and discipline. In order to stay ahead of the game you have to think about the “what if’s” in life. In order to prepare for the worst, experts suggest saving 36 months of living expenses. What’s the easiest way to achieve this number? By enrolling in a free automatic savings account! Furthermore, having a savings account separate from your checking account will eliminate the temptation of transferring on a regular basis. I strongly recommend downloading the Digit app. Within the first month of signing up I saved $300 bucks without lifting a finger!
How Digit Works
Every day Digit sends you a friendly text on the exact balance of your checking account. After checking your spending habits, they automatically transfer a few dollars from your checking account to your savings account. You have complete access to your savings and can withdraw the funds at anytime in case of an emergency. It’s also free for the 100 days, and just $2.99/month afterwards so sign up today!
Well, there you have it! Financial freedom starts with knowing exactly where your money is coming from and where you plan to take it. After recieveing your free credit report, you can figure out your net worth and organize your finances. By negotiating every single bill you have (including your credit card APR) and adopting the shop smart mentality, you will start to see hundreds of dollars appear out of nowhere. This extra cash can be used to pay back your debt as well as funnel into your automatic savings account.
Sometimes it takes a devastating wakeup call to knock us out of a vicious cycle of financial turmoil. It did for me anyhow…After spending the majority of my life wasting thousands of dollars on meaningless swag, I finally realized that I was playing into societies twisted game of morbid consumerism. Who did I learn my spending habits from you ask? It was my beloved mother who taught me at an early age how to spend money without a conscious. This should come as no surprise considering that the average woman makes 301 trips to the store annually, spending close to 8.5 years shopping during a typical lifespan (NY Daily News). However, as an adult in my mid-twenties, no longer could I use the excuse of my mothers shopaholic upbringing as my own financial downfall.
Two years ago I got myself into over $4,000 of credit card debt while living the hollywood lifestyle. That “fake it till you make” saying was engrained deep within let me tell ya! Once I cleared my debt after moving back home I vowed to NEVER put myself in such an unhealthy state again. After doing a lot of reading I had set a goal to pay back my student loans in full and buy my first house by the time I turned 28. In order to achieve this goal I had to not only increase the amount of money I was making, but most importantly decrease the amount I was spending. After completing my research on how to be a financial success, I became extremely inspired! It wasn’t enough for me to share my finding with just my friends and family, hence the reason why you’re reading this blog today. I decided to make it my duty to help kids and young adults around the world reach financial success just as I did. After you get your budget straightened out you can next move on to the really exciting part…making your first 6 figures! In closing, I leave you with these words of wisdom:
“The best years of your life are the ones in which you decide your problems are your own. You do not blame them on your mother, the ecology, or the president. You realize that you control your own destiny.” – Albert Ellis
PS: Before leaving to start on your budget, checkout this mind-blowing Ted Talk titled “Consumer Kids” by Agnes Nairn.
Wishing you success and happiness,