Debt is a noose

I feel like the topic of money and savings is especially needed right now as Christmas is not too far around the corner.  I want to discuss the importance of putting a set amount of money aside each month and living within your means. I’m fortunate because my Mom taught me a lot about money growing up.  I also learned a lot about money growing up that I knew I didn’t want to do when I was older!

My family didn’t have a lot of money growing up.  My sister and I had to share a bedroom, and we had a very small house for a family of 5.  I used to get so frustrated sharing a room with my sister because she was such a messy and disorganized person.  I used to think about how great it would be to move out and buy a house when I was older so I could have plenty of space.   I also remember asking my mom for toys, clothes, or CDs growing up and her response was mainly “When you are older and get a job you can buy it for yourself!” We were still fortunate enough though that all of our bills were paid, we had food, and my parents were still able to put money aside for emergencies, Christmas and birthday presents.  However, growing up like this I always told myself that I needed to go to college and get a good paying job when i was older so that I could buy whatever I wanted. I also learned the value of money and how to save.

I was out to dinner last night with two girlfriends and we all ended up on the topic of money somehow and I was sharing about my retirement and savings and that I make those a priority.  I had a look of shock from my one friend who seemed very impressed by the fact I took a portion of my paycheck every month to put into savings. It reminded me of the fact that not everyone grew up with financial skills and that many people live paycheck to paycheck.  It also reminded me of several other friends that would go into debt by putting all of their Christmas gifts on credit cards in hopes to pay them off at a later time.

I want to give you a few pieces of financial advice as we head into the Christmas season and also as rules to live by in the future.  

No matter how much you get paid you will always learn to spend everything you have unless you choose to put money aside BEFORE you buy anything.  

I’ve saved money pretty much all of my life since I was 15 and had my first job. I saved money when I shared an apartment with three roommates on a graduate student stipend.  It’s possible to do. I have auto debits scheduled every month that move money from my checking account to my savings account, so I don’t even have to think about it. I save 10% of my salary and I also contribute a good amount to my retirement fund through work.  It’s never too early to plan for your future. I’ve read some really awful statistics about how most Americans don’t even have a savings and/or have less than $1000 in savings. Having money set aside gives you peace of mind in case an emergency happens, someone loses a job, or you have an unexpected expenses.  This point brings me to my next suggestion.

Live within your means!  

What does that mean? It means don’t rent the most expensive apartment, don’t buy the house that puts you at the top of your loan borrowing limit, and cut out unnecessary purchases!  As a part-time realtor, I especially learned that many people will try to buy the most expensive house that they are pre-approved for. Then you have absolutely no wiggle room at all if something unexpected happens.  That leads many people down the bumpy foreclosure road. When my husband and I were buying a house, we made sure that if one of us lost our job, we would still be able to pay the mortgage on just one salary. As a homeowner now, there are sooooo many other expenses to also consider.  We had to buy lawn equipment, pay for septic maintenance, have the fireplace fixed, purchase a dryer, etc. When I knew we were closing on the house soon, I cancelled several memberships that I had (spotify, hulu, massage envy, etc) because I knew we would have home upkeep expenses every month.  So, when you are looking for an apartment or a home, I’ve read it’s best to spend no more than 25% of your salary for housing costs.  Personally, it’s best to keep it even lower than that if it all possible.

Pay off your debt as soon as possible.  

Many people I know have student loans, credit card debt, car payments, etc.  Having debt is like having a noose around your neck. It feels suffocating! My advice is to pay more than the minimum every month to decrease the interest you are paying over time.  I only use credit cards now if I know I will pay it off within the month OR if there is a special no interest time period in which I can pay off an item (this is especially great for big home purchases – like using a Lowe’s or Home Depot card).   I use my credit card to get airline miles but I make sure I pay it before the due date so that I am not paying extra for interest. If you know you can’t afford to pay something off before you start paying interest on a credit card, ask yourself if you even need it!  This goes for buying Christmas presents!

Stop going into debt over a holiday that is meant to be peaceful and happy.

Hustle.  

My last suggestion is to always hustle and always look for ways to bring in extra income.  I lost my job a few summers ago and I did everything I could do to make up for my lost salary.  That included dog sitting at my home, getting my real estate license to sell houses, and being a contract editor for a scientific editing company.  I didn’t sit at home just waiting for an opportunity to smack me in the face, I hustled and did what I had to do to keep up my share of the bills. I still currently still dog sit as a way to make a little extra income.  

 

I would love to hear your thoughts on financial wisdom!

Advertisements