As the new year rolled around, my husband and I were struck by the reality that our financial situation was in need of a serious makeover. We’re in debt over the holidays and it feels like we’re standing still. Every month we find ourselves just barely getting by and adding a little bit to our ever-growing debt. With the pandemic, economic instability, The price of gasoline, food, and overall adult and other survival necessities are rising, and we feel an overall sense of unease and instability. Little do we realize that not only are we feeling this instability economically, but it is seeping into every aspect of our lives. Sound familiar?
Financial stress can have many negative effects on your life, from mood swings to difficulty making decisions, sleep problems, and the list goes on. I don’t know about you, but that’s not the way to live. I decided to find someone to help us get back on track.that’s when we reach out Katie Almstrom, a local financial coach. At first, it felt like added stress and expense, but it turned out to be one of the best choices we made this year. I know that if we don’t start making changes, we will continue to be in a deep hole of debt from which we will never be able to get out.
Getting into the financial world can be really scary at first, but the truth is, being in control of your finances can be empowering. We all work so hard every day and knowing where that money is going and being able to control how we spend it is an incredible life transformation. There will always be obstacles along the way, but I’ve learned that having an active plan to prepare for those obstacles and ways to execute them is very necessary.
With rising costs and financial uncertainty, I want to share 5 important things I’ve learned from my financial coach. Hope some of these insights help you too.
5 Things I Learned From a Financial Coach
Know your financial situation
As I’ve learned from our financial coaches, when starting to dig into your finances, it’s important to first understand what you’re earning and spending each month. Many of us don’t even know how much we spend on groceries or takeout each month. We don’t pay enough attention to automatic payments for subscriptions that we may not even use or need anymore. Using an app to track your monthly income and expenses is a great way to start making people aware of these things.
Katie suggested we use per dollar We love its simplicity and ease of use. No need to buy a subscription, just use the free version. Instead of connecting your app to your bank account, she recommends entering your expenses every few days. This will create awareness around your spending.
One of the biggest surprises that EveryDollar has given us is how much we spend on groceries each month. After a month of tracking, it was clear to us that this was an area we could work on improving. Being able to use the app to keep track of our grocery spending and budget is helpful. Some of the things we try to spend less on groceries are weekly grocery pickups. I order a week’s worth of meal plans online on Thursday nights. We stick to simple meals with only a few healthy ingredients, keeping everything simple and affordable. Grocery pickup has made me pay more attention to each item in my “shopping cart” and avoid any last-minute snap-ups.Another thing we’re doing is using thriving market Shop pricey kids’ snacks, diapers, and other monthly staples to save on these brands.
simplify, simplify, simplify
Katy is all about simplifying your finances to simplify your life. It’s amazing how true this is and how I’ve found it permeating every part of my life over the past few months. When we told Katie we were working with 5 different banks, the two of us, for all of our finances, she encouraged us to simplify the process. We now have a trusted local bank with individual, joint and savings accounts. This will take the stress out of constantly moving funds and debiting our cards while our monthly income hasn’t arrived.
Think about how you earn your income and how you pay for it? Can you simplify this process to make your life easier each month?
control your debt
When we first met Katie, one of our biggest concerns was our credit card debt. Katie was quick to reassure us, telling us that yes, the credit card debt is not huge, but we can get 100% of it and pay it off in a few years. But only if we develop a plan and execute on that plan.So after checking a few different options, she suggested that we use nerd wallet Found a credit card to transfer our debt at 0% APR for the first 18+ months. We don’t know to what extent the rising APR is preventing us from paying off our credit cards. Unfortunately, credit cards can be an incredibly slippery slope, and it’s nearly impossible to get off of it. By transferring our debt and committing to monthly payments, we are on track to pay off our debt within 18 months!
The big question to ask is what does your credit card serve you? If you say it’s for emergencies but you use it regularly, make sure you’re being careful with your spending. Credit cards trick us into thinking we have how much money we have, and therefore how much we can spend.
Planning for the future is one of the best ways to stay on top of your finances. Instead of being reactive and stressed when a major financial “surprise” arises, you are prepared and have the reserves to execute. Katie calls this type of savings account a “sinking fund.” The funds are used to cover unexpected car expenses (which is always expected, especially living in Vermont where cars are badly damaged), home improvement projects, vet appointments, gas bills, and more. If you set aside a certain amount of money to fund this each month, you’ll provide yourself with a safety net dedicated to these unexpected but expected expenses that aren’t yet included in your monthly budget.
Another way to plan for the future is to consider your upcoming expenses. Maybe you’re planning a project at home this spring or summer, or need to buy a new car. Start setting aside money each month for these projects and future expenses. You can track your “sinking fund” money in an Excel spreadsheet. Be careful with your money and what you do with it. Maybe you decide to take extra shifts at work, and the money will go towards a stone patio project this summer. Or maybe you sold the bedroom furniture in your home and used the profits to convert the space into an office.
Reflect on your work, income and goals
One of my biggest takeaways from working with Katy is that we have more control over how much we make and how we make it than we think. This goes well beyond jobs and income, to how we really live our lives. We get so caught up in our routine that we forget that we have options and can reroute if things don’t work for us.
Consider how much money you make and whether it is enough to live the life you want. You should not only think about the money you make, but whether it fits with your passions, goals, and priorities. Is there another way to make the same or more money, but with less stress? Or are you willing to make less money and prioritize work that feels more authentic and true to who you are and who you want to be? Don’t underestimate yourself, opportunities abound and you deserve to be happy and fulfilled in all areas of your life!
Do you have any helpful budgeting tips? Let us know in the comments below.
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