For twenty years now I have been counseling people in #debt. Sometimes it seems those are the only people I know, but please realize, I do have friends who have never had debt. They own their cars, homes, and have never had to pay college loans. Today, reading an article about wealthy lifestyle habits, several of my friends came to mind. What set these people apart from the thousands I have counseled over the years? Sure, I’ve taught people these basics, but rarely thought about rich people as having their own spending practices. In our book, Paid In Full, we actually refer to this practice as a Lifestyle of Financial Freedom.
So, no more suspense: here is what Goal-Powered-Spending habits can get You.
Every Dollar on Purpose: Know where your money is-every penny!
Personally, as a single parent scratching my way out of poverty, I literally had to log every dollar I spent. As a director I had blocked actors saying, “Every Move On Purpose.” So, directing people in debt, I switched it to “Every Dollar on Purpose.” So first, get a Dome 12 month Bookkeeping Record book and start TODAY recording your weekly income, expenses, bank fees, taxes, snacks, and anything that exchanges from your paycheck to someone else. I discourage the use of software programs initially, especially if you need to really see where your money is going. Later, the software graphs and charts can be great incentive to watch your expenses shrink, while the profits expand.
Credit: What is your Spending Pattern and History?
Go ahead! Take a deep breath and check your #Credit Score. Our counselors will be glad to pull your credit report and do a free #Debt Analysis for you. If there are discrepancies or debts you don’t recognize, we can talk you through them and verify your credit rating. If you have delinquencies you were unaware of, plead for mercy! Explain your case and ask for a grace period or to have the creditor wave a fee one time.
For credit cards in Good Standing, ask for a better interest rate. If you were the CFO for a multi-millionaire you would pride yourself in saving every penny you could for their company. Do it for Yourself! Even your first rule for GPS is to know your starting point. Then, you can determine the #Financial path you need to improve your Financial Address.
Once you have logged your income and monthly expenses, you can establish a spreadsheet. You will know every expense and when to expect to pay it every month. You will see any extra income and how you might pay extra on a bill, or pay your savings account. I actually logged my income in pencil at $100 less per pay period. (It’s funny how you can fib to yourself and actually start believing it.) That forced me to spend less than I actually earned: a Billion Dollar secret! My Dome book made me actually SEE where my money went each week. No more Mystery Money Monster. I was the one leaking cash out of my wallet.
Shop Smart! Pay Attention, not Retail!
Whenever possible, shop & stock ahead. Except for groceries or fresh produce, I buy on-line at sale price with Free Shipping. My list is made up of what I will need the coming month. That means I am not buying under pressure. Inventory your household, especially each wardrobe, and purchase at off-season prices. You’re going to know if your kids have outgrown their sizes, or if you totally wore out clothes at the end of a season.
If you really want the latest style on something, just don’t spend money for something else ahead of time. Our book calls this “GPS-Goal-Powered-Spending.” Keep a picture posted on what you are saving to purchase. You might even start a “Special Purchase” envelope to save up for a few must haves.
When you’re purchasing on-line or at the store, always ask, “Is that the best you can do for me today?” So many times I have gotten “Secret” percentages off with my reverse sales pressure! The clerk has even given me their discount, or used an extra coupon for me.
Be polite, respectful, and expect FAVOR! Always be able to walk away if you don’t feel good about the price. Say NO to up-sales. They cause you to spend CASH ear-marked for your Special Purchase Goal. Just picture what you are saving to purchase. It’s YOUR money. You cannot spend it twice! That’s called #Debt! Just remember “Every Dollar on Purpose!”
Whether you pay into a savings account, schedule automatic payments for car, college, rent, or mortgage, think of your income as payment for valuable memories on hold. The millionaire next door to you never sees cash as “extra money.” They keep the big picture of how that cash will add to a larger investment. Having caged the impulsive-compulsive spender in their emotions, they’ve trained it to be tame, purposeful, inside a framework of time and experiences.
For instance, take your morning drive-thru cup of coffee. Yes, you deserve a $4.00 cup of pleasure to start that long, hard workday. Five days a week, 4 weeks a month, even just 10 months this year will total $800.00. If you only indulge half of those you still spend $400.00. What would you like to do or have at the end of this year that costs $400-800 dollars? Put that picture on your dashboard, and every time you start toward that drive-through, look at that picture and pay $4.00 to your Special Purchase Goal. That’s how you change your habits and improve your lifestyle. You exchange less value for better value.
Never think of bonuses, gift cards, raises as “extra money.” Think of it as pre-payment for paying off your car, cash for college, larger down payment on a dream home. If you’ve paid off your car, keep making payments to your savings. You will need another vehicle someday. Then you’ll have your trade-in plus the cash you’ve been building interest on in your savings account.
Wealthy people weigh the pro’s and con’s of second incomes to be sure they really get the cash value over what they have to spend for the job. Work extra jobs only if you are not spending the income on childcare, extra vehicles and insurance, restaurant food because you can’t go home to eat. Calculate the expense of doctor bills, medicine for blood pressure or poor diet against the actual bring-home pay. Be selective about which jobs are actually going to benefit your household and which ones will add stress or burden to your family.
Too bothersome for you? You thought being rich was an easy lifestyle with no cares for money? Then a #DebtFree Lifestyle won’t work for you. Sounds funny to say, when living debt free is an available option for most households. You may not be able to save bundles of money back for #retirement, but at least go into retirement with your home paid for, no debt, no heavy financial weight to your monthly income. Start that as your Financial GPS and see how quickly your lifestyle improves.
Being Rich is not being Care-free about money.
Spending the same money twice is called DEBT!