Follow these rules to have a healthy relationship with money
This is my destiny. I am just not good with money. It is what it is.
Did you ever tell yourself those things when you were in the thick of it? I did. I also went through the maybe if I ignore my debt it will go away phase.
When I opened my eyes and my debt had actually increased, I literally started feeling sick of the financial situation I was in. My debt was over $30,000, I had no savings, I was living paycheck to paycheck and my car loan was at an interest rate of 11.5%.
My money rules were born at that time. After trial and error these are the 6 rules I live my life by.
Pay off my credit cards in full every month
So I was losing money! What! Yes, I paid so much more for items than what I initially purchased them for because I was not paying my bills in full every month. Therefore they were accruing interest and not only was the balance increasing but it was getting harder to get rid of them. I could no longer make a dent.
Well eventually I paid off my bills and didn’t allow myself to use credit cards for over a year. I wasn’t sure that I wouldn’t end up in the same position again. I was paying everything in cash and living my new debt free life until I learned about Credit Cards that give you perks to travel and even cash back. Game changer!
I decided that I would apply for credit cards again. My husband and I agreed that we would keep credit cards open for the purpose of accruing points only if we would pay them off monthly. If we ever went without paying our bills in full we would have to cut the cards and go cash only again. It has been 5 years and we are doing great. If you have not learned about Credit Card Points please do your research. There is tons of information available online, but also feel free to send me a message with any questions.
Consistently invest in my future
Even when I was getting out of debt I was investing in my workplace 401k. That was the best financial decision I ever made. I invested in the match. Not having much financial literacy, I didn’t know what else to do.
Now, I left my job of 13 years with my $140,000 fund that I have transferred to my brokerage account. My plan is to invest in mine and my husband’s IRA in full every year until we reach $300,000. Then we will no longer have to save for retirement. We will have reached Coast FIRE. Our investments will grow at a rate of 7% every year. My husband is set to receive a pension upon retirement.
Once we reach our savings goal we will throw what we were investing into the house to pay it off before my husband retires.
Start now. Invest in your workplace 401k up to the match. Then open an IRA with a brokerage account and invest the max allowed for the year. It is currently limited at $6,000. There are income limits as well that you can look into.
Other methods of investment are real estate, crypto, and individual stocks. I would go into these after my 401k and IRA’s are funded.
Budget for fun
What’s the point of living if you’re not having fun. Always plan for fun. Regardless of your financial situation you should make room for fun.
When we were focused on paying off our debt we did only things that were free. We paid for things like parking and coffee, but other than that we did not splurge.
Now that we are debt free I have room in my budget for entertainment and travel/parties. Fun is important to us. It always has been.
Write a monthly budget
When I first started budgeting, I immediately felt like I got a raise. I went from feeling like I have no money and I don’t know where my money goes every month to suddenly having money for everything that I valued.
That’s why I still budget every single month. It is what allowed me to resign from my job, take vacations and become an investor.
There are different models to follow. You choose whatever is the best fit for your situation.
Right now we use the zero based budget. I have used the 50-30-20 and I think that’s the most responsible method to use. I was using that when I was working.
Invest in myself
My education is what got me to earn an income I had never imagined. For that reason, I am committed to be a lifelong learner. I invest in certification courses, books, classes, conferences. I find it all useful.
I encourage you to invest in your learning whether you are paying out of pocket or your place of work is funding your growth. Some will not pay if it’s out of their pocket, but I can’t stress the importance of investing in your growth.
Write down my values
In our home we value quality time together, wellbeing, honesty, experiences and travel. Both my husband and I have not pursued supervisor roles in our companies because that came with a lot of stress and time commitments. We have both value flexibility and freedom at our jobs. I did pursue a senior consultant position only because it did not require me to sacrifice my values. That was the last position I held before I resigned. I pursued that position in order to increase our savings rate.
This is the most important rule. Create goals that align with your values. You will be much happier as a result.
Living by these 6 money rules has made my life pleasant and peaceful. I don’t worry about money. My husband and I don’t fight about money. Implement these rules into your life if you are not doing so already and let me know how that goes for you. I am sure that you will see positive results.