In This ” Bad Financial Habits” Article You Will Read:
1. The first step to replacing bad financial habits with good ones are realization.
2. The second step to creating good financial habits is to cut up credit cards.
3. The third step is to stop bad financial habits when you start to save.
4. The fourth step is to get a higher paying job or negotiate a higher salary.
5. The fifth step to changing financial habits; is to find a cheaper place to live.
6. The sixth thing to do to get rid of bad financial habits is to monitor.
7. The seventh thing to do to stay out of bad financial habits; is to surround yourself with positive people and stick to a budget.
Surprising as it may seem, many who have bad financial habits don’t understand that they do. This is because of the extent of their financial upbringing or lack thereof. Some kids are taught very young that they should have a piggy bank and budget their money. They are also taught they can’t have everything they want, and money doesn’t grow on trees.
Other kids are from the “my kid has to have everything I did not have” parent. These parents don’t understand that no matter how much money they spend or credit they use to give your kids what they want, the child never feels enough. This happens because kids, or even young adults start using these things to give themselves a false sense of feeling good. At least this is the message they get from parents, grandparents or other relatives. They teach kids to use things to solve problems the wrong way, with things.
So, buying things, and overspending at any income, becomes a never-ending spiral. The old stuff gets old, outdated, boring or broken and there is a constant stream of new stuff presented by stores, the internet or television advertising. The joy is usually short-term, but the inability to solve problems and other issues organically, not with things, becomes a long – term problem.
Once you get on your own, you find out there is no one to pummel you with a constant barrage of gifts so you get into huge unbearable debt, until you have the revelation. The revelation is, “I don’t have to live like this, constantly trying to make myself happy with things that don’t provide long term happiness and put a smoke-screen on the real issues I have. I understand that I am making myself miserable with the attempt to be happy with unlimited things.
There is another way, you finally realize that you have bad financial habits that are destroying your peace, joy and happiness. Now, all you must do is figure out how to replace those bad financial habits with good one.
The first step to replacing bad financial habits with good ones are realization
The first step to getting good financial habits is to realize you have bad financial habits. You made that realization above when you moved out on your own or married, and concluded that you would have to be deep in debt to get most of the things you wanted.
With that said, you realized that the debt was making you miserable. You got sick when you went to your mailbox and opened your bills, you stayed up at night trying to figure out how to shift the bills so you could pay at least half of them this month, then of course the occasional bill that slipped into collection agencies and you had to turn off your phone to get peace on your day off work. It was an endless cycle of headaches, and all you wanted was peace of mind, joy and happiness. So, you started to think that it must be possible, since the current situation is so miserable.
The second step to deleting bad financial habits is to cut up credit cards
You had a ceremony cutting in half, all but one of your credit cards. That one credit card will be left at home except when you travel – you need it to rent a car or to stay in a hotel.
You make a spreadsheet to list big things you can do to immediately make money to pay off credit cards.
Stop spending money on everything you don’t need to buy, or need to do.
Stop eating out – it is expensive and unnecessary.
Buy your groceries at a discount and shop with coupons.
If you have a car buy a monthly buss pass IF it is cheaper to ride the bus or train, if not use your car only when it is necessary.
Ask your parents if you can move back in to save money and pay off debt, with a timeline to move out.
If you don’t have parents who can help, ask a friend or relative if you can rent a sofa for at least 50% less than your rent. Use the 50% savings to pay off debt.
Before you move sell everything you can sell and pay off bills with the proceeds.
When you get your bills down low or to a manageable amount, go to step 3.
Keep a spreadsheet of your debt payoff and your budget. Use google spreadsheets.
The third step is to stop bad financial habits when you start to save
Open a savings account, have money automatically transferred from your paycheck or your checking account to your savings account – at least 100 dollars a month.
Now you are saving money by not paying market rent, at least 400 per month and the 100 auto deduct to your savings account. You should be able to save 500 per month.
Keep a spreadsheet of your savings and timeline for savings.
Pay extra to credit card principle every single month. Pay off the lowest balances first.
Save dollars and coins in a large vase so when you need small things you can take them from your cash stash.
The fourth step is to get a higher paying job or negotiate a higher salary
Some people are afraid to leave their comfortable job or talk to their boss about a higher salary. They feel it may be their doom. They ask themselves questions like: Would if my boss gets angry if I ask for more pay? or Would if my new job doesn’t work out? Do your research first. Find out what you must do to make yourself more valuable to your boss and company, then go to your employer and tell them how you have improved the business by giving at least 3-5 major things. Make sure he offers the first salary move, then if it is not enough you can counter it and let him know you would like more and why.
If you find the salary is simply too low with little opportunity for advancement look for another job. Before you start to look for another job, do lots of research to find out what you qualify for abd whats available. Talk to people in the field and take an online class or a few to improve your skills before you start to look. Improving yourself with online courses will also help with your current job. Just don’t take expensive courses that will put you in debt. There are many free or inexpensive courses online.
The fifth step to changing bad financial habits is to find a cheaper place to live
After you have gotten your debt paid way down, you have saved a substantial amount of money, you have trained yourself with the mantra, “money doesn’t grow on trees – I learned that the hard way”.
Then you can make more major changes.
Start looking for an affordable place to stay after you have increased your salary, or you get a higher paying job. Try to stay away from 12-month leases. It is hard to find a place to rent that is month to month, but it is possible.
The sixth thing to do to get rid of bad financial habits is to monitor
You now must monitor everything you do. Use your spreadsheets monthly to monitor your debt pay off, savings, balances, and budgets on everything. As you pay down debt, increase savings and come closer to your goals you will notice a peace, joy and happiness space surround you. Remember this feeling so you don’t go back to nausea, headaches and sleepless nights you get from high debt and bad financial habits.
The seventh thing to do to stay out of bad financial habits, is to surround yourself with positive people
Don’t forget to include your student loans in your debt payoff and create a spreadsheet for them. If you have student loans do everything you can to make the payment in full and extra to principle to pay them off early – that may include a second job. When you make extra payments to principle this cuts out not only the principle, but the interest associated with it. Associate with others who are paying off their student loans early.
Now that you have understood how you came to have bad financial habits and how you got out, try to surround yourself with people doing the same. It may be a family member or a good friend but choose wisely and work with that person to help each other stay away from bad financial habits and keep your good financial habits flowing for life.
What are smart money moves?
A smart money move is a tried and true method for creating financial growth and prosperity after education, research, deep thought, mentorship, and experience has guaranteed they will work. Here are some smart money moves for you to begin with, I will discuss:
- Short term smart money moves you can start now.
- Long term smart money moves that will permanently change you
- Understanding the types of smart money moves that will save your financial life
What are the three types of smart money moves that will benefit you?
1A. Short term smart money moves you can start now
It starts with a guerrilla budget. Judging from the way many of you spend money, I can see that you are not close to any budget, much less a guerrilla budget. A guerrilla budget, as defined by me is “your budget on steroids”. You become the master of your money, not advertising, not spoiled kids, not friends who have financial emergencies, not things you don’t need.
It is you, your tracking your spending and getting rid of everything that is not necessary. Sure, after you get your debt and bills under control you can budget in a few things you enjoy, but first you will start with paying your necessary bills with ease, getting your debts low, and creating a system to have emergency money for your emergencies only.
Learn to say the word no. If you can’t afford it, it should not be a part of your spending process. Your short-term financial goals for the new year should include the following.
- Create a budget planner
You know how much money you take home; you know where you are spending on things you can’t afford, so this is where you start.
- Track everything you spend
Sometimes you spend money that we are not aware of because we don’t pay attention to what we are spending on. Create a budget for everything you spend money on.
Maybe you can’t afford a necessary item this month, but if you pay off another item, or save enough money for a new item you need, you can get it in 3 months. Whatever you do, don’t keep charging for things you don’t have money or income for.
- Plan what you need
Write a plan for daily needs, weekly needs, monthly and for the year. Do you plan to return to school in three years? You need a plan for that. The plan should include an affordable public school where student loans are kept to a minimum and the education is an absolute must for your field.
Many people gain access to good paying jobs, without college, by working their way up in a company getting experience as they go. Many jobs will pay for you to take courses to gain knowledge and some will pay for a college degree.
- Plan what you want
Do you really know what you want? Don’t just take a stab in the dark, know what you want based on experience, knowledge, and research. Many folks get useless education or degrees because they did not research the field and understand “exactly” what is involved.
Occupations change over time, what was in demand 20 years ago, may have no demand now. But some people are still getting into fields with student loans and years of study, only to find out they made a huge mistake and there is no demand in that field.
5. Delete what you can do without, and may not want
Make a list of the things you have or are doing. Then make a second list of the things you can do without. From cable tv to going back to school. What is necessary right now? What can I do to make my life more affordable? What can I eliminate to help get out of debt? These are the questions you need to put at the top of your list.
What are long term smart money moves?
2A. Long term smart money moves
If you will ever have enough money, you must learn sane savings techniques, these techniques have been created by me for you. Your long-term financial goals should start with money all over the place. Sounds crazy, but it is possible, no matter what your income. There are many ways with these smart money moves.
- Start with the dollar and coin jar, save regularly here
Get two simple jars, at least a foot high. Every week empty a handful of coins in your coin jar, place at least a few dollars in your dollar jar, between $2 and $10 dollars. This money will accumulate until the jars are full. Don’t use any of the money until the jars are full.
When they are full, you can use them for inexpensive, minor emergencies. But they need to always be half full. When it gets full, take out the coins, redeem them at the store where there is a coin exchange, take the money from the coins and take half the dollars to the bank.
They will be placed in your passbook savings accounts. The remaining dollars will be used for your small emergencies or expenses.
- Don’t be afraid of a basic passbook savings account for emergencies. Yes, I said passbook savings account. This is your first great savings account. Now, I know what you’re thinking. You are thinking, “I am not getting much in the way of interest”.
The interest is not the important issue at this point. The issue is accumulation of funds for short term emergencies’ and long-term smart money moves. This is where we accumulate.
Your short-term smart money moves will be born in your passbook savings account. Everything sprouts from here. Try to put at least $50 to $200 a month in your passbook savings account.
- Use your overage in your basic account every six months to fund a higher interest account as you accumulate money in your passbook savings account, it will be added to pay off bills, purchase short term more expensive emergencies or add to a higher interest savings account.
- Use your passbook account to fund your needs
Write down your immediate short-term money moves as they relate to your needs. An example would be to pay off a $400 credit card balance when I accumulate $600 in my passbook savings account.
- Use your dollar and coin jar to fund your immediate wants
The dollar and coin jar are for super short-term smart money moves as well as to fund your passbook savings account. A super short-term money move would be to fix the cracked screen on my cell phone or hire a gardener to weed and trim your over-grown yard.
3A. Understanding the types of smart money moves that will save your financial life
If you don’t understand the smart money moves of big thing buying you can ruin your finances for a long time, buying cars, homes, and an education.
I talk to people all the time who tell me they wish they would have put more thought into purchasing a car, going back to school or even buying a home. There is never a rush.
Making the wrong decisions when it comes to major items can cost you hundreds of thousands of dollars you could have saved. Remember, you have many choices, and there is never a need to rush. Do your research, do your homework – identify all your options.
- Make “paying off” a car or credit card a goal
I talked to a young girl just a few months ago. She wanted to get her finances in order. I told her you have first start with critical thinking, not allowing advertisers to tell you how to purchase. They recommend high-profit items that benefit their pockets, not yours.
I told her the example of refinancing a car. She, said “STOP”, I already made that mistake. She said she saw an ad to refinance her car for a lower interest rate, she did and then her sister pointed out to her, “do you realize that you just added two years to your car note?”.
She told her, after looking at her paperwork that the two years she had left on her car loan was now four years with her new loan, adding an additional two years. She would have been better off paying a slightly higher interest rate she had and paying off the car in the two years she had remaining.
That was not a smart money move and shows how it happens when you allow propaganda advertising to influence you.
- Use the monthly budget you have from a payoff to save money
When you pay off a bill, you now have extra money, use at least half of that money to place in passbook savings. The other half will be used to put on other bills.
- Do research on a new car if you need it
New cars are expensive especially when you add the first-year warranty service and the cost of general maintenance and vehicle registration. So, look hard for an affordable new car or consider a CPO, or certified pre-owned car. These are cars that you purchase on the used side of a new car lot, they are less than 5 years old, have about a 150-point check and you get a warranty.
- Buying a home is still possible in some states with a middle income, start your research
Homes are getting extremely expensive in the larger more populace states such as California, New York, New Jersey, Washington D.C. as well as others. But there are many states especially in the south and mid-west where you can buy affordable homes if you are middle income. But I caution you to do your research, do your homework first.
- Set a budget for the home you can afford
The most important thing you can do before you think about purchasing a first home or even a second or third, is to set a budget. That budget is based on what you can afford after your down payment, after you have paid off bills, and after you have sold things you don’t need, an example would be a car with a large car payment, may be something you could get rid of.
16. Start a savings account for a home you can afford
After you establish your affordability index, you can now start to save for your new home. I have discussed the many ways to save money above, so you have many ideas. You will need to save for the down payment, the escrow costs, and any repairs that may be needed.
17. Choosing a college; there are no guarantees, research is paramount
Going to college in the United States is tricky these days. The number one goal should be to keep you and your parents out of debt. There are affordable public colleges, consider those first. Private colleges have a lot of hidden cost. For-profit colleges, (that is those that advertise on television constantly and are located online only, or in a strip mall or office building – usually no real college campus, they have quick classes), the cost is high, and the jobs are few. Some employers will not hire from for-profit colleges.
18. Focus on finding an affordable not-for profit college, preferably brick and mortar There are many affordable non-profit public colleges. Do your research be through, keep student loans at no or low, very low.
19. Find great careers that don’t require college
There are many careers that don’t require college and some online course that are very cheap, but have great careers connected to them.
20. Research community college degrees that pay well, computer science, registered nursing, dental hygiene, at a community college you can get a certificate or an associate degree. From that degree you can get a great starting job, depending on the course matter or you can transfer to a 4-year college if your state permits.
The following demonstration shows you that smart money moves can and will put you on tract to great financial growth when you pay attention to the details.