Out With The Old And In With The New
Wow, 2015 has come and went and what a blast it was! So many great memories along with numerous events.
- Finding out I was going to have a child √
- Attend a wedding √
- Vacationing to Hawaii √
- Attending 4 Baby Showers (including my own) √
- Paying off the last of our school loan – $5,550 √
- Paying down our car loan – $6,623 √
and so much more!
While these are all amazing memories/events they also come with a cost. Finding out I was going to be a father couldn’t of been a more awesome experience but knowing the expenses that would come from preparing for my son was nerve wracking. The wedding I attended was my wife’s life long friend and she was lucky enough to be a bridesmaids. While being part of a wedding is exciting it comes with a price tag. Soaking up the sun in Hawaii was relaxing but plane tickets, accommodations, food and entertainment adds up fast. Lastly, my wife attended 4 showers and of those helped plan 3, while I attended 3 and that was just crazy! We all know gifts alone can creep up on your bank account but adding in cost to help plan the event can make a big dent. But at the end of the year, after all said and done, we shared great memories, plenty of smiles and oh yeah, we added almost $32,000 to our bank account and paid off $12,173 in debt!
After seeing this I had to give myself a pat on the back and my wife a hug, we worked hard but truthfully not that hard.
How did we do It?
Well first thing first, we had to track our spending and income because how else would we know what we saved? Now I know what some of you are thinking, oh no, spread sheets, pencils, paper, MATH! Before you disregard this post entirely, we used none of that to track our income and spending! In fact, finding out how much we saved and spent at the end of the year was one of the easiest parts because we used Personal Capital. For those who are not familiar with Personal Capital, it’s a free online software to help keep track of your finances (like mint.com but better). All you do is link all your financial accounts and personal capital does the rest!
If your serious about shaping up your finances and making more positive cash flow, sign up for a free Personal Capital account, it will make number crunching a whole lot easier!
PAY YOURSELF FIRST!
I’m a huge proponent of paying yourself first and/or automatic savings plans. Why?
- I hate budgeting, it makes me feel constrained! By setting up and automatic savings plan, I’m tricking myself into thinking I have to live off what I made after the chunk that goes into my savings account has been removed.
- It forces you to save money! Unlike traditional savings strategies where you try to save whatever is left over at the end of the month (if any), this strategy splits money from your paycheck before you even get it. So when you receive a paycheck, some money goes to your saving account and the rest goes to your checking.
- It gives you an opportunity to have your money earn money for you! This is by far my favorite part! Who doesn’t like earning money from their money? Whether your making interest in a Capital One savings account or other high yield savings account, investing in the stock market, buying cash flowing websites or some other way to generate passive income. Either way, it feels good to sit back and know your not the only one bringing in that cash!
Cut out what you can live without!
Now I can’t say I’m an ultimate frugalist like some of my readers but I do know how to cut back, limit or all out axe things I don’t need! I try to take a 80% practical 20% emotional approach. This helps me so I don’t go crazy and eliminate all things I enjoy. Usually at the end of each month, quarter, or year, my wife and I will sit down and look at our expenses. Now we don’t do this to start yelling at each other about you spent X amount on golf or you spent how much at Nordstrom! It’s more to evaluate our spending and find out how we felt about it. I learned this technique from the book Your Money Or Your Life which is an excellent read and I would highly recommend picking up a copy. This book helped me realize what the author calls “Life Energy” which helps you calculate your real hourly wage, be aware it’s not as pretty as you might think. It also has you transform your paycheck into life energy used, then apply that to things you buy. This was powerful because it shows you how much time you spend working for things you might or might not really want. So now when my wife and I go through our expenses we have that perspective to utilize.
Expenses Part 2
When looking over our expenses we also look for ways or things that will help lower our cost overall. No brainier right? Truth be told, many people don’t do this. Why? Maybe time, but I think it’s laziness. Why would you want to pay more for something if you can find a similar product for less. For example, last year up through October, we had cable TV and our bill was $195 a month! That means I paid $1,950 last year for cable TV, WTF!!! We knew we wanted to switch to something cheaper but we kept putting it off and being lazy. We finally cut the cord and kept internet, bought a Roku, added Netflix, Hulu and Amazon Instant (free if a prime member), and ended up spending $83 a month. By finally stepping up to the plate, we were able to shave $112 a month in expenses, that’s a $1,344 savings annually! The only regret I have is not making the switch sooner. These are the little things that can make a big difference. So do yourself a favor, stop being lazy and take the time to shop around, then send me a comment with how much money you saved!
Pay Off or Down Debt
Debt as most of you know eats away at your money and your SOUL! Make sure your making every effort to pay it off as fast as possible. As of December 31st 2015, I can officially say we no longer have student loan debt! Man does it feel good (I’m doing the happy dance while typing this). When that last payment goes out you feel like you could climb the highest mountain. Now the only other debt we currently carry is for our SUV. While it’s still not something I’m happy with, it was a necessary purchase and we plan to pay it off as fast as possible!
While we do have credit cards, they never carry debt since we pay them off at the end of each month. So no interest and no penalties! Why even use a credit card if you don’t need them? To reap the REWARDS! I use the cash back card from Fidelity which provides 2% cash back on all purchases. So by using this card to purchase things I would of otherwise purchased with cash, I was able to earn almost 450 extra dollars in 2015. I also use the Chase Sapphire card in 2015 which also provided me with about $1000 this year to use toward travel. So if you can use credit cards for everyday expenses you would normally pay for in cash, why not get the extra rewards. Just make sure you only purchase what you can pay off that MONTH! There’s no point getting cards like these to receive rewards if your going to end up paying interest or penalties.
Start a Side Hustle
Everyone has extra time to do something, yes even you! If your having trouble finding it, try scheduling out your day or tracking the things you do to see where you have time to spare. You might be able to pick up a part time job although I would recommend working on something for yourself. Are you passionate about something or do have specific knowledge on subjects the general public would like to know? If so that’s a great place to start. Many people, including myself, start blogs on what their passionate about or hobbies that interest them. Once they gain followers and a community they are often able to monetize their sites to make some money on the side. That can range from a couple bucks a month to thousands! For example, I started a blog a couple years ago in a niche I was interested in at the time. While I don’t work on it much anymore, it brought in just shy of $3,000 this year. Not to bad for something I spend a handful of hours on a month, and it all started as a passionate side hustle.
While there are numerous ways to save and make money, these are the ones that have worked for us and if your willing to put in some time and effort, I’m sure they would work for you also! So how did your finances end up this year and what tips do you have for the readers and me? Let me know in the comments below.