Stop Waiting for Retirement – Start Chasing Your Dreams – Part II
A 2015 Bankrate poll found that 62 percent of Americans don’t have enough savings to cover a $500 repair bill. Investopedia cites a Federal Reserve study that indicates that 43 percent of American families are spending more than they make. Nerdwallet reports that “actual lender-reported credit card debt was 155% greater than borrower-reported balances.” These are dismal stats, but there’s hope.
Welcome to part two of my three-week series on how to stop waiting for retirement and start chasing your dreams by building the foundation to create midlife change. In my last post, I introduced the framework my husband, Jer, and I used to stop waiting and start living. What I laid out last week was organized, but it really looked more like the picture below. My hope is that this series will help you take a more structured approach to change and avoid many of the mistakes we made.
In Part I, I introduced the 7 Pillars to Personal Transformation. The first step to creating your midlife change is to get your personal finances in order. What I am going to talk about isn’t popular in our culture. But stick with me because I guarantee that it works and it’s worth it.
Change Your Money Mindset
What is it about the subject of personal finance that makes rational people lose control of their emotions? To get right with our personal finances, we need to think and feel right about money. I cover this in my recap of Business Secrets from the Bible.
The bottom line is that before we can have success with money, we need to table all of our negative beliefs about money. We need to move from a scarcity mentality to an abundance mentality. We must let go of past failures and have hope in what lies ahead.
We’ve all made financial mistakes. Most of our schools don’t teach financial education. 76 percent of American households are living paycheck to paycheck, so most of us don’t grow up with the right example. This is where the 10 Principles of Prosperity comes in. We need move past the past and hold ourselves accountable for our financial future.
There is so much great information available today. We just need to find the discipline to consume it and the persistence to apply it. If you are commuting to and from work each day, download some audio books and turn your car into a mobile university. When you’re at the gym, opt for podcasts over TV or music. And when you finally have a moment of free time, commit to spending time with an educational book or blog.
Here are some resources to get you started.
Eliminate debt by cutting your spending and increasing your income. Wealthy people like Warren Buffett, Mark Cuban, and Darren Hardy say that debt is a trap. We should listen to them – they’re wealthy. You wouldn’t take diet advice from a 400-pound man. Why do you take financial advice from broke people?
I’ve taken my fair share of bad financial advice. Due to our lack of financial education, we’re not always clear about who the real experts are. When I was heading to college, I took the advice of enrollment advisors and applied for student loans. As advised, I took out a small loan. After my first semester, I thought, this is stupid, I could just wait tables one night a week and make this money. And that’s what I did.
When we bought our home, we listened to the mortgage broker who suggested an 80/20 loan in which our down payment of 20% was an interest only loan. We quickly refinanced, to a shorter term and a lower rate. This wasn’t motivated by knowledge as much as it was motivated by me not wanting to drive to St Paul to make the payment each month. I had yet to learn the moral of the story – don’t take financial advice from loan officers.
Save for a Rainy Day
If I had to attribute our financial success to one person, it would be my Grandfather, Andrew. I was blessed to be able to spend a lot of time with my grandparents when I was young. Of the many wonderful memories, one of the most significant was sitting next to Grandpa at the dining room table, eating ice cream and watching him do the books. He was a quiet man, but the few tips he shared saved Jer and I a lot of pain as we journeyed into adulthood.
As soon as we started working, we began saving. Although we didn’t do it as wisely as we do now, we did it. That small act helped set the stage for where we are today.
There are different recommendations on how much you should save. I’ve heard figures that fall between 10 and 20 percent. I think it depends on where you are in life. If you’re older and haven’t started saving, you need to ramp this up as quickly as possible. No matter what your situation, it’s never too late to start. I promise you’ll thank yourself in 10 years.
Set Goals and Create a Plan
Everything was going fine and then Jer received a book from his uncles that changed our lives. Jer devoured it and kept telling me, “you should read this, you’re doing a lot of things right, but we could do better.” As with most of his suggestions, I didn’t listen. A few years later I finally listened to this audio version.
I was officially on board with the baby steps. We immediately agreed to pull retirement investing back to the recommended 15%, boost our emergency fund and begin paying down our mortgage. We set a goal to be completely debt free in five years. Less than three years later we were financially free.
One of the greatest factors to our success was working as a team. We could never have done this if we had separate goals and finances. Budgeting and tracking were essential components to our progress. Having a clear long-term vision of why we were making these sacrifices kept us going.
It’s hard to give money, especially while living on a budget. I could give 10 percent to this charity, or take one heck of a vacation. Lucky for me Jer is ridiculously generous. When his hairstylist was moving away, he gave her a 150 percent tip to help her get started with her new shop.
You may have heard that when you give, you’ll get 10 times in return. The idea is that when you loosen the grip on what you have, you open yourself up for more. It’s hard to understand until you experience it. Even after having these experiences, it’s hard to trust that it wasn’t just a fluke.
Without a doubt, since we’ve become more generous, we’ve always had more than enough. On more than one occasion when we were exceptionally generous, the favor was returned 10 fold. Learning to be generous has helped us transform into the people we are today.
It’s Your Choice
Today is the day you decide what your future holds. Will you take control of your personal finances so that you can fulfill your potential? Or will you choose to follow the crowd and join the statistics from the beginning of this post?
If you have already laid a solid financial foundation, will you do me a favor? Will you offer your assistance to someone who is trying to figure this personal finance stuff out? Together we can change the future of our generation.
If you could give your 20-year-old self one piece of financial advice, what would that be?
Share in the comments below.
Stop Waiting for Retirement – Start Chasing Your Dreams
Part I – The Framework
Part II – Personal Finance
Part III – Spirituality
Part IV – Career and Contribution
Part V – Health and Wellness
Part VI – Relationship and Family
Part VII – Social and Recreation
Part VIII – Personal Development
Part IX – 10 Principles of Prosperity
Part X – Life Change Strategy
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