Holly Scherer

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Freedom

How to track your spending – Your first step to financial freedom

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Before you start your journey to financial freedom, I should ask you, why do you want it? What’s the burning reason you’re willing to make sacrifices today for peace and freedom in the future? Is it to reduce stress and improve your health? Are you taking control of your finances to set a better example for your family? Or are you sick and tired of scrambling just to eek by at the end of the month?

Before you continue, take a minute and write down why this is important to you.

Next, I want to let you in on a little secret. Whatever the reason you wrote down, I want you to know that you’ll experience that and so much more.

How do I know? Nearly nine years ago my husband, Jeremiah, and I embarked on our own journey to create financial freedom in our lives. Less than three years later we were completely debt-free. Less than a year after that we were in a position where I was able to leave my corporate job which had become a poor fit. Shortly after that Jer started advancing his career, I started this blog, and so many other unexpected and incredible changes followed. And I believe it all started by taking control of our finances.

I wrote a whole post on how creating financial freedom has changed our lives. You can read it here. It might not be exactly the same for you. I share our story, not as the rule book to follow but to inspire you to create your own journey to freedom. With that in mind, here’s how our journey began.

Growing up, I was told there are three things you never talk about: sex, money, and politics. There are lots of other things we don’t talk about and really ought to start: mental health, relationships, emotions, limiting beliefs, and fear, to name a few.

When I started this blog, I swore to myself that I would talk about these things. Most of us weren’t taught these subjects in school. So unless we had caregivers who were savvy experts on these topics, we likely entered adulthood having no clue how to manage our finances, nurture healthy relationships, and play nice with people who had different political views.

These topics are too important to walk around with blinders on just because it’s uncomfortable. These subjects affect every other area of our lives. And so I’m going to talk about them and I invite you to do the same.

Let’s start with the cold hard truth. Personal finance statistics in America are not something to brag about.

  • The US National Debt is more than $23 Trillion and counting. Up 3 Trillion dollars since I first published this post. I mean, I don’t even know how much a trillion is, so $23 trillion must be a lot.
  • Nearly two-thirds of Americans don’t have enough savings to cover a $500 emergency. I don’t know about you, but I’ve had a lot of emergencies that were more than $500 throughout the course of my life.
  • One-third of American adults report having ZERO dollars saved for retirement. Say you work on a team of 12 people. If they follow the average, that means four of them have nothing in a retirement account. That’s kind of scary considering the state of social security.
  • The amount owed by an average U.S. household with this debt is more than $136,000.

That’s the bad news.

And here’s the good news. More and more people are creating a new story for their family’s financial future, like John and Lisa. These are normal people who didn’t grow up with trust funds or win the lottery.

Since I’ve been sharing our story during the past four years, I’ve met dozens of people like John and Lisa on a similar journey. And I truly believe that financial freedom is attainable for anyone. Some people may have longer and windier journeys, but it is attainable.

It’s Never Too Late

There are some topics that get lots of action whenever I bring them up on social media. One of those topics is feeling behind. I can only imagine that it’s gotten worse in this digital world where everyone broadcasts their highlight reels 24-7. Just as many people in their 20s feel like they’re behind as people in their 40s and even people their 60s feel like they missed the mark.

But I’m here to tell you that you’re exactly where you need to be and it’s not too late. The moment you decide to change your future and take action, things will come together more quickly than you plan. If you commit to the long-term reward and remain diligent, you’ll find financial peace before you know it.

I’m not saying these things because I read some personal finance books and watched a Suze Orman special on PBS. I’m saying this because Jer and I have actually lived it.

We’ve felt behind. Heck, we still feel behind some days. We’ve felt like we weren’t smart enough, skilled enough, and didn’t make enough money. And even after reaching a number of financial goals, imposter syndrome still creeps in.

Jer and I are just like everyone else. Except that we decided that things were going to be different. We set goals, worked as a team and stuck with them. It’s never too late and I know you have what it takes to do the same and create your own version of financial freedom.

Our Journey to Financial Freedom

Join me as we travel back to the year 2010. Up until then, we were doing ok with money. We were saving for retirement and didn’t have any student loans or credit card debt. I have always been a saver and Jer was more of a spender.

I had spent the previous decade trying to get Jer to be more of a saver. I bought audiobooks on CD. I tallied up how much a year’s worth of his Chipotle habit would be worth in 30 years if invested in a mutual fund. I begged and pleaded but the time wasn’t right I guess.

Around this time, Jer’s lovely Uncle Eric bought a book for all of his brothers and sisters for Christmas. Eric shared a heartfelt story about how the book changed his life. He shared his hopes and dreams for sharing it with his brothers and sisters. Jer’s oldest uncle had already read the book and kindly offered his copy to Jer, which Jer eagerly accepted.

It must have finally been the right time because Jer devoured the book. Now he was the one coming to me saying, “You’ve got to read this book. We’re doing a lot of things right, but we could be doing so much better.” To be honest, I was slightly annoyed. This is what I’ve been trying to tell him for the last 10 years.

At the time I was traveling a lot for work. Since I had so much windshield time, I decided to pick up the audio version of a similar book. As I listened, my mind was blown. I always intended to be wealthy and was well on my way, but this, this was something that never occurred to me.

I officially had the debt-free itch.

We slowly started cutting our expenses, which led to tracking, which led to a budget, and the rest is history I guess.

How to get started

Building wealth is simple–spend less than you make. Click To Tweet

Building wealth is simple–spend less than you make. While the concept is simple, it’s not always easy to do. There are societal pressures and familial expectations. We’ve got our status to maintain and we’ve become comfortable with our routines and little luxuries. But while it’s not always easy, it is always worth it.

In order to spend less than you make, you need to know how much you’re actually spending. This is a simple step, but it’s going to require that you be diligent and honest with yourself.

The best way to figure out how much you’re spending is to track every dollar you spend over the next 30 days. In John and Lisa’s story, John calls it reverse budgeting. And that’s exactly how they began their journey too.

To this day I track every dollar we spend. I use an app to track daily expenses and enter everything into an Excel grid each month. I have detailed records of our income, expenses, and investments going all the way back to 2011.

This came in really handy when we were making plans for me to leave my corporate job and helps as we make projections for future plans. It’s also a great way to see the progress we’ve made and to celebrate our accomplishments.

I will always use Excel because I love the flexibility and the data I’ve compiled over the last nine years. If you’re not an Excel user, I’d suggest using an app. Here are some popular free apps as of the November 2019 update of this post.

There are also plenty of great paid apps and software to help you on your journey to financial freedom. Do some digging. Ask around. And find one that’s right for you.

Tracking your spending for 30 days will give you a good idea where your money is going but it won’t give you the full picture. We all have bills that fluctuate throughout the year like gas, electricity, and water. We also have bills that are paid on an annual or biannual basis, such as homeowner’s insurance, auto insurance, and property taxes.

Think about which of these expenses you have. Then go through your bank statement or ebills and add up the annual total for each category. Then divide that by twelve to get your monthly average. And add this to your 30-day tally.

I like my data very detailed. My husband, Jer, prefers to keep it simple. Think about what you will be able to maintain long-term. If you’re not into details, keep it simple, or you won’t do it. You can change your system at any time. Just do what works best for you.

Since writing this original post, I listened to a very detailed personal finance book. It’s a big book but I think it would be great for anyone who is truly ready to make a change. I recently recommended it to my oldest nephew because it talks a lot about the whys of money.

But for the purpose of this post, here’s why I mention it. I just said that if you’re not detailed, don’t get too granular because you won’t stick to it. And I believe that. But in the book, the author says the more detail the better.

She shared an example on one guy who was spending 20 percent of his income on SHOES! Had he tracked the way I do with all clothing and shoes in one category, he probably wouldn’t have found this exorbitant expense.

Here are some categories you might consider tracking:

Savings

  • Retirement
  • Health Care
  • Emergency Fund
  • Car Fund
  • Vacation Fund
  • Home improvements

Charitable Giving

Housing Costs

  • Mortgage or Rent
  • Utilities
  • Water
  • Trash
  • Gas
  • Electricity
  • Internet
  • Phones
  • Television
  • Internet Security/Online Backup

Household Expenses

  • Groceries
  • Beverages
  • Household and Cleaning Products

Personal Wellness

  • Health and Beuty
  • Hair Cuts
  • Clothing
  • Gym Memberships

Taxes

  • Property Taxes
  • Federal Taxes
  • State Taxes
  • Tax Preparation

Insurance

  • Homeowners
  • Life Insurance
  • Health Care
  • Personal Articles

Home Maintenance

  • Home Improvement
  • Repair
  • Gardening and Landscaping

Transportation

  • Car Payments
  • Auto Insurance
  • Gas
  • Registration
  • Repairs
  • Parking
  • Public Transportation
  • Bike repair and maintenance

Entertainment

  • Dining Out
  • Movies and Events
  • Travel
  • Hobbies and Equipment

Education

  • Classes
  • Books
  • Seminars

Work Expenses

  • Uniforms
  • Fees and Dues
  • Day Care

Gifts

Other

Is there anything I missed? Please comment below and I’ll add it to the list.

After 30 days, set aside some time to analyze your data. If you’re married, make sure to include your spouse. Consider the categories you tracked as well as the non-recurring expenses we discussed above. Some of the apps I mentioned will do much of the work for you.

Once you discover where your money is going, you’ll feel a renewed sense of empowerment. For example, a friend of mine discovered that he was spending more than $1000 per month on restaurants. That was a nice chunk of change he was able to redirect and use to build up what is now a multi-million dollar business.

Wants VS Needs

As you analyze each category, decide whether it’s a want or a need. Each person has a different opinion of what a need is. Jer insists that cycling socks are a need. I’m standing firm in my opinion that they are a want. So we compromise, but only because we’re debt-free.

For the purpose of this exercise, we’ll define needs as expenses that are necessary for your survival. And wants are nice to have, but you can survive without them.

In the categories you identified as needs, ask yourself which of these expenses can be reduced.

  • Can you shop for insurance and cut your homeowners, health care, and auto insurance costs?
  • Could you call your cable, internet, and wireless phone providers to negotiate better rates?
  • Would you be willing to sell that car you have payments on and trade it for a bike and a bus pass?

There’s a lot that can be done here. Leave no stone unturned. Check out this post for more ideas.

Now for those wants. If you’re like most people, you’ll find all sorts of extra money here. When we were paying off our mortgage, we quelled our wants by not buying anything new. (Something I’m trying to get back to.) Restaurants and travel were a rare treat. We essentially funneled every penny from our wants toward paying off our debt.

Keep in mind that this isn’t forever. It only took us two and a half years to pay off our mortgage. We were willing to give up almost everything to get it done fast! Ask yourself what you are willing to give up now so that you can enjoy peace and freedom later?

Ask yourself what you are willing to give up now so that you can enjoy peace and freedom later? Click To Tweet

When analyzing your wants, think about the categories that truly bring value to your life. Be okay with spending in those areas and learn to say no to the others. For example, it’s important for us to spend money on healthy food. I’m not willing to cut that category because my health is more important than achieving a financial goal.

Is financial freedom right for you?

I’m going to be honest with you. This is work. There are apps and services that will make it easier for you. But you’ll need to find the desire and discipline to keep going. We dealt with naysayers and frugality fatigue which would have made it easy to quit.

Remember in the beginning when I asked you to write down why you’re doing this? Let’s get back to that.

If this is going to work, you will need to have a good reason to keep going. Is your why for creating financial freedom something that will keep you going even when it gets hard? If not, spend some time reflecting on why you really want to do this.

Once you begin your journey to financial freedom, it will go by quickly. You’ll probably even learn to love the lifestyle changes you make. So many of the things we cut from our budget were never added back.

At the end of our lives, I believe that the things that truly matter are the little things. Nothing you could buy will feel as good as financial freedom will feel. So remember your why and let’s get started!

Ready to change your financial future? Check out these posts to learn everything you need to know to go from surviving to thriving.

Step One – Figure Out Where The Eff Your Money Is Going
Step Two – Create a Budget That Works For You
Step Three – Save For Financial Freedom
Step Four – Ditch Your Debt
Step Five – Build Wealth on Any Income
Step Six – Achieve Your Goals As A Couple

Editor’s Note: This post was originally published in April of 2017. It has been completely revamped for accuracy, comprehensiveness, and readability. Please enjoy and feel free to share this newly revised content.

10 Surprising Benefits of Creating Financial Freedom

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What does financial freedom mean to you? For years I thought it was a certain dollar amount. And while I still have numbers tied to different levels of financial freedom, the concept of freedom means so much more to me.

As my husband and I achieved different levels of freedom over the years, I began to realize it wasn’t really about the money. It was more about the feeling.

We live in a society where money is the medium of exchange so I’m not saying that money isn’t important. We all need a certain level of income to be able to survive. Beyond survival, the more financial margin we have, the easier some areas of our lives become. But beyond a certain level, more money doesn’t make us happier.

For me, financial freedom is about money. It’s about living debt-free, saving and investing, building assets, and spending on things that bring us joy.

But financial freedom also means not staying stuck in a job you hate because you need the paycheck. It means living with integrity because you’re not ruled by fear. Financial freedom means not having to worry about the furnace going out or fighting with your spouse when they have to buy an expensive flight to attend a funeral out of town.

When you have your finances in order you’ll enjoy less stress, better health, and a more peaceful work and home life. You’ll be able to do more of what you love and be free from worry and guilt.

What would financial freedom mean to you? How would it feel? And how would your life look different 10 years from now if you could (and you can) make financial freedom a reality?

The Day it Happened

My husband, Jeremiah, and I got up early that sunny Saturday in May of 2014 to do something we never dreamed of until three years earlier. I remember feeling scared, nervous, and excited all at once. We got ready and drove to the closest branch of our credit union. It was unexpectedly busy when we arrived, so we stood in line for what felt like an eternity. We were so anxious that we didn’t say a word to one another.

When it was our turn, the teller asked, “How can I help you today?” Not wanting to call attention to myself, I quietly whispered, “We’d like to pay off our mortgage.” “Oh, that’s exciting,” she shrieked, “just go over there and I’ll send a banker right over to help you.”

Jer and I sat down and silently waited for the young banker. When he sat down, he confirmed that we were there to pay off our mortgage and proceeded to write down the amount we owed. I had the biggest pit in my stomach. What if something happened and we needed this money? Were we making a huge mistake?

Nope, I told myself, this is what we came to do. We’d been working toward this goal for years and today was the day. I had to bite the bullet and write the check.

In addition to making extra payments, we had also been stashing all of our extra cash into a money market account over the previous three years. This was a huge sum of money for us and I had to triple check to make sure I had all of the numbers correct.

I slowly handed the check over to the banker. I prayed one more time that nothing would go wrong since a big chunk of our safety net was now gone. The banker entered some notes into his computer and said, “Okay, you’re all set.”

We stood up and he shook our hands to congratulate us. Then he rang a bell and announced to the entire bank that “Holly and Jeremiah just paid off their mortgage.” Everyone clapped and we made our way back to the car. It was a surreal moment.

When we were back in the car, Jer asked, “how does it feel?” “I don’t know,” I responded. “How do you feel?” I asked. “It’s weird,” he said, “hard to believe. It feels good, like a weight has been lifted off my shoulders.”

It still feels kind of weird all these years later. We grew up believing that debt is something you have to deal with until you die. You buy a starter house, then upgrade to a bigger one, then a nicer one, and don’t forget the cars, and furniture, and home improvements. I’ve always had goals to be wealthy, but up until our mid-thirties, I never considered I could achieve that with zero debt.

That One Day Changed Everything

We decided to pay off our mortgage three years earlier because we saw it as a way to get us closer to our long-term financial goals. We never imagined how much it would change our entire lives. That one decision has become the foundation for much of what I coach and write about, building a foundation to do more of what you love.

First and foremost, I believe that we need to feel healthy enough to have the energy to focus on the things that are most important to us. I believe that good health includes our bodies, minds, and spirits. Our finances affect our stress level as well as the food and activities we’re able to afford.

The next thing we need is to have healthy and supportive relationships throughout our lives. This is especially important when you’re trying to make big changes in your life. Whether it’s your health or finances, the right people will cheer you on along the way.

Everyone I know who has achieved a big financial goal has at least one story about naysayers who made fun of them or tore them down. That’s why having at least one person who will cheer you on is so important. If you don’t have that person, I’ll be there. I love getting texts of $22,000 wads of cash that friends are using to pay for a new roof. And what’s more exciting than a picture of a credit card with a zero balance?

The next part of being able to do more of what you love is building some level of financial freedom. This is going to mean something different for everyone. Without getting into specifics, I’m going to assume that we all want to live a good life without financial worries.

The final thing I talk about is personal growth and lifelong learning. If you’re alive, you’ve got more to learn. I’m a completely different person than I was 20, 10, 5, and even 2 years ago. The more I learn and grow, the more I realize there is to learn. I recognize that I may have just made that sound overwhelming and intimidating so let me remind you that it’s personal growth. That means you get to decide what that looks like to you.

In theory, it probably makes sense to start with health. However, we found ourselves focusing on financial freedom first. Not long after, our health became a priority and is one of my three nonnegotiables to this day. Relationships followed and continue to be a lifelong area of growth. And personal growth has been a part of the entire journey.

Each of these areas are interconnected. Heck, every aspect of our lives are interconnected. It’s hard to love your whole life if everything is compartmentalized. I’m sure you will also find that as you make progress in one area, you’ll simultaneously advance in others.

I also feel like it’s important to mention that our lives are not perfect by any means. It’s likely that we connected through social media or that you follow one of my feeds. I really try to show real life, but I know it can look like I’m just showing my highlight reel. I consider that often and try my best to be real.

The truth is that even though we have a certain level of financial freedom, we still have stress, worry, and other struggles. The difference is that the struggles we face today are not comparable to what they were 5 to 10 years ago. Since we’re working from a stronger foundation, today’s concerns are more growth-focused. It’s a fun, interesting, and challenging place to be.

Having lived with and without debt, we wouldn’t choose to live any other way. There is absolutely nothing money could buy that would make me feel as good as financial freedom feels. Living debt-free has been an indescribable blessing to our life and our marriage. So without further ado, here are the top 10 ways financial freedom has changed our lives.

10 SURPRISING BENEFITS OF CREATING FINANCIAL FREEDOM

10 – YOU’LL BE FREE TO FOCUS ON WHAT YOU WANT TO DO, NOT WHAT YOU HAVE TO DO.

I recently heard a psychologist talk about reframing the things you have to do, as things you want to do. Research shows that people are more apt to stick to habits, like working out and eating healthy, if they view it as something they are choosing to do.

Since becoming completely debt-free, most of what we do is stuff we’re choosing. I don’t have to grow a garden. I choose to put in the work because we enjoy having nutrient-rich organic produce in our backyard. In our professional lives, we no longer feel stuck working in jobs or with customers who are not a good fit, just to make ends meet.

When you have debt, at least part of your life is going to revolve around doing what you need to do to make those payments. The more debt you have, the more stuck you feel.

When you’re not worried about making payments, you can set your life up to enjoy more of what you love each day. For most of us, those are the little things like going for a morning run, enjoying daily family dinners, or simply winding down with a good book after a fulfilling day of work.

9 – YOU’LL MAKE DECISIONS BASED ON LONG-TERM GOALS, NOT IMMEDIATE SURVIVAL.

The way we make decisions today is very different from how we made them as little as five years ago. When we had big debt payments that were due each month, our tendency was to not rock the boat. We were focused on a short-term false sense of security. We just needed that next check to come in.

Today we look at things very differently. Our timeframe for thinking, planning, and taking action has extended out much further. Conversations often begin with where we’d like to be ten years from now and what we need to do today to get there.

8 – YOU’LL IMPROVE YOUR RELATIONSHIP WITH MONEY AND SPENDING.

Other than politics, I can’t think of a subject that creates a more visceral reaction than money. It’s simply a medium of exchange. It’s a tool that people use to build lives, businesses, and create change. But the topics of student loans, wages, and taxes make some of the most rational people fly off the handle.

As Jer and I have become more secure in our finances, we’ve changed how we experience money. We have less of an emotional attachment to money. We see it as a tool to create a life that’s meaningful to us. Not something that defines or controls us.

Our goal to pay down a large amount of debt quickly forced us to reframe how we saw wants versus needs. In 2013 we spent a mere $455 on clothes and shoes for both of us. During that journey, we discovered that very little of what we used to spend money on were things we actually cared about. Today we choose to only spend money on things that bring us joy.

The most significant change, however, was learning to not care about impressing others. When I entered the working world after college, I thought the goal was to show how successful I was by wearing expensive clothes and driving a nice car (with payments of course). When we purchased our most recent vehicle (with cash), we went with the most practical choice instead of buying something that would make me look like I “made it.”

We buy things we don't need with money we don't have to impress people we don't like. ― @DaveRamsey ‏ Click To Tweet

7 – YOU’LL CHANGE YOUR PERSPECTIVE ABOUT SACRIFICE.

Come to think of it, I can’t remember the last time I made a sacrifice. Everything I do is a choice. How’s that for empowerment?

As I mentioned, we cut most of our spending during those three years we were paying down debt. And you know what? Those sacrifices weren’t as painful as we expected. In many cases, they were kind of fun.

Countless spending cuts that were meant to be temporary haven’t been added back to our current budget. We continue to camp because we enjoy it, not because it’s the cheapest way to vacation. We’ve come to prefer eating at home and so our dining and entertainment budget hasn’t increased much. We found a new way to live life and we’re enjoying every bit of it.

6 – YOU’LL HAVE MORE MONEY AND FINANCIAL PEACE.

Six months after becoming completely debt-free, Jer and I began making arrangements for me to leave my corporate job. The numbers worked out on paper, but I worried about losing an entire income. After I left, other things fell into place but there was still a significant difference in our monthly income.

It didn’t take long to realize that even though we were making less, we were able to manage what was coming in better than when we made more and had more payments. It’s amazing what you can do with your income when you’re not using most of it to pay back the bank.

No matter who you are or how much you make, stuff happens! When you’re not spending most of your paycheck on payments, you can set some aside for unexpected expenses. When you need a new furnace, a new roof, or a new car, it’s a minor inconvenience instead of a disaster. This new way of being will bring you a greater sense of financial and emotional peace.

5 – YOUR ACTIONS WILL ALIGN WITH YOUR VALUES.

When I had a “real job,” there were times I was told to do things that I felt were wrong. But since I needed to keep the income coming in, I felt I had to play along. As soon as we were no longer dependent on that job for survival, it was like a switch flipped.

I began to speak up in meetings and say, “we’re approaching this all wrong.” In case you’re wondering, that new voice was not well received. But it felt amazing to finally speak up about what I believed.

Now I understand how living in resistance to our values is physically and emotionally unhealthy. I can’t tell you how many times over those last couple of years I called Jer crying because I was being forced to do something that was wrong or utterly ridiculous. It affected me emotionally and I believe it also took a toll on my physical health. I’m so grateful I was able to get out of that cycle before any serious health issue arose.

Jer has expressed similar feelings. While discussing our new found freedom, he said, “One of the best things is not feeling constant stress at work. I no longer feel trapped and I don’t make decisions based on fear.”

When we’re stuck in the cycle of debt, it’s not uncommon to sacrifice what’s most important to us to make ends meet. I’ve been there and I learned that you don’t have to stay stuck. Freedom is closer than you think.

4 – YOU’LL VIEW YOUR FUTURE WITH A NEW PERSPECTIVE.

The plans we’re discussing for the next ten years weren’t imaginable when we started this journey a decade ago. In the past, we’d have big dreams but would eventually succumb to facing “reality.”

For instance, when we got married in Hawaii 16 years ago, we came back and announced that we were going to retire there. Everyone said, “There’s no way you’ll be able to afford to live there.” And we believed them. Feeling defeated, we started looking for cheaper options, like Mexico, Nicaragua, and Thailand. (Remember what I said about relationships?)

Today we have a new perspective. Instead of accepting defeat we ask, “What can we do to make this happen?”

With the freedom that comes from living debt-free, our dreams have grown far beyond retiring somewhere warm. Our dreams are no longer some far off vision that will happen someday when we retire. Our dreams are continually growing and evolving, but more importantly, we believe that we can get there.

3 – YOU’LL ENJOY BETTER HEALTH.


I’ve shared the ways we feel less stressed and there are other ways our health has improved. Most importantly, we’ve been able to take back control over how we live our everyday lives. We’ve built a foundation that allows both of us to exercise daily and consume healthy home-cooked meals. We’ve been able to work in rest and healthier morning routines. We drink less, sleep better and live all-around healthier lives.

We also have a greater sense of emotional peace. There’s less anxiety about making money. And we’re happier and more content overall. It’s been a much better way to live life.

2 – YOU’LL FEEL MORE CONFIDENT.

This is a big one for both Jer and I. We struggled with low self-confidence for most of our lives.

In another blog post, I wrote “confidence is something we carry within us and not a series of particular behaviors. As we begin to feel more secure in ourselves and our abilities, our confidence will become visible on the outside in its own special way. Confidence is a skill. We can’t read, wish, or meditate ourselves into more confidence. We have to practice the things we’re trying to become more confident in.”

In short, confidence requires action. We took action and ended up achieving a goal many people never achieve. Obtaining and maintaining debt-free status is a pretty big deal and something we deserve to feel good about.

This confidence has spilled over into other areas beyond our financial life. We’re more confident with our health, looks, and body image. We’re more confident in our relationships and communication. We’re more confident in our careers and life choices. It was an unexpected, yet welcomed bonus to achieving financial freedom.

1 – YOU’LL ENJOY BETTER RELATIONSHIPS, ESPECIALLY WITH YOUR SPOUSE.

It’s hard to express what working on and achieving a goal like this does for a relationship. And I have to imagine it’s different for everyone. So here’s our perspective.

Working on something like this as a couple requires a high level of honesty, follow-through, and trust. Your success depends on your ability to communicate and work as a team. If you can stick with it, achieving your goal will bring you closer together.

There are many ways our relationship has improved. We feel less stress overall. We have more quality time together. And we continue to learn and grow as a team. This is something we will always share; the experience of a lifetime that brought us closer together.

I invite you to think about how these benefits could play a role in your life. Then take some time to think about what financial freedom might look like to you. I share our story, not as the only strategy that works, but to inspire you to write your own.

Here are some questions you might want to consider.

  • How much money would you need to reach the next level of financial freedom?
  • Does financial freedom mean living debt free?
  • If so, how much debt do you have to pay off? How quickly can you do that?
  • If not, how much debt are you willing to live with?
  • How much would you need to earn to not have to worry about making ends meet?
  • How will you manage your finances in order to maintain your financial freedom?

Now take some time to think about why this is important to you and your family.

Answer these questions and visualize the answers as though they’ve already come true.

  • How would your life be different if you created financial freedom?
  • How would your daily life be in alignment with what you most value?
  • How would your relationships develop through this process?
  • How would it feel to achieve this goal?
  • How would you use your freedom to create change in the world?

Finally, there is no change without action.

Write down one small thing you can do this week to start moving toward more freedom. If you’re feeling brave, hold yourself accountable by sharing it in the comments below. Or come tell me about it on Facebook.

Editor’s Note: This post was originally published in June of 2018. It has been completely revamped for accuracy, comprehensiveness, and readability. Please enjoy and feel free to share this newly revised content.

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Start Living in Abundance When You Change This Financial Belief

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Our thoughts and beliefs affect all areas of our lives; our success, relationships, health, and finances. Over the years I’ve come to recognize a very common belief about money that limits our ability to prosper. This belief not only applies to our financial lives but every other area of our lives as well. Continue reading to find out if you have this belief and if you do, learn what you can do to change it.

I was chatting with a friend the other day and I commented on how he’s been working on the same house forever. He went on to tell me more about the project. It’s a 14,000 square foot home for a couple of 30-somethings. It has eight bathrooms and a budget of 10 million dollars. After my initial “holy crap!” I said, “I need to get into their line of work.” He said… wait for it… “They don’t work. It’s family money.”

What?! We don’t even get birthday cards from our family. So the idea of a 10 million dollar home completely blows my mind. Like, how much money does this family have that one member is building a home worth $10 million?

The old me would have said something like, “who needs a house that big?” Or, “must be nice to not have to work.” But the current me kind of chuckled at how crazy different their reality is from anything I’ve ever known. And then I said, “Good for them. That’s not how I’d spend $10 million on real estate. But I hope their building something that brings them joy.”

And I truly meant it.

The old Holly would have been bitter because I had a belief that there was a fixed amount of wealth to go around. If one couple had $10 million to build a home, that meant there was $10 million less to go around. Which meant there was less for me.

I believed that wealth was a zero-sum game. Or maybe it’s easier to think of it like a pizza. I thought that when someone did well and got five pieces that meant there were only three pieces left for everyone else. I didn’t consider that you could simply make more pizzas.

Most economic fallacies derive from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another. – Milton Friedman Click To Tweet

As I began to learn more about money, I learned that wealth isn’t a pizza with eight slices. It’s like literacy. There’s not a fixed number of people who can be literate. Throughout history, as more people learned to read and write, the literacy rate grew. Literacy begets literacy.

Wealth creation works the same way. There’s not a fixed amount of prosperity in the world. Like literacy, wealth can grow.

In his book, Business Secrets from the Bible, Rabbi Daniel Lapin teaches that money is spiritual. Yes, legal tender, like $100 bill is physical. But the concept of money is not. When you view money as a physical object, you believe it is finite. If it’s finite, then you can only get money by taking it from someone else.

When you see money as spiritual, it becomes infinite and everyone can win. Engaging in economic transactions creates money. This is why the stock market continues to grow and the central bank continues to mint new money.

When you view money as an object, you believe it's finite. If it’s finite, you can only get money by taking it from someone. When you see money as spiritual, it becomes infinite and everyone can win. – Rabbi Lappin Click To Tweet

Here’s a modern-day example of how wealth is created. In 2007, Joe Gebbia and Brian Chesky started Airbnb. Ten years later, the company boasted a $31 BILLION valuation.

Was this money taken from the prosperity pizza leaving $31 billion less for the rest of the world?

Quite the contrary. Airbnb created new a new opportunity for virtually anyone to create wealth. My husband, Jer, and I traveled to Mexico earlier this year and saw firsthand how platforms like Airbnb are helping families make ends meet.

A skeptic might argue that they’re taking from someone. The skeptic would say they’re stealing business from the big hotel chains or the hostels. But after a recent last-minute trip to Hawaii, I beg to differ. Trying to find decent lodging last minute was an adventure, to say the least.

The creation of Airbnb has not only been good for the founders, but also their employees, investors, property owners, travelers, airlines, rental cars, and the travel industry as a whole. There’s even a whole new niche of businesses created to serve property owners. I’ve also noticed growth with other vacation rental sites like VRBO. Like literacy, wealth begets wealth.

Now for the moment of truth. Do you possess a belief that wealth is a fixed pie?

If you do, go easy on yourself. We all have diverse backgrounds and experiences that have come together to form our worldview. Many of these experiences you didn’t choose so you don’t have to continue to carry them with you. Give yourself permission to embrace a growth mindset and keep learning and improving.

Whether or not you see wealth as a fixed pie, these three practical tips will help you live with more wealth and abundance.

1 – Educate Yourself

I love books. They’re something I can pick up in the evening when I have downtime, or grab and bring with me to appointments. When I traveled for work I listened to tons of audiobooks. Here are some of my favorite titles that will help you build wealth.

You can find lots of other resources here on my blog. Podcasts and YouTube offer more wonderful opportunities to learn. And don’t forget to look into classes through local churches or community education.

Most of us weren’t taught about personal finances in our schools or families of origin. But that’s no excuse to stay stuck with a negative belief. Empower yourself to thrive financially by learning more about money.

2 – Think Collaboration over Competition

I’ll admit that this isn’t something that came naturally for me either. From the beginning, we’re taught to win. We’re graded on a curve and only a handful of people can get the highest grade or the biggest raise. Only one team can win the sports ball trophy and only one runner comes in first in a marathon.

But business and wealth creation don’t work this way. Over the last 20 year I learned that collaboration always wins.

Your success in business isn't graded on a curve. There aren't a fixed number of A's or bonus dollars to be divided. That's why collaboration always wins long-term. Click To Tweet

Before going out on my own, I worked for a large corporation as a business coach. I have fond memories of one business owner, in particular, who was leaps and bounds ahead of his competition in terms of sales and profitability. While he’s a driven and competitive person at heart, he’s a collaborator when it comes to business. He was the only client I worked with who would freely share his knowledge, resources, and staff with his competitors. His collaborative mindset served him then and continues to serve him today as he remains on top of that business and is creating an exciting life most of us could only dream of.

3 – Be a Giver

Secret number 34 in Business Secrets from the Bible is that giving money makes you feel rich. The reasons that givers win with money could be (and now is) an entire blog post of its own. I’ll keep it simple for this post but if you want to learn more about how giving makes you rich, check out this post here.

In this book Give and Take, Adam Grant explains how the world is made up of givers, takers, and matchers. Most people are matchers. When a matcher works with a giver, they want to help them and see them win. When a matcher works with a taker, they can’t wait until the taker eventually gets what they deserve.

Nobody likes a taker, so be a giver instead. It will change your mindset, relationships, and your happiness.

In every area of our lives, our success is tied to our beliefs. While many of the beliefs we learned growing up are beyond our control, we have the power to change them. By educating yourself, collaborating, and giving, you’ll shift your mindset and enjoy a more abundant life. And there’s nothing you deserve more than a life that’s overflowing with love, health, and wealth.

By educating yourself, collaborating, and giving, you’ll shift your mindset and enjoy a more abundant life. Click To Tweet

What belief about money has held you back from fulfilling your potential?
Share in the comments below or come tell me about it on Facebook.

This post was originally published in March of 2018. It has been completely revamped for accuracy, comprehensiveness, and readability. Please enjoy and feel free to share this newly revised content.

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5 Fun Ways to Give that Will Make You Feel Richer

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Could you actually feel richer when you give? You sure could! Not only will giving make you feel richer, but it can make you financially richer too. Giving has also been shown to increase happiness and improve physical health.

Even with so many benefits, giving can lose its sparkle and no longer feel fun sometimes. Find out how to bring the spark back, feel richer, and make giving fun again.

Why Give?

There many reasons to give and the motivation behind giving is different for everyone. Some people do it because that’s what they’re supposed to do, others do it because it makes them feel good. Someone might give because it’s fun, and others give in memory of a loved one. There are infinite wonderful reasons people choose to give.

Here are some of my favorite reasons. Study after study has shown that giving makes people happier. Giving has been shown to improve physical health and increase lifespan. Being in a position where you are able to share your good fortune can be fun. And finally, giving actually makes you richer.

In his book, Give and Take, Adam Grant shared a study conducted by economist Arthur Brooks in the year 2000. In this study, Brooks found that “higher income led to higher giving. For every $1 in extra income, charitable giving went up by $0.14. But something much more interesting happened. For every $1 in extra charitable giving, income was $3.75 higher. Giving actually seemed to make people richer. For example, imagine that you and I are both earning $60,000 a year. I give $1,600 to charity; you give $2,500 to charity. Although you gave away $900 more than I did, according to the evidence, you’ll be on track to earn $3,375 more than I will in the coming year.”

If you want to learn more about the benefits of giving, I highly recommend checking out Grant’s book below.

Our Journey to Giving

My husband, Jer, and I have been generous here and there throughout our lives. But we didn’t give consistently until 2012. And to be perfectly honest here’s why I did it. At the time we were diligently working to create financial freedom by paying off our mortgage and becoming completely debt-free. I read over and over again about the financial benefits of giving. But there was one idea in particular that resonated with me.

I don’t know if you’ve ever buckled down to focus on a financial goal like paying off student loans or saving for a down payment to buy a home. If you have there’s a good chance you became obsessed with frugality. If you’re anything like we were, you only ate at restaurants during happy hour if you even ate out at all. If you bought new clothes, they probably came from the clearance rack or a thrift shop. When you’re focused on a big financial goal, you think a lot about ways to save and cut spending.

I can’t remember where I first heard about this idea, and if it’s a quote I’m probably getting it wrong. Here’s the gist of it. When your fist is clenched so tight holding on to your last dollar, there’s no room for another dollar to slip in. I don’t know why, but that idea really resonated with me so we decided to give regular giving a try.

When your fist is clenched so tight holding on to your last dollar, there’s no room for another dollar to slip in. Click To Tweet

We started by setting aside a specific amount each month to give to charitable organizations. Eventually, I got sick of keeping track of it so I automated our giving and gave the same amount to the same charity each and every month. When we earned large bonuses, we’d take 10 percent and give it to something else. But for the most part, our giving became very bland.

I started to wonder if I was benefitting from giving any more. Not to sound selfish. I believe almost everything in life can, and should be, a win-win. If I’m giving money joyfully, the positive energy along with my donation can surely do more good than giving to something I feel no connection too.

As the tax laws changed over the last several years, it seemed like as good of a time as any to experiment with new ways to give. I stopped all of our automated contributions but maintained the same dollar amount of monthly giving. We decided that we were no longer concerned about giving to an actual charity to receive a tax write off. So we started to give however much we wanted to whomever we wanted and we’ve been having a lot more fun since. Here are some ways we’ve made giving fun again.

5 Fun Ways to Give that Will Make You Feel Richer

Help someone freely and unexpectedly.

I’m going to be honest here because I know I’m not the only one who feels this way. Giving out of obligation or expectation is the worst! For example, buying a little something for someone just because you know they’ll love it is super fun. Buying something for someone because you’re supposed to and you know that you’ll never hear the end of it if you don’t is the opposite of fun.

Giving should be done freely and without obligation and expectations. Click To Tweet

Giving should be done freely and without obligation and expectations. Here are a few fun ways we’ve been able to do that this year.

A guy who works for one of Jer’s customers had an accident at work and was limited to the number of hours and the work he could do. As an hourly employee with a large family, Jer wanted to help him make ends meet while he recovered. Jer purchased a grocery store gift card that was enough for a month’s worth of groceries. The employee was touched by the gesture and thanked Jer profusely telling him how much that meant to him and his family.

Can you imagine what it would feel like to be able to help someone like that? Just because you wanted to? To be able to keep a family going while they worked their way through a challenging time? If that’s not a fun and meaningful way to give, I don’t know what is.

One small thing I like to do is to pay for people’s groceries. Have you ever been behind someone in the grocery store and they realize they don’t have enough to cover their entire bill? I simply tell the cashier to add it all to my bill and cover the cost of anything they didn’t have cash for. It’s a very humbling experience because it’s usually a small amount of money for things I would never buy. It reminds me how blessed I’ve been in life and I feel honored to be able to share that with others.

Be ridiculously generous.

This is my favorite way to give!

A fun way to be ridiculously generous is to fund an entire Go Fund Me campaign when it’s a smaller amount. It’s a blast to blow people’s minds when they start a fundraising campaign and you can meet their entire goal within the first hour. And while you’re at it, try doing it anonymously next time. I find being anonymous much more enjoyable than blasting my name and the amount I gave all over the internet.

Another thing we love to do is to leave really large tips when we receive exceptional service. I’ve been known to leave $25 on a $7 lunch tab or a $50 tip for a pizza and two beers. We never let them see the tip before we leave. I want them to be able to experience the reward without feeling obligated to thank us. They earned the tip and should enjoy it however they want.

Create a giving challenge.

While I don’t have the budget to do this often, this was an exciting and eye-opening experiment in giving. I set a budget and divided that into 30 days. Then for 30 days, I gave away that dollar amount every single day.

I tested how different forms of giving made me feel, like that time I handed a big wad of cash to panhandlers in the co-op parking lot. I was surprised to find that I didn’t feel any strong emotions after. That said, I’ll probably never do that again.

It was also interesting to see the different responses I received from organizations. Some organizations said nothing, which is really too bad because I would have loved to have sent them more. Others sent very heartfelt notes of gratitude and of course I can’t help but think of them when it’s time to give. For me, it wasn’t about getting recognition, but the value of my generosity to them.

Micro-lending

Micro-lending is the gift that keeps on giving.

What is micro-lending? Microloans are small loans issued by individuals and not banks. These loans are common in third world countries where traditional financing is less abundant than what we’re used to here in the United States. These loans are most commonly used to start businesses, pay for education, and for surgeries or dental care.

One of the best ways to participate is through an organization like Kiva. Kiva uses crowdfunding to provide capital to the underserved. 100 percent of every dollar loaned goes to funding loans. Kiva boasts 1.8 million lenders serving 3.4 million borrowers in 78 countries with a 97% repayment rate.

I discovered Kiva during my 30-day giving challenge and I couldn’t be more pleased with the experience. As a lender, I get to choose who I fund and how much. I love that it’s a loan and not a donation. When I’m repaid, I can use that money to bless someone else to empower themselves and their family. It’s fun to follow their stories and watch their diligent repayments. Kiva is an excellent way to share your abundance in a way that keeps giving back indefinitely.

Think beyond monetary donations.

Even if you’re in a season of life where there’s not much to spare, a tiny amount of generosity will go a long way for both you and the recipient. Whether you’re giving away one dollar or 100,000, I encourage you not to stop there.

There are many wonderful ways I’ve seen people give back that are rewarding and meaningful to both the giver and the receiver. Little things like the family who set up a water station along a bike route where there are no water fountains. This is a simple and thoughtful way to give back.

Think of your unique gifts and talents that you could share with others. For example, I love hiking, feel passionate about connecting people and building building healthy habits. And I just so happen to excel at research, planning, and organizing. I used these passions and superpowers to create a monthly hiking meetup in my local community.

How about being a mentor? I believe that we all do better when we mentor AND are mentored. There’s no greater act of generosity than empowering someone with your knowledge and experience.

Consider these other ways to be generous.

  • Pick up trash on the sidewalk and side of the road.
  • Support a friend’s business by liking, sharing, commenting, and sending referrals.
  • Give genuine compliments daily.
  • Lend a listening ear.
  • Invite someone who’s been going through a tough time over for dinner.
  • Let someone cut in front of you during rush-hour traffic.
  • Shovel your neighbor’s walk before they get home from work.
  • Simply be friendly, smile, and say “hello” to everyone you meet.

Bonus Tip – Make it a family affair!

While I love being generous on my own, it’s more fun when Jer and I do it together. And if you’re lucky enough to still have kids at home, think of all the fun you could have giving as a family. I bet your little ones will be so inspired that they’ll offer up their own savings without you having to prompt them. Find something you care about, create a plan, schedule it, and then have a blast giving together!

How to find the money to give.

As I mentioned, everyone benefits from giving. Whether you have a dollar or $100,000 to spare, your life will be richer when you give. Here are some tips to get started.

Budget it

We budget giving every month after paying ourselves first. We pay ourselves, then we pay it forward, all before paying any bills.

Start small

10 percent is a good standard for giving, but if you’re just starting out, begin with $10. Pay the bill for the car behind you at the Starbucks drive-through. Pick up a $25 gift card for the single dad at work who’s going through a difficult divorce. Just do one small thing and when you’re ready, do another.

Cut Nonessentials

You know that weekly trip to the specialty grocer that costs you $50 when you don’t feel like making dinner? Or that $100 trip to Target to get toothpaste that turned into retail therapy? Or maybe it’s a daily trip to the Starbucks drive-through because you’re too rushed to prepare your morning coffee at home? It’s safe to say that most of us have something we could cut and wouldn’t really miss. And let’s be honest, using that money to bless others would be more rewarding than that trip to Target for retail therapy.

The beauty is that you don’t have to do any of this forever. Give it a 30-day test run and see how it feels. If you like it, keep it going, if not, try something new.

Sharing our time, talents, and financial resources with others can be immensely rewarding. And I believe that the better we feel about our generosity, the more valuable it is for everyone. So the next time you give, why not have fun doing it.

What are some of your favorite ways to give? Share in the comments below or come chat with me on Facebook.

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How eliminating debt helped John and Lisa thrive during an unexpected layoff

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Having spent the first part of my career in the corporate world, I’ve watched hundreds of people navigate unexpected layoffs. It was heartbreaking to watch and devastating for those experiencing it firsthand. Then not that long ago, a friend mentioned that his wife would be losing her job the following spring. Rather than being devastated by the layoff, they seemed to welcome this unexpected change with eager anticipation. And by eliminating debt, they not only survived but thrived during the unexpected.

I was so inspired by their journey that I asked if they’d be willing to share their experience with a larger audience. I’m grateful they agreed and hope that John and Lisa’s story helps you believe that eliminating debt and financial freedom are attainable for you too. Please enjoy John’s encouraging words and wisdom about life after debt.

Most people are pretty scared when they experience a layoff. It’s ingrained in our culture to identify our self-worth with our paycheck. But in reality, most of us are living just a paycheck or two from a crisis.

That’s absolutely where we were when I (John) experienced a layoff in 2013. We were terrified. We didn’t know where our money was going, much less where it would be coming in from. Even after that crisis passed and I found a new job, I never shook that feeling of panic.

Two things happened when I lost my job. First, I became painfully aware of how much money I had wasted on stuff that didn’t matter to me. I sat there with a legal pad trying to figure out how we were going to pay bills that month and my shelf of unwatched DVDs started to look like a wall of 20 dollar bills I would never get back.

I realized that none of the stuff for which we had gone into debt actually brought happiness or fulfillment. They didn't then and I know now that they never will. @JohnSQuast Click To Tweet

I realized that none of the stuff for which we had gone into debt actually brought happiness or fulfillment. I believed the lies that driving a certain car would make me feel like I’d “made it,” that having the newest toys would bring me joy, or that going to all the best shows and eating at the trendiest restaurants would make me feel content. They didn’t then and I know now that they never will.

Second, the support and encouragement I received from my wife, Lisa, made me realize that I’d always had the fulfillment I was grasping for; I was just ignoring it. I began to rely on God and my wife for contentment, not the image I projected with material possessions. I realized that loving people and connection brought joy, not toys or experiences.

I asked myself why I was letting this stuff get in the way of doing the things that bring me real fulfillment. What I truly desired was taking care of my family, spending time with family and friends, giving to and serving others. At that point, I got mad. Every useless thing I had was standing between me and the life I wanted for our family.

A few months after my layoff I found Dave Ramsey’s book The Total Money Makeover. It resonated with what I was feeling about our recent layoff scare. I wanted to have control over our money and to be able to set aside enough so that if something like that happened again, we’d be prepared. If we could just start eliminating debt payments, we’d actually have money left over at the end of each month. We took to the plan, got on a budget, and attacked our debt.

If budgeting feels as intimidating to you as it did for me, start the way we did with a reverse budget. I set up budgeting software and tracked our spending for a month. We used Quicken, but Every Dollar or Betterment are also good options. Just by tracking and being mindful, we cut our expenses and it gave us a baseline to work from. When we saw exactly how much eating out was costing us, it became easy to plan a menu and go grocery shopping. At the same time, it was encouraging to see how cutting a few expenses increased the amount we were putting toward eliminating debt. That motivated us to cut more.

Part of the Dave Ramsey plan is to sell all the unneeded stuff you’ve accumulated and put the proceeds toward eliminating debt. This was very healing as I was able to recover some of the money I wasted and pare down what I owned. I’ve since become very intentional about what I own and try to only bring things into my life that add value.

I started a spreadsheet to track how much debt we paid off with the stuff we sold. As we sold more and more, I realized that I didn’t miss any of it. I can only think of a couple of times in the last five years when I needed something we had sold. There were over 300 line items in that spreadsheet and many of those were bulk lots such as a garage sale where hundreds of items were sold.

We paid off our last non-mortgage debt just before Christmas 2014. You’d expect our spending to increase after that, but it didn’t. We found that we didn’t miss most of the things we cut, so there was no reason to bring them back. We went out to dinner more often and felt comfortable spending on things that were important to us and added value. But our spending patterns didn’t change.

Fast forward to 2018. Lisa didn’t like her job and we had reason to believe they might be shutting down her office. So when she called to tell me the layoff notice had come across, I remember being excited for her. Then I felt worried about her state of mind. I worried she would feel devalued, rejected, or like a failure.

Instead, she was kind of giddy. It was like someone had taken a weight off her shoulders. She felt secure about our financial position, which enabled her to focus on helping her employees navigate the unemployment system and get the help they needed.

This time around, instead of feeling panic, the financial margin we created by eliminating debt allowed us to start thinking about what we could do differently. A year earlier on a weekend getaway for our anniversary, we started dreaming about what we’d do differently. Lisa expressed regret that she hadn’t been home with the kids more, so we started making plans for her to be able to quit her job in the summer of 2019. When we found out that she was being let go a year earlier than planned, we realized that God had more faith in our plan than we did.

When Lisa expressed interest in staying home more with the kids we started daydreaming about what that would look like. She didn’t want to quit her job and be home year-round, so contract work during the kid’s school year made sense. I already had a budget established so I had a rough idea of what we’d need to save and the areas we’d need to trim to get through the summer on one income. When the layoff came, we’d already done a lot of the mental groundwork.

It was a surreal feeling as her job was winding down and she wasn’t hunting for a new one. The kids started a countdown on the calendar and a growing list of things to do over the summer. The first Monday Lisa didn’t have to go to work everyone was so excited. And I was excited for them as I left for work and they were happily planning their day.

The summer wasn’t all playdates and fun outings. It was an adjustment for Lisa to be with the kids 24/7, and an adjustment for the kids to not have a structured daycare day and classmates to interact with. They drove each other crazy sometimes, as siblings do, but it was a good experience.

Holly asked what advice I’d give others and the simplest answer is to get out of debt. I think that’s a wise choice for everyone, but that’s only part of the story.

You also need to create margin in your life. When a significant percentage of your monthly expenses are fixed debt payments, you don’t have the opportunity to consider things like a more fulfilling job, taking time off, or starting a business. When your schedule is crammed full, you don’t have the time or emotional energy to ask questions like: What do I really want to do? What do I find fulfilling? Or what do I need to stop doing because it’s draining me? Being able to ask those questions, having the margin to really consider the answer, and then doing something about them is far more important than how much money you have.

When a significant percentage of your monthly expenses are fixed debt payments, you don't have the opportunity to consider things like a more fulfilling job, taking time off, or starting a business. @JohnSQuast Click To Tweet

If you’re in a place where creating financial margin seems a long way off, I understand. We had a point in our journey when we didn’t know how we could possibly create the space we have today. Back then saving $1,000 seemed like an unrealistic goal.

If that’s you, consider whether you’re holding any limiting beliefs that make that goal seem further away than it really is. Maybe you’re already working two jobs or working full time and pouring yourself into your kids the rest of the time. If not, would you be willing to make that sacrifice for a period of time to create margin in the future? Or pick up a side hustle like thrift store and garage sale flipping. Check out Gary Vaynerchuk’s advice on how anyone can make extra cash hitting up garage and estate sales. Or consider Dave Ramsey’s advice about delivering pizzas a couple of nights a week instead of surfing the net or watching Netflix.

Wherever you’re at right now, eliminating debt and financial freedom is within reach. I (Holly again) believe the old adage that we become the people we spend the most time with. Consider surrounding yourself with people who are already doing what you want to do. Fill your social media feed with people who are positive and inspiring. And then start doing the work so you too can thrive though the unexpected just like John and Lisa did.

Thank you again to John and Lisa for generously sharing their story. I truly enjoyed going through the process of developing this with John and I hope it provides great value to you or someone you know. If you’d like to connect with John, you can follow him on Twitter or connect on Facebook.

Can you relate to John’s story? Feel free to share your comments in the space below or come start a conversation on Facebook.

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3 Ways to Start an Emergency Fund & Why You Need One

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Just before Christmas in 2018, nearly a million US federal employees learned that their next paycheck may not arrive due to a government shutdown. The longest shutdown in US history lasted 34 days and left many workers unable to cover basic needs like food, shelter, and utilities. My heart goes out to these families. The fear and uncertainty must have been overwhelming, especially for those without savings in an emergency fund.

According to Bankrate’s 2019 Financial Security Survey, only 40 percent of Americans could cover a $1000 emergency without borrowing money. Among those families who faced a financial emergency, 36 percent reported that the unexpected expense was more than $5000. Since emergencies happen to all of us, I thought it was time to talk about emergency funds and share three simple ways to start one.

What is an emergency fund?

As the name suggests, an emergency fund is money you have set aside to cover unexpected expenses. I haven’t met a single person who is immune to these emergencies and that includes me and my spouse. If you’re a homeowner, chances are you’ll need a new roof or furnace someday. Everyone who drives a vehicle knows how it feels to have an unexpected expensive repair bill. And I pray you never fall ill or lose your job, but it makes sense to be prepared just in case.

Why you need one.

Having cash set aside for the unexpected dramatically decreases your stress level when the unexpected does arise. Simply having an emergency fund when our furnace went out last fall made a potentially stressful situation a minor annoyance. Sure, I would rather have spent that money on bikes or a canoe. But I was grateful that we didn’t have to worry or fight about where the money would come from.

An emergency fund will also help you get out and stay out of the cycle of debt. It’s easier to pay off debt if you’re not adding additional $5000 emergencies here and there. And once you’ve eliminated those debts, an emergency fund will ensure you don’t slide back in.

Just think what you could do with all of that money once you’re no longer giving it to banks.

How much do you need in your emergency fund?

The amount you should have in an emergency fund is different for everyone. Most financial experts suggest three to six months of living expenses. That’s not your monthly income, but what you need to get by if the checks stopped coming. Check out this link to learn how you can figure out what that amount is for you.

Three to six months is just a guideline. Some people need more and others need less. If you’re a young college student, you likely have very few bills and expenses and can get by on much less. And if you’re nearing retirement, you could add a little more cash to allow for market fluctuations as you wind down your career.

Other situations that could affect how much you need to save include households with one income, young couples starting a family, and homeowners. Anyone with medical issues would also benefit from a little extra padding. Those who are self-employed or independent contractors may want to have additional cash handy as well.

It’s up to you to figure out what number is right for you and baby step your way there. Start with a goal of $100 to $1000. Then work toward three months of expenses. Finally, consider your personal situation and add anything else you feel necessary.

Where should you keep it?

For some of you, this is going to be a large chunk of cash. It’s tempting to want to use your money to make money and invest it in the market. But let me remind you what happened in 2007 at the start of The Great Recession. I clearly recall the unfathomable dips in the market and remember being grateful that I wouldn’t need to access that money for many years to come.

Both stocks and real estate can experience extreme highs and lows over a relatively short period of time. What if you put your emergency fund into the market at a peak and needed it in a valley? You’d likely be in the same place you were before you hand an emergency fund and need to borrow money.

The better option is to leave it in a high yield money market account. Since the interest rates remain low at the time I’m writing this, you won’t get rich off your emergency fund. But that’s not the point.

The point is to insure yourself from the unexpected.

To find money market accounts with the highest yield, do a quick web search and do a little research. Bankrate.com is a great resource for all things interest related.

When should you use your emergency fund?

Again, as the name suggests, ONLY in an emergency. New bikes and canoes do not constitute an emergency. (Well, maybe if they’re your primary mode of transportation, but in our case, they’re not.) Likewise, most clothing, shoes, and home goods are not an emergency. And those concert tickets and fancy restaurants? Not a chance!

I could go on and on about what isn’t an emergency but that seems futile since it’s somewhat subjective. Here are some things that might constitute an emergency. A leaky roof, broken furnace, and exploding hot water heater all fall under emergencies. Repairs on a vehicle that you need to get to your place of employment is also an emergency. Lifesaving medicines and treatments are definitely an emergency.

An emergency is something you CANNOT go without, not a minor inconvenience. Click To Tweet

Three ways to start an emergency fund.

There are many ways to fund your emergency savings. To keep it simple, I’m going to stick to three main categories. You can use your imagination from there and find other fun and creative ways to build your emergency empire.

1 – Sell Your Crap

A friend recently shared a fun fact that the average American household has over 300,000 items in it. I struggle to imagine what that even looks like. And at the same time, I believe we weren’t that far off before we downsized all of our crap.

If you live somewhere for a while, stuff accumulates. Until last fall, we had a basement full of crap that included boxes that moved in with us 15 years earlier that we never bothered to unpack. There were gifts still in there wrapping, dinnerware we purchased for a party and only used once, and other things we had long forgotten about. We tossed a bunch in the trash, gave even more to charity, and even managed to sell a few thousand dollars worth of junk.

Check out this link to learn more about how to sell your crap quickly and get what it’s worth.

2 – Cut Your Spending

Most of us have plenty of things we could cut from our budget. I could go through my budget right now and find a nice chunk of nonessentials to cut. Some of you might be thinking that this whole emergency fund thing doesn’t sound fun anymore. But let me assure you, we’ve done the work and it’s worth it in more ways than you’ll ever know. You can learn more about the surprising benefits of cutting your spending in this post.

3 – Make More Moolah

A couple of great ways to make more money is to get a raise or start a side hustle… or do both.

When I had “real jobs” I never tried to negotiate my pay and that was a big mistake. Many employers will pay the bare minimum to keep you. It’s up to you to negotiate to a level that compensates your value and is fair for both of you. If that’s not an option where you’re at, consider a new job or an entire career overhaul.

There’s also the option of starting a side hustle. Almost everyone has skills and talents they could market on the side that have great earning potential. I love Chris Guillebeau’s podcast, Side Hustle School, and his book Side Hustle: From Idea to Income in 27 Days.

ALL OF THE ABOVE

The quickest route to financial freedom is employing all of the above. But I caution you to start small. Sometimes doing more than one thing is as productive as doing nothing. Pick one thing, make it a habit and part of your and lifestyle, and then consider adding another.

A fully-funded emergency fund is an essential part of any good financial plan. No matter where you are, don’t get overwhelmed by the numbers.

One dollar at a time is all it takes. Before you know it, you’ll be enjoying the peace and security of an emergency savings account.

What are your best tips for saving for unexpected expenses? Share in the comments below or come start a conversation on Facebook.

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