Holly Scherer

Find Yourself Outside

Personal Finance

When Helping Hurts – How to Set Financial Boundaries

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Have you ever had a friend, coworker, or family member who struggled to manage their money? No matter how hard they tried, they just couldn’t do what they needed to do to take care of the important things. I’m not talking about someone who is down on their luck. I’m talking about someone who has been begging you to help them out of a bind for the last 20 years. You want to help them, but you’re starting to feel like giving them money isn’t the best thing you could do. Here’s how to set financial boundaries so you can save your sanity, financial future, and relationship.

For many years I volunteered teaching life skills classes. One of the most challenging topics I taught was budgeting and personal finance. Money is a very emotionally charged topic and one wrong word could incite a fierce argument.

I didn’t particularly like teaching that class for that very reason. But I’ve seen how being intentional about personal finance can completely change someone’s life. Creating financial freedom changed every aspect of our life and I’m passionate about helping others do the same. I’m also a crazy person who loves a challenge so I kept teaching the class and eventually found a way to get my message across without starting a riot.

There wasn’t a single class where I didn’t hear a story about relationships destroyed by money. No wonder we have such strong emotions about the topic. It was always the same story. They lent someone a large chunk of cash and when they tried to get repaid, they never heard from them again. There were many variations of that story and I’m sure you have your own. I’m hoping that the things I share with you today will help you avoid a similar scenario in the future.

Families are Weird

I said that to a friend recently. Her response was, “families are weird.”

No two families are alike. Each family has its own unique culture and expectations. If I look at how my and my husband’s family of two operates, compared to my family of origin, then compared to the family he grew up in … well, you can’t even compare them. They all function so differently.

With that in mind, my goal is not to tell you what’s right for your family. Instead, I’m going to share a little bit about how we’ve dealt with family and financial matters.

What are Boundaries?

I love that boundaries is such a common topic these days. I believe they are the cornerstone of healthy relationships. That doesn’t mean they’re easy to articulate. But simply learning about boundaries is a great first step to building better connections.

So what are boundaries? I love Brené Brown’s simple definition: what’s okay and what’s not okay.

It’s up to each of us to define what is and is not okay for ourselves and our families. As a couple, Jer and I are a united front when it comes to our boundaries. The next step is learning to communicate these boundaries and hold others accountable.

I don’t know about you, but communicating boundaries is challenging for me. Rather than telling someone, “It hurts me when you talk to me like that.” I’d rather down a bottle of zinfandel and pretend to ignore it. And by pretend to ignore it I mean not saying anything to that person directly but complaining about it to Jer for the next week to 12 months.

That’s the thing about boundaries. If you’re not willing to communicate them and hold others accountable, you could spend your whole life poisoning yourself with resentment. If you have a situation that would benefit from stronger boundaries, I highly recommend learning more by reading a book like Boundaries by Dr. Henry Cloud.

Boundaries or Resentment?

Unless you clearly define what is and is not okay, you may be setting yourself up for resentment. This is especially true when it comes to families and even more so when money is involved. Here are three common causes of resentment.

1 – Expectations

My friend Ashley always says, “Unspoken expectations lead to premeditated resentments.” Can we just take a moment to give Ashley a virtual round of applause here?

This is one of the truest things I’ve ever heard and unfortunately something I’ve experienced hundreds of times. I’ve referenced my and my husband’s personality styles in so many posts and I have more fun examples coming next week. But as it pertains to expectations, Jer is a sweet peacekeeper who gives generously and is loved by everyone. This also means that he doesn’t always communicate what he needs.

I could care less about celebrating Christmas. My idea of a perfect holiday is hopping on a plane and going somewhere warm and spending Christmas on a beach eating tacos and drinking margaritas. Decorating and buying and wrapping gifts was unenjoyable work to me so each year I did a little less.

Then one day, it came to a head. By then I had two years under my belt of not putting up a single decoration. Then one Saturday in December when we were snowed in, Jer asked if I wanted to put up the Christmas tree. “Nah,” I responded, “then we’ll have to take it down in a couple of weeks and that’s just too much work” Apparently that was not the response he was looking for.

Sweet, kind, generous Jer was not happy. He said, “Thanks for ruining Christmas. It’s the one happy memory I have from my childhood and you had to go and ruin it.”

Um? Excuse me? We’ve been together for more than 15 years. Why is this the first time I’m hearing this?

Since then I’ve learned to play nice at Christmas. And learned to remind Jer that I can’t read his mind. While we’re not perfect, we’ve learned to communicate better and intend to keep improving.

We both laugh about this now which makes it a perfect example of what can happen in families when we’re not communicating our needs and desires.

I think we all know families who have dealt with resentment from unspoken expectations. This is especially true when money is involved. I’m sure we’ve all heard of blowouts during a reading of the will or splitting up an estate. Countless celebrities have complained about their families treating them like ATMs. And others feel slighted because they’re not getting their fair share.

All of this resentment could have been prevented by simply communicating our expectations. Better yet, learning to let them go altogether. You can’t control the expectations that family members have of you, but you can choose to let go of your expectations toward them.

2 – Manipulation

When our families, workplace, or friend group doesn’t have a culture that openly asks for what they need, manipulation can come into play. Manipulation is something that really bothers me. If you want me to do something, just ask. Don’t create some 20 step scheme to try to trick me into doing what you want. Even worse, don’t try and manipulate Jer because you know I’ll say no.

Some common forms of manipulation I’ve seen families use with one another are guilt, shame, threats, triangulation, lies, blame, and bribery. All of these behaviors are very toxic and you have the right and responsibility to set boundaries when they’re are being used on you. There may be tension in the moment, but being direct upfront will prevent future resentment.

3 – Lending

Last but not least, that classic example I shared earlier—lending.

Someone recently asked a friend of mine, “what are your three biggest regrets?” The first thing he said was lending money to his brother. He went on to explain that he’ll never see that money again and it didn’t fix the problem. Not only did he feel resentment toward his brother for not paying him back, but his brother also resented my friend for not continuing to bail him out.

This is such a common problem with family and friends. In the next section, I’m going to share some thoughts on avoiding this trap. But in my opinion, it’s best to not lend money to family and friends.

How to Prevent Resentment

So how do you honor your boundaries and avoid resentment?

Learn to get comfortable communicating your needs and let go of your expectations. And when it comes to lending—don’t do it!

If you want to help a family member, give, don’t lend. Give because you want to help them and believe in what they’re doing. Give without the expectation of getting anything in return. Give freely and joyfully, not because you feel guilty or manipulated.

When considering whether giving is the right choice, ask if it aligns with your values. If you are disciplined with money, would it challenge you to give to someone who spends frivolously and irresponsibly?

I know someone who loaned money to their father because he was having trouble covering his mortgage. The following weekend he took a trip out of town and dropped hundreds of dollars on hotels, restaurants, and bars for a pool tournament. As you can imagine, this created tension that rippled throughout the entire family.

One of our personal financial boundaries is that we don’t give money that supports unhealthy behaviors. If the family member in question has an issue with drugs, alcohol, gambling, or hoarding, we prefer to find other ways to help. Giving a hoarder money to buy more stuff hurts them more than it helps.

Helping Without Hurting

In situations where the money would be used in a way that is harmful to the individual, consider other ways you can help. Buy them groceries, bring them home-cooked meals, or a bag of clothing. Offer to help them better manage the resources they do have. Volunteer to help them create a budget or manage their bills and expenses. You could even offer to pay for a class to help them learn the skills they need to get back on track. There are so many wonderful and creative ways you can help.

And here’s a coaching pro tip. ALWAYS put the ball in their court when it comes to taking action. Ask them to send you an email with dates when you could schedule a sit-down to work on a budget. Have them gather statements and send you copies before you meet. If you’re buying them a course, have them sign up for the class and cut them a check upon receiving the receipt. Their action on the front end is a good indicator of future follow-through.

There are few subjects that are more complicated than relationships and finances. It’s safe to say that it’s something we will all encounter at some point in our lives. If not family, almost everyone has had that friend that never paid them back or took advantage of them.

Knowing how to communicate and stick to your boundaries will help you navigate these situations more easily. If you don’t feel good about a situation, you’re not obligated to do it, even if it’s family. It’s better to be direct and say no upfront than dealing with resentment that could fester for years.

What important lessons have you learned about friends, family, and money? Share in the comments below or hop on over to Facebook and share your story.

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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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3 Unconventional Ways to Create Financial Freedom

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Saving, investing, cutting expenses, and asking for a raise are wonderful ways to create financial freedom. But have you considered that there may be other ways to fast track your journey? Here are three unconventional ways to accelerate financial freedom that you probably haven’t thought of.

How would it feel to have no debt and enough savings that you didn’t have to worry about money? What would you do if you had more than enough coming in to cover all of your bills, save, and explore your interests? How do you think financial freedom could impact your health, career, and relationships? Really consider these questions and begin to create a mental picture of that life.

As I mentioned, we all know how saving, investing, cutting expenses, and asking for raises can help create financial freedom. But there are other very practical things anyone could do to accelerate their journey exponentially. These ideas might seem unconventional, but they work and are worth the effort to explore.

Accelerate Your Financial Freedom

1 – Move

Since this idea could seem the craziest, we might as well start here. You probably don’t hear a lot about this, but the cost of living has huge implications for your personal finances. There are many places throughout the country where you can earn a great income but have very little left over after covering your living expenses and taxes.

While not the most expensive place to live, our home city of Minneapolis, Minnesota isn’t the cheapest either. Especially once you add in taxes. A friend of mine has been doing some research and figures he can double his savings just by moving to another state.

Wages are typically higher in the city, but that doesn’t necessarily mean you’ll come out ahead. I had a conversation recently with someone who moved from the city back to their home town. Even though they took a tiny pay cut, their disposable income has nearly tripled. In the city, they had just enough to make ends meet. By moving to a smaller town they now have money to save and invest, as well as money to spend on their hobbies and interests.

This is going to be different for everyone depending on your career, income, and family size, so you’ll have to do your own research. Check out this link to compare the cost of living throughout the country. Then take a look at taxes here and here.

This unconventional option isn’t for everyone. Even though we could do better elsewhere, we’ve chosen to stay in Minneapolis for now because we love the culture and lifestyle. But if you find it hard to make ends meet and are ready for a change, why not consider a move?

2 – Change Careers

One of the things that really helped us on our journey to financial freedom was career choice. Sales jobs, remote work, and jobs where you travel offer unconventional benefits that really add up.

I have never had a “real job” where I worked in an office. I’ve always worked remotely and traveled. That meant that many of our everyday expenses were covered as a part of my home office. Cell phones, wireless plans, high-speed internet, and office supplies were always paid for. When I traveled I received mileage reimbursement which covered all of my vehicle expenses with plenty left over to save for new cars.

Then there were the little things like airline miles and hotel rewards. It’s been more than four years since I had a job where I traveled and we just used up the last of my airline miles. And while we paid for plenty of vacation rentals, we had nearly all of our hotel rooms covered with hotel rewards for close to 15 years.

On their own, these might seem like small things. But not having these expenses can leave $10,000 or more in your bank account over the course of a year. Not to mention that many of these jobs come with a higher earning potential too.

Start snooping around, do some informational interviews, and find out if a career change might be right for you.

3 – Start a Side Hustle

I’m not an accountant or tax expert but I do know that tax laws favor businesses and the self-employed. This makes starting a side hustle a great way to save some green and increase your income at the same time.

Experts estimate that more than 50 percent of the population could be freelancers in the next 10 years. So why not try it out and get ready for what’s to come?

This is something I really wish we would have started sooner in life. It’s such a wonderful way to not only accelerate your financial freedom but create time freedom as well. If you’re new to this idea, I highly recommend the resources from Chris Guillebeau. He hosts an excellent podcast called Side Hustle School and has authored a number of wonderful books.

The $100 Startup

Side Hustle

100 Side Hustles

No matter where you are right now, you can live a life of financial peace. All it takes in a little discipline, ingenuity, and some stick-to-it-iveness.

What are some of the unconventional things you’ve done to accelerate your journey to financial peace? Share in the comments below or come tell me all about it on Facebook.

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