Debt

How To Find Your Money Balance

How To Find Your Money Balance | www.TheHeavyPurse.comMy friend, Laurie, recently shared how she was giving money all the power in their relationship and the steps she was taking to regain control. This happens frequently. Whether we like it or not, money does wield a lot of power in our world. It’s why it’s always been so important to me to teach Lauren and Taylor how to use that power wisely, so they are in control, rather than their money controlling them.

Restore Your Money Balance in 5 Steps

People in debt tend to struggle with this the hardest, in part because they are also dealing with the stress (and potentially feelings of guilt and regret) of eliminating their debt. There is no pill or potion that magically erases debt, but a balanced money mindset can help you stay on track and focused on your goal.

Step #1: Stop Comparing Yourself to Everyone Else

We talk a lot about the dangers of playing “keep up” and how it creates bad habits and all too often debt. What we don’t talk about is how we also compare our debt journey to everyone else and how that can be as equally harmful. I see people act ashamed or defeated because they feel their own journey to financial freedom is going much slower than others. They apologize for what they think is poor progress, instead of recognizing how far they have come and the positive changes they have made. Sometimes they give up because they think they have failed.

Figure Out What Works for You

First, stop comparing your debt payoff to everyone else. Even if you have the same amount of debt, it is still an apples to oranges comparison. For some, they may about to fall off their own fiscal cliff while for another, the situation may be less dire. Additionally, what we consider an aggressive debt pay down may differ from one another too. Meaning one person will happily sell their home, their car and most of their possessions to eliminate all or most of their debt. Another person would rather not do those things because it would make them incredibly unhappy.

You have to figure out what an aggressive pay-down looks like to you, and only you. It’s not that you can’t be open to feedback and suggestions, you can. Just don’t get caught in the trap where you constantly compare yourself either. Use other people’s success to motivate you on the those days where you want to quit as a reminder that people can eliminate debt and reach financial freedom. But remember, it’s not a competition as to who gets there the fastest. All that matters is that you get there.

Step #2: Set Goals that Matter to You

Now that you’ve stopped comparing yourself to others, you can turn your attention (and energy) onto what you want to achieve and the life you want to create for yourself and your family. When you have debt to eliminate, it is often your top priority goal, which is fine. I encourage you, however, to set goals beyond debt elimination. Because in many instances that alone is not enough. What else do you want your money to do for you? Be specific.

And when you find yourself jonesing to shop after a bad day or stumble across something you want but don’t need, ask yourself, “Does this bring me closer or further away from my goal of XYZ?”. If you can stay focused on your goals and what you truly want, then it’s much easier to walk away without feeling deprived because you know that your “no” puts you another stop closer to achieving the life you truly want.

Step #3: Create a Realistic Budget and Track Your Spending

I truly believe budgets give you freedom, rather than take it away, which is how many people commonly view budgets. When I know how much money I have available, then I can make informed choices on how I want to spend it. When I don’t know how much money I have to spend without creating debt, then I am justing spending. And not always on the things that truly matter to me.

There are so many different ways to budget and track your spending these days with all the handy apps and tools that make it easy for you. There is no one right way to budget. There is only the budget you will follow consistently. Find it and use it.

Success Tip: Always start by eliminating the low-hanging fruit. The things you won’t miss. Then get ruthless. Examine every expense and decide which ones you will keep and which ones you will eliminate based on your goals and values.

Step #4: Give Yourself Peace of Mind with an Emergency Fund

Now I know this one can be really difficult for those paying off debt. Having a sum of money just sitting there, earning pennies in interest, seems silly. I get it. It’s very tempting to use that money to put a nice dent in your debt. But I suggest you don’t.

First, stop thinking of it as wasted money. In my mind, it’s actually quite priceless. An emergency fund is exactly that — it saves you from creating or going further into debt when emergencies happen. And they do happen. Regularly. If your emergency fund isn’t being tapped, then consider yourself fortunate that life is rolling along smoothly.

Some of you may still think it’s worth the risk, not realizing the psychological impact of an emergency fund. You rationalize that you can always use your credit card in a pinch. Here’s what I often see happen. Not having any sort of cushion causes people to have more sleepless nights than their debt does. They feel very vulnerable and exposed. They now not only worry about their debt but also about the “what if’s”.

In most situations, some emergency does arise and they don’t have the funds to cover the cost outright, so it goes on their credit card. Sometimes it undoes months of hard work and it’s incredibly demoralizing to the point where many quit. The fact is, if you have substantial debt, it will take time to eliminate it, potentially years. Having money set aside to help cover emergencies when they happen will help you stay on track with your debt repayment plan.

Step #5: Forgive Yourself for Your Money Mistakes

Every single person has money skeletons in their closets. Money is emotional and sometimes we make bad choices when we let our emotions guide our decisions. While we need to learn from our mistakes, we don’t need to beat ourselves up over them either. Constantly replaying mistakes while we call ourselves “dumb”, “stupid” or “bad” for making them does not help us gain control over our money. Instead we feel even less confident in our choices because we start to second-guess ourselves constantly. We become so paranoid about making a mistake that we refuse to make any decision. Debt does not make you a bad person. Forgive yourself and move forward.

Celebrate — You’re Back in Control

Having money balance helps put you back in the driver’s seat where you are the one making decisions that honor your goals and values versus letting others or your emotions make them for you. You not only feel confident in the choices you are making but also your ability to reach financial freedom.

Shannon

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September 15, 2014  •  41 Comments  •  Debt

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  1. Monday, September 15th, 2014
    I think I can sum up your tips as something to do with personal management. I like that making everything personal is better like what strategy works for me may not work for others. It's about getting to know yourself, your needs, and your preferences, which I believe can easily meet that goal: money balance.
    • Shannon Ryan
      Monday, September 15th, 2014
      Absolutely, Jayson! People sometimes forget to find the strategy that works for them and mimic someone 100%, then wonder why it not working as well. We have to know what motivates us and what our money values are in order to create the right plan and create money balance.
  2. Monday, September 15th, 2014
    For me, I have to constantly remember number 1. If I compare myself to others, it looks like I am not doing so great. Most of my colleagues have around $100k of student loan debt or less. I have $159k! But I have to remember that I started out with $206k, and with a 7.5% interest rate, getting down to $159k in 3 years is great. And with that momentum, I hope to speed things up even more over the next 3 years. If I compare myself to my peers in this category, I'm frustrated and discouraged, which ultimately will do more hard than help.
    • Shannon Ryan
      Monday, September 15th, 2014
      You're doing great job tackling your student loans, Natalie. It can be discouraging when you compare yourself to others, which is why it's so important to stay focused on the great strides your makings. Because you are absolutely correct, the more frustrated and discouraged you feel, the harder and slower things seem to go.
  3. Monday, September 15th, 2014
    Shannon, thank you so much for the mention, and for this post: I needed it today. Getting frustrated again with how slowly the journey is going. Thanks for reminding me to remember how far we've come. :-)
    • Shannon Ryan
      Monday, September 15th, 2014
      You're welcome, Laurie. The road to financially freedom can be slow and frustrating and it is important to continually remind yourself of your accomplishments. You've made huge strides not only in debt repayment but a massive shift in how you look at and handle your money. All things you should be proud of, Laurie.
  4. Monday, September 15th, 2014
    Not comparing yourself with others is always something I concentrate on. As soon as you start comparing yourself to others you are setting yourself up for failure...because there's ALWAYS someone in a better situation than you. Be the best I can be...continue to get better each and every day!
    • Shannon Ryan
      Monday, September 15th, 2014
      I agree, Travis. It's often a recipe for failure because there is always someone in a better place and you just can't compete. It's better to focus on creating the life you want and taking the necessary steps to make it a reality. As you said, be the best you can be - that's all you can do and all that's needed.
  5. Monday, September 15th, 2014
    Great tips as usual Shannon! I think these are all important to go through and, like many others, still struggle with #1 at times. I did when I was in debt and thought that when I'd be done when the debt was gone. Boy, was I foolish! :-)
    • Shannon Ryan
      Monday, September 15th, 2014
      Comparing ourselves is something that is so second-nature for most of us. And sometimes it's beneficial. It can motivate us or inspire us, but it can also make us feel like we're not as accomplished too. It's why we need to be mindful so we can catch ourselves when we play "keep up" whether it's with the Joneses or the UnJoneses.
  6. Monday, September 15th, 2014
    I think having some kind of emergency fund is huge and so important. Nothing would be more heartbreaking than to put all this money into debt and then have to put more on your credit card if something happens.
    • Shannon Ryan
      Monday, September 15th, 2014
      It is heartbreaking when people have to go back into debt because they didn't have an emergency fund. And something always happens.
  7. Monday, September 15th, 2014
    Haha...I've made so many money mistakes and yes, we have to forgive ourselves. You can't change the past so there is no reason in obsessing over it. Learn from your mistakes, move on and make the necessary changes for a better future.
    • Shannon Ryan
      Monday, September 15th, 2014
      You can't change the past. And it takes up a lot of energy to dwell in the past. I figure it's better to make lemonade from lemons and move on.
  8. Monday, September 15th, 2014
    Gratitude is the ultimate weapon against comparing myself to others. Really helps me find my balance.
    • Shannon Ryan
      Monday, September 15th, 2014
      Great point, Stefanie! Gratitude makes a huge difference and I'm a big advocate for demonstrating gratitude every day. It really does help you find balance and gain perspective.
  9. Monday, September 15th, 2014
    I think many of us succumb to being held hostage by money and this is an awesome list for getting back in control. Setting goals that matter is a huge first step. If you don't have any direction to your money, then you are just going to wander aimlessly and make a bunch of mistakes along the way.
    • Shannon Ryan
      Monday, September 15th, 2014
      I agree, Shannon. Too many of us allow ourselves to be held hostage to money and many don't even realize they are giving money their power. Goals are definitely critical (and fun!) and they certainly act as my barometer when I'm making decisions.
  10. Monday, September 15th, 2014
    As you referred to in Step 1, It's really important for us to work towards a head space where our journey with money is truly our own and to not feel bad if we don't measure up to where others are at.
    We have no idea of their own starting point with money and a whole list of other factors that would make one have a greater net worth than someone else even who is the same age. It took me awhile to realize this but once I did, I felt more comfortable and connected with my own financial goals.
    • Shannon Ryan
      Monday, September 15th, 2014
      Exactly, Kassandra! We don't know their situation, they don't ours, and in most instances it's not an apples to apples comparison. We just make ourselves feel bad. I'm glad you're in place now where you are connected with your goals.
  11. Monday, September 15th, 2014
    This is great advice. I stopped trying to compare myself with others and concentrated on just the things that I need in order to leave MY life.

    Also, keeping track of your expenses and having an emergency fund will relieve a lot of stress.
    • Shannon Ryan
      Monday, September 15th, 2014
      Thanks, Aldo! I'm happy to hear that you are focused on creating the life you want for yourself. It's the best place to be in.
  12. Monday, September 15th, 2014
    These are great steps and things that we all need to keep in mind, no matter how long we've been going down the road to get out of debt, increase savings, whatever our financial goals are. I just recently had a big set back - I got my car window fixed and then ended up having to spend about $455 on new computer and router to continue my side hustles. I decided it was worth it because I know I can make that much in 2 months (or less), but it was still frustrating. I paid for my car out of my EF, but the computer and router I charged :( It will slow me down for a bit, but I think in the end it will pay off by increasing my work speed for my side hustles.
    • Shannon Ryan
      Monday, September 15th, 2014
      It's always tough in those situations, but sometimes you do have to mindfully spend in order to make more money. You've done a great job building a new side business in a short time, and I have no doubt you'll continue to grow your business, Kayla.
  13. Monday, September 15th, 2014
    All of your steps are great advice. The thing that I find hardest to do is to forgive myself for the mistakes I have made. I find myself blaming myself over and over and over again, which makes it really hard to move forward.
    • Shannon Ryan
      Monday, September 15th, 2014
      Thanks, Brad. Sometimes I think forgiving yourself for past mistakes is one of the hardest things to do. It does make it really hard to move forward and I hope you can let go of your past, so you can focus on your future.
  14. Monday, September 15th, 2014
    All good advice. I always come back to not comparing myself to others and tracking spending. In my opinion, those two things are paramount. I think that once you're on track with those elements of financial management, you'll be able to navigate a budget and a system that works for you.
    • Shannon Ryan
      Monday, September 15th, 2014
      Thanks! I agree. Once you stop comparing yourself to others, it makes doing everything else a lot easier. And tracking spending is always one of the best ways to keep yourself honest about your spending.
  15. Monday, September 15th, 2014
    This is a great plan....simple and complete. Have a plan, stick to the plan and know you will fail, but it will not destroy you and continue on. Others may have success around you but as long as you are happy that is all that matters.
    • Shannon Ryan
      Monday, September 15th, 2014
      You got it, Lance. When we compare ourselves to others and place their opinions and beliefs above our own, we give away our power and happiness. Instead we to focus on what it is that we want and work towards it, regardless of whether others want the same, etc.
  16. Monday, September 15th, 2014
    #1 is so incredibly important! It's such a dangerous game to play and I know it's been a budget buster of mine in the past. It doesn't have to even be with material goods, but giving into myths like "I can't cook" or "I have visitors so I can treat myself" is an easy way to dig yourself into a hole.
    • Shannon Ryan
      Monday, September 15th, 2014
      So true, Erin! It is an easy and dangerous way to create debt and it's something we all have fallen prey to at some point.
  17. Monday, September 15th, 2014
    Those are all things I've struggled with at some time or another, especially forgiving myself for past mistakes. I think goal setting is maybe most important. If you have to goals, it's easy to spend your money and wonder where it went.
    • Shannon Ryan
      Monday, September 22nd, 2014
      Sometimes I think forgiving ourselves for our past money mistakes is one of the hardest things to do. I agree, goal setting is important. It's the best defenses against over-spending and helping ensure you spend your money on what matters most.
  18. Monday, September 15th, 2014
    I think that an emergency fund is the very best thing for regaining balance. The added level of security it's given me and my wife can't be stressed enough, and we still have more to go. Slowly building it - and continuing to build it - is important.
    • Shannon Ryan
      Monday, September 22nd, 2014
      Great point, DC. You don't have to fund your emergency fund overnight. Do it consistently and you'll get there. And I agree an EF makes a huge difference in making you feel balanced. When you know you can handle whatever life throws at you, it's much easier to stay balanced and sleep at night.
  19. Wednesday, September 17th, 2014
    I think a lot of my money downfalls come from setting myself up to fail. I make bogus time lines for paying off large amounts of debt. I do the same for dieting.
    • Shannon Ryan
      Monday, September 22nd, 2014
      Self-sabotage is an issue that many of struggle with. Sometimes we don't feel as though we deserve something so we set ourselves up to fail. Take it slow and be consistent and you'll get there, Michelle. I believe in you!
  20. Thursday, September 18th, 2014
    We are working on building back up our emergency fund after our big move this summer. It's hard work, but worth it. An emergency fund is a necessity with our economy!
    • Shannon Ryan
      Monday, September 22nd, 2014
      Moves are so expensive and hard work, but it's worth it in the end. I'm glad your move to Portland went so well, Mackenzie, although we miss you in SoCal! And yes, today an emergency fund is an absolute must-have.
Shannon Ryan SHANNON RYAN, CFP®
  • Meet Shannon

    "As a Certified Financial Planner, it is my passion to help individuals and families build a healthy relationship with money. I look forward to helping you raise financially confident kids.” - Shannon Ryan
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