Don’t worry, I’m not putting actual financial numbers out there!
The most important thing I could probably say right now is, remember April You? The version of you that is in a blind panic over the deadline to file your taxes? Right now you have an opportunity to send that Future You a very thoughtful gift. You can start getting organized now, a little bit at a time, and then April 15 You can maybe go for a walk and watch the sunset.
That never works, though. There is nobody we will ever treat as cruelly as Future Myself.
I like to take a little time every December to imagine Future Me of different ages and ask what she is doing with her time. I like to imagine that she is comfortable, that all she really has to do is eat her oatmeal and do cryptograms all day. I would never want her to worry as much about money as Young Us did, because Young Us could go to work to earn more, but Old Us probably can’t.
Let’s face it, unless you’re already 80, it’s easier to earn money now than it will be then.
This is why it’s helpful to do a financial review. If not in December, then when?
Seriously. Pick a month. Draw a month out of a hat so it’s different every year, if that’s what it takes.
I was poor until I was 30, and going over my finances used to make me cry. It basically went like this:
There was a time in my life when my rent was 80% of my income. And I had roommates.
It was only by keeping a keen eye on my (lack of) money that I started to be able to make changes.
I would read personal finance books, and there were not just chapters but entire sections that applied to financial vehicles I did not have. I didn’t have a 401(k) because my job didn’t offer one. I didn’t have an IRA because I didn’t have enough saved to open an account. I tried to have a savings account but I kept having to use it (all) to pay bills.
There was also a time when I had no credit score because I had no credit.
Credit cards used to be hard to get. I had a store offer to set me up with a store credit card, and the clerk was telling me all about how single moms with no job could get one. I was declined.
When I finally managed to get a credit card, my limit was $250. It was still $500 when I turned 30.
Although, pro tip here - credit doesn’t matter if you don’t use it. If you never carry a balance it doesn’t matter what your credit limit is, and it also doesn’t matter what your percent interest is.
When I was young, working as an office temp, sometimes I could only think about one week at a time. I might have an assignment that only lasted a day, and then I’d have to get another assignment. My commute was all over the place. I didn’t have a car, nor could I imagine having to buy gas. I would ride the city bus, sometimes two hours each way for a job that might only last three days. It was a mess.
I had no debt, but I had nothing else either. No savings, usually no more than $30 in my checking account, usually not enough change in my pocket to use a phone booth. My roommate kept stealing my laundry quarters.
How could I do a financial review? The answer was the same, for years: Try not to get overdrawn.
I knew it would help if I earned more, but I didn’t know how to find a better-paying job. I didn’t know what I wanted to do or how to get credentials. It didn’t help that I looked young for my age, and I could pass for a teenager into my early 30s.
It’s different now!
99% of my thoughts about money used to be not thoughts, but feelings. Dread, anxiety, panic, stress, irritation. There wasn’t much room for much else.
What goes where the stress about bills and debt used to go?
We’ve been living on half our income, or less, for years.
We’ve been debt-free for years.
We probably have six months’ living expenses saved up - possibly more - but why bother counting it out? When in doubt, shrug and save more.
We’ve maxed out our retirement funds at work. Did you know there’s actually a maximum amount that they let you save?
Everything is automated. Each week, money is deducted and put into our 401(k)s and set aside for our IRAs, and we only have to think about it when we move the IRA money at tax time.
All our bills are automated.
We are big users of reward points, so we put all our expenses through our credit cards, but we pay off whatever balance week by week.
It is hard to overstate what a major emotional difference it makes to be debt-free and have a high savings rate. On one side of the divide is an ocean of tears with thunderstorms of splitting headaches. On the other side, it’s just... mild and sunny.
We never argue about money because what is there to argue about?
I don’t want to brag. That is not why I’m sharing this. I want to bring hope to other people who are as flat broke as I was all those years. It is possible to get out. It is possible to move past it completely and just never feel that way again.
It takes focus, though. Once a year is a good start, although monthly is better, and weekly is even better when things are really tough.
Make a list of every account you have. If you forget some, that’s okay, just add them as you run across them. Or set up a financial tracking app, if you’re brave.
Total up everything you owe and everything you have.
Start putting together an estimate of your monthly expenses, plus the weird quarterly and annual ones like car insurance.
Find a book or a podcast or a website or a radio show or a friend that will teach you basic personal finance skills. If you didn’t get a personal finance class in high school, shrug it off, because that information is wasted on teenagers anyway. You can learn today. Maybe start with a search for “financial independence retire early” and see what you find.
Our way is a radical way. We decided to live on half our income and save the rest. We got rid of over 80% of our stuff, and we live in about 1/4 the space we had when we were newlyweds. We haven’t had a car in nearly four years. Literally anyone can do what we did, which is to cut expenses, live in a small apartment, and not own a car. It sounds shocking, until you try it and realize that it’s not a big deal at all.
Maybe once a year, pull back and spend a day thinking about where your money goes, where it comes from, and what things might be like if you made some changes. Maybe even radical changes?
I've been working with chronic disorganization, squalor, and hoarding for over 20 years. I'm also a marathon runner who was diagnosed with fibromyalgia and thyroid disease 17 years ago.
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