What Does Being Rich Mean to You

What Does Being Rich Mean to You?

After completely screwing up our wedding budget and being incredibly lax with our money during our honeymoon, it’s time to get back into this financial battle against our debt, win the war for financial independence, and start being rich.

It’s easy to say “DIE DEBT, DIE” and just start there, but we want to be strategic about our next few moves. Like a real battle, we don’t just want to run out into the battlefield and start hacking away at obstacles mindlessly. Yeah, we might get some good progress going on our debt, but we can also run into burnout if we’re not intentional and if we don’t realistically pace ourselves.

That’s why it’s so important for us to come up with a plan for battle. But even before that, we have to start at our idea of being rich.

What Does Being Rich Mean to You?

Start With the Big Picture

We can’t get to where we’re going if we don’t even know what our destination is or even what it looks like. The journey is important, but the destination is the whole point of it all.

So, for our financial journey, we’re starting at defining our destination – what does being rich mean to us?

Being rich means being free from debt

Debt-free may be a no brainer for some, but for others it isn’t.

But let’s think about it – imagine yourself with all the money in the world. Maybe you’re earning a lot at your job or maybe your passive investments are enough to pay for all of your expenses. To many, you seem rich – money is coming in faster than you know what to do with it.

But every 1st or 15th of the month, you are still obligated to pay your car loan. Or your student loans. Your mortgage. That personal loan. And on and on and on. Your income may be great and all, but as long as you have those debts to your name, your money isn’t all yours.

To The Husband and I, being rich means being free from the shackles of debt. No more due dates, no more “minimum monthly payments”. Simply put – our money is ours and no one else’s. (Okay, there’s taxes, but let’s not go there for the sake of this post ;))

Being rich means not worrying about money

Not only do we want to be debt free, but we also don’t want to have any worries when it comes to money.

Right now, we’re scrutinizing every single dollar spent. That $40 dinner? Let’s check our accounts real quick if we can afford that. That $20 Warriors T-shirt? Let’s see if we have the cash for that…

Every single expense means we need to look at our accounts. That’s because we’re still on our way to financial freedom.

We’ll know when we’re rich when we can spend money on a lunch or T-shirt and not even have to check the bank account to make sure we can cover it. We want to be able to spend on things that we enjoy (within reason, of course) without it completely emptying our bank accounts or hindering our goals.

Being rich means being incredibly generous

I’ve written before about how I will not give up giving even when I’m in debt. And I still firmly follow that rule. But when I’ve really made it, I want to give more than I’m asked – I want us to be incredibly generous.

I was listening to one of Dave Ramsey’s podcasts when I heard him mention that he flew his entire family to a cabin for a vacation as a gift. As soon as he said it, I knew that I wanted to be able to do that one day for my family and friends. Not to show off, but to be able to give the gift of time with one another.

Generosity to family and friends may be easy to want, but The Husband and I want to be generous to our parish and to other charities that mean a lot to us. To me, this is the ultimate goal – to have enough for ourselves so that we are able to give to those who don’t have enough.

Whether you’re starting over with your finances or you’re simply starting, period, beginning with what it all means to you is the best place to start. “I want to be rich” or “I want to be successful” are common goals, but are terribly vague.

Dig deep and really think about what it all means to you. Being rich is great, but my definition of being rich can be the exact opposite of your definition of being rich. Make sure you’re chasing after your destination and not anyone else *cough The Joneses cough* then we can get started on the goals.

What does being rich mean to you? What signals or events will trigger in your mind that you’ve “made it”?

AMDG,
Lisa

Q1 2016 Net Worth Update

Disclaimer: this post may contain referral links.

Q1 2016 Net Worth Update

I was dreading this post.

The last time I updated my net worth was back in June 2015 and everything was all fine and dandy.

My net worth went up a good $30k, my credit card debt was almost gone, and my retirement savings, though struggling, was at a nice balance for someone my age.

And then life happened.

*Gulp* Well, let’s just get into it then – here’s my Q1 2016 Net Worth Update

Q1 2016 Net Worth Update

Overall, my net worth decreased by $883 this month.

Note – just to clarify before we move on, this update is just looking at my own finances. My husband and I are slowly combining our finances, so we should see our combined net worth in the next update.

Assets

Cash – $6,207 – up $3,026

Despite the mostly terrible net worth update, this category has a nice increase this time around. This is largely due to the wedding we just had. Wedding gift money, heyyyy!

Short-Term Savings – $1,346 – down $905

My savings accounts are all with Capital One. I love how easy it is to look at all my savings goals in one place. Here’s what my goals are right now:

Emergency: $1,003 – up $2 (hey interest!)
Personal Escrow: $322 – up $162
Wedding: $0 – down $1,083

Of course, the wedding fund was depleted once we, you know, had the wedding. It sucks to see savings go down like this, but that’s exactly why we save for things like this – so we can spend it eventually!

Retirement Savings –  $14,915 – down $17,194

This consists of:

401k: $3,733 – down $22
Traditional IRA: $8,636 – down $445
Roth IRA:  $2,546 – down $16,727

*insert uncontrollable sobbing here*

You’re probably wondering what happened?

Well, the short story is that we were getting closer and closer to the wedding date and realized that we were in way over our heads in regards to payments. I mostly blame myself – I thought we were good financially until a few weeks before the wedding when we finally sat down and added everything up. My mom and my auntie had already helped us out, so we didn’t want to ask for any more money.

So, I double, triple, and quadruple checked that my Roth IRA contributions could be withdrawn without any tax penalty and that’s exactly what I did.

I am not proud of this. But, I can obsess over how terrible this is (and believe me, I have), or I can own up to it, take the L, and move forward knowing better.

Estimated Car Value: $13,815 – down $1,550

I always get my car value from Kelly Blue Book. We all know how badly a car depreciates, especially one that’s bought brand new. So this isn’t news to me, just another unfortunate thing that happens each month that I’ve learned to just accept.

Estimated Home Value: $514,992 – up $17,324

Right now, I use Zillow to determine this value. Since I’m not planning on selling my house anytime soon, I really don’t take this increase to heart – even though it’s a great one! It just doesn’t mean too much at this moment, even though it almost masks my huge decrease in my retirement accounts this quarter (almost).

Liabilities

Credit cards: $11,978 – up $10,424

This consists of:

Discover @ 15.99%: $11,978 – up $11,958
Wells Fargo @ 22.15: $0 – down $1,534

Oh, hey credit card debt! There you are! Didn’t know you were sticking around this long…

Well, the good news is that I paid off my Wells Fargo credit card before the APR changed from 0.00% to 22.15%! The bad news… well, I think it’s a little obvious.

Again, I’ve obsessed over this and the retirement savings. But when I say I’m starting over, I really mean it this time around. In the meantime, I may have to add another chapter to the Credit Card Debt Saga.

Student Loans: $13,359 – down $905

This consists of:

Direct Subsidized @ 6.55%: $2,672 – down $158
Direct Subsidized @ 5.75%: $3,385 – down $212
Direct Subsidized @ 5.35%: $4,109 – down $265
Direct Subsidized @ 4.25%: $2,013 – down $140
Direct Unsubsidized @ 6.55%: $1,180 – down $131

I can always count on my student loan progress to cheer me up! While so many others my age love to complain about these bad boys, I can’t help but be thankful for their consistency amidst the chaos of everything else in my finance world.

Car Loan: $11,439 – down $3,426

Usually, this category is pretty boring since I plan on paying the minimum on this loan for a long time. At least until my credit card debt and student loans are gone.

But something of interest just happened – I’m no longer upside-down on this loan! What that means is that the value of my car is now greater than what I owe on it! Yay!

Mortgage: $265,558 – down $4,511

Slow and steady is my motto for my mortgage. I’ve got all these other loans to worry about, so I’ve decided that the mortgage is the last to go on the totem pole. Nothing new here, folks.

So, there you have it. My cringe-worthy, disappointing net worth update. It would be easy for me to blame the wedding, but ultimately – I blame myself.

But, like I said, I’m starting over. So, I’m done obsessing over the slip-ups and I’m ready to move forward towards financial independence – one step at a time!

AMDG,
Lisa

Starting Over, Again

Starting Over, Again

Starting Over, Again

Yes, I’m starting over.

It’s been almost a year since my last post.

I’ve taken hiatuses from this blog before but this time, I thought this was the end. My last post was a net worth update and I was crushin’ it! My credit card debt was almost gone, my savings were going up and up, everything was all good in the hood.

Then life happened. And now, I’m starting over.

In the midst of wedding planning, family stuff, and just life in general, this blog became a very low priority. Unfortunately, my finances went down the priority ladder along with it.

I was too embarrassed to come back and write about money when my money situation has totally veered off the path I wanted it to take. I feel like I’ve taken several hundred steps backwards in my financial journey and I didn’t want to tell anyone about it.

After all, how can someone who writes about financial independence and her hate of credit card debt have any credibility on a personal finance blog when she still has growing debt? Who in the world would listen to a girl who just keeps making mistake after mistake after mistake with her finances?

Well, I’m hoping you are listening. I’ve decided that I’m not writing for those who are already well on their way to financial freedom. I’m not writing for those who have completely tackled their debt and are free from those shackles.

No, I’m writing for someone like me. Someone who is early on in their financial journey. Someone who is just getting a grasp of what it means to want financial freedom. Someone who keeps making mistake after mistake. I’m writing for those who need to hear that starting over is okay and giving up isn’t.

No one is perfect. A lot of the blogs out there will show you a perfect plan that they followed step by step and how they’re completely crushing it with their finances. They are well on their way to millions in the bank, but I’m still here sitting in debt.

And that’ s okay. I’m writing for those who are starting over. Those who had a plan – heck, maybe several plans – and still feel like they’re 1,000 steps behind. Those who don’t even have a plan, who have no idea where to start.

If you don’t want to read about an imperfect person’s journey to financial freedom – cringe-worthy mistakes, stumbles, falls, and all – then I suggest that this is the last post you read of mine.

But if you want comfort in the fact that hey, not everyone in this world has got it all figured out yet, that at least one other person is starting over, then this is the place to be.

I hope you’ll stick around. Heck – I hope I’ll stick around 🙂

AMDG,
Lisa

June 2015 Net Worth Update

Disclaimer: this post may contain referral links.

June 2015 Net Worth Update

What! It’s July already?!?! Seriously, life is just moving too fast, y’all.

June 2015 Net Worth Update

Overall, my net worth increased by $31,567 this month!

What! That’s insane!

Mind you, most of it is due to my updated house value number. But I’ve also made some great progess on my credit card debt and all other debts, in general.

Assets

Cash: $3,181 – up $487

Someone pointed out that my cash balance is enough to pay off my credit card debt altogether. Which is true, but this money is reserved for house bills (mortgage, electricity, gas, water) and a lot of these bills are paid either every other month or one a quarter. As much as I’d love to just pay my debt off immediately, I keep it in my bank accounts for future bills.

Short Term Savings: $2,251 – up $1,099

My savings buckets are all with Capital One 360. They make it easy to see all your savings at once! Here’s what mine mostly consists of this month:

Emergency: $1,001 – no change
Personal Escrow: $160 – up $20
Wedding: $1,083 – up $1,080

Wait, didn’t I say I stopped saving for my wedding? The funds in there actually aren’t from me. My mom graciously offered to help pay for the wedding, so she’s sending me money once in a while for safe keeping. However, since I’ve got a goal to be credit card debt free before the wedding, I’m thinking of throwing that money at my remaining credit card debt.

Retirement Savings: $32,109 – down $758

This consists of:

401k: $3,755 – down $61
Traditional IRA: $9,081 – down $228
Roth IRA: $19,273.25 – down $469

Yuck. Of course the market takes a little dive the month I decide to stop saving for retirement. I’m pretty far from retirement, though, so I’m not going to worry too much about this. I know that in the long run the market will pick up, so I’m not going to stress over this.

Estimated Car Value: $15,365 – down $605

I look up the value of my car on Kelley Blue Book every quarter and update my net worth as necessary. The car always goes down in value, without fail. That’s what you get for buying brand new.

Estimated Home Value – $497,668 – up $27,832

Aw baby! I check Zillow when I want to see the value of my home. As awesome as this looks, I’m not planning on selling soon, so this value doesn’t necessarily mean anything to me right now. But those gains look damn good!

Liabilities

Credit Cards: $1,554 – down $2,552

This consists of:

Discover @ 15.99%: $20 – down $1,323
Wells Fargo @ 0.00%: $1,534 – down $1,228

Despite the huge $31k jump in net worth, I am most excited about this one! I am so close to being credit card debt free, I can taste it! I really buckled down last month and threw whatever I could at this debt and it shows! Hopefully by next month, this will be a nice fat $0!

Student Loans: $14,264 – down $131

This consists of:

Direct Subsidized @ 6.8%: $2,830 – down $15
Direct Subsidized @ 6.0%: $3,597 – down $20
Direct Subsidized @ 5.6%: $4,374 – down $25
Direct Subsidized @ 4.5%: $2,153 – down $14
Direct Unsubsidized @ 6.8%: $1,311 – down $5

Another solid month for the student loans. Can’t complain!

Car Loan: $14,865 – down $336

The minimum is all I’m throwing at this loan right now. Slow and steady is the motto.

Mortgage: $270,069 – down $493

Same with the car loan – slow and steady with this one.

Overall, my June 2015 net worth update had it’s ups and downs. Mostly ups! Can’t wait to tackle some more debt this month.

How was your June financials? Did you stay on track with your goals?

AMDG,
Lisa

Financial Empowerment – Why and How #TheRoad

The following blog post is part of The Road to Financial Wellness Blog Tour. Over a period of 30 days, the Phroogal team will go to 30 locations to raise awareness about financial empowerment. Today they will be in San Francisco! Our goal is to help people learn about money by starting the conversation. We understand that local conversations can help bring about national awareness.

Financial Empowerment – Why and How

Why Seek Financial Empowerment

Don’t get me wrong. I love my parents.

But as a child in a household with two parents who always disagreed about money, I grew up with a confused outlook on personal finance.

While one parent would say we needed to stop spending and start saving money, the other would come home with multiple bags full of goodies from today’s impromptu retail therapy session.

That same parent who went shopping the other day would then tell us that money was tight and that we could barely afford anything, and, almost immediately afterward, the other would literally hand us a bunch of cash.

It wasn’t like one parent was a saver and the other was a spender. They both were spenders who never agreed on anything when it came to money. While my mom would come home with multiple bags full of clothes from Ross or Macy’s, my dad would come home with a Mercedes Benz or two. True story. At least they were used.

You can probably see why I grew up confused about money.

It wasn’t until I got my first job after high school (R.I.P. Anchor Blue) that I really knew the value of a dollar. I finally realized how not-so-easy it was to earn, yet so-damn-easy to spend. My closet was filling up, but my bank account stayed empty. I thought retail therapy would make me feel better, but it only made me feel worse, especially when I saw how much money was in my wallet. (Read: none)

My money confusion from my childhood had a lot to do with how I handled money now as a working adult. I was just like my mom – coming home with tons of clothes and no money to spare. I was just like my dad – splurging on status symbols that cost more than my paycheck.

Once I identified that my actions were almost mirroring my parents, I knew that I had to take control of my money and I had to start now. Here are the steps I took to gain financial empowerment and how you can, too.

How to Achieve Financial Empowerment

Stop Spending More Than You Earn

A couple of years ago, I went on a Spending Fast. I didn’t do it for long, probably only 3 months, but it really helped me in several ways. First of all, my credit card debt didn’t grow as fast since I wasn’t swiping anymore plus I had more money to throw at it. Secondly, the fast really challenged my thoughts on my needs versus wants.

The Spending Fast also made me realize that the act of swiping really does give a temporary high – key word being TEMPORARY. Shopping and getting new things is fun, but after that initial high fades away, you’ll want to do it all again. You’re never completely satisfied. Going on a spending fast will really help you monetarily and even mentally.

Set Up Automatic Savings

The next thing I did was set up an automatic savings transfer from my checking into my savings goals (at the time, it was funding my emergency fund). Now, I still save for my personal escrow account and whenever I have travel coming up. I quickly learned to live without that $100 or so that was automatically being transferred out of my checking account each month.

Most banks offer free transfers between your accounts. If you want to save, automation is the way to go. Not only will it happen without you thinking about it, but automating actually trains you to live on just a little bit less. After the first few months, you won’t even miss that money! And it’s not like that money is simply disappearing, it’s actually going to work for you!

Take Care of Your Future Self

Compound interest is talked about a lot when you go to school to get a business degree. So I knew that, even though I’m young, I needed to start saving for retirement. So, right when I graduated from college, I opened up a Roth IRA and socked money away every single month via automatic transfer.

I knew I didn’t want to be 60 years old and stressing out about whether I had enough money in my retirement. I want to make sure Future Lisa is financially empowered, too!

Check In Regularly

I’ve made it a habit to look at my bank account balances almost everyday. It gives me an idea of how much money I can spend that day. If everything is all good, I might treat myself to a nice lunch. If it’s not looking too good, I’ll pass.

Checking your balances regularly keeps you aware of your financial situation at all times. You can’t hide from the hard numbers. At first, checking in regularly can be daunting and discouraging. But once you really start taking control of your money, this regular balance check is just making sure you’re on the right path.

Ultimately, I think this is what financial empowerment is all about – reevaluating your spending, saving up for splurges, taking care of yourself, and being aware and in control of your money choices.

What caused you to seek financial empowerment? What steps do you take toward financial empowerment? 

AMDG,
Lisa

 

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