simplify your finances
I am so excited about this post today, because finances have been a huge focus in our home over the last few years. When we started looking seriously into our finances we were just over $90,000 in debt making less than $40,000 per year. Today we’ve only got half that debt left and we’re making double what we were two years ago. We plan to pay off the last debt in 2020 and it’s such a freeing experience.
This journey has been long and hard but we’ve learned a lot in the past two years and I’m excited to finally share our journey with everyone.
Simplifying your money might mean something different for everyone. For me, simplifying meant making money be a back-of-the-mind thing instead of a daily stress. As my husband and I talked about what we needed to do to change our mindset about money, we made a list of things that would help us.
Consolidate everything to one bank - the idea here is to make is easy to access all our accounts, transfer money quickly between accounts and see all our loans and assets in one place. We use USAA for personal and Capital One for business to make things simple and easy.
Get out of debt - When you owe someone money, you don’t own the thing you borrowed money for. Whether that’s a home, a car, your education or a t-shirt bought with a credit card - it’s not yours until you’d paid for it. Owning vs owing is a big difference on your wallet.
Put all our bills on automatic, scheduled payments - Not having to remember to pay bills is nice, not having to even think about them is even nicer. When you are debt free and your bills are on auto-pay, they don’t become a pain point. Other than budgeting for them each month, you don’t even have to think about them.
Cut out as many expenses as possible - The less you have to pay each month, the more money that stays in your pocket. From cutting cable to canceling subscriptions, the less bills we have to pay, the less that weighs on my mind. It also makes us more grateful for the things we do have.
Boost our income to give us more financial freedom - Earning extra income means more money in our savings, more money to invest and more money to give. If we can earn some passive income or make a little extra from a hobby, it’s a win-win.
So all of that sounds nice, but how do you actually put these things into practice? What steps get you to a more simplified financial space?
01. Debt Free Journey
In the summer of 2017 my husband and I reached our breaking point when we realized the apartment we had just signed a lease for was too expensive. We didn't know how we were going to pay next month's rent and our credit cards were nearly maxed out. We knew we had to make a change, and for us, that was Dave Ramsey's Financial Peace University. Taking this course was the single best thing we ever did for ourselves and our marriage.
Whether you're drowning in debt or you just want to cut back expenses a little, I want to give you some ideas on how to simplify your finances and save some money that you probably didn't even realize you were wasting. You don't have to take Dave Ramsey's course to get your finances under control, but a lot of my topics and lessons are pulled from his teachings.
If you're thinking "I don't need to save money, I need to make more money", don't skip this post. Learning how to better plan your purchases will benefit you in the long run, regardless of how much money you make. Everyone should have a monthly budget and everyone should be able to plan their meals. I'll show you the simplest ways to do both.
Some people think of a budget as a restricting set of rules, but when it's used correctly, a budget can actually help you realize how much further your money can go when you know where it's going. It’s not something meant to limit you, it’s a tool to give you peace of mind. A budget is simply a way to track your money so that you know where it's going each month.
If you've never created a budget before, you probably think you have an idea of where your money is going. The problem most people run into when creating a budget, is that they are not realistic with their actual spending habits. You might like to think that you spend more money at the grocery store than at the bars, but that might not be true.
The first step to budgeting, is to realistically look at where your money is going each month. So instead of trying to create a budget for the next month, we're going to start by creating a "budget" for the previous two months. But first, let's get the right tools.
This app is my absolute favorite for budgeting. You can access it from your computer or phone and it's super simple to use. My husband and I use the free version and we've been really happy with it. I've used a ton of other apps (BudgetSimple, YNAB, Spreadsheets, etc) but nothing is as simple as this one.
Feel free to use something else if you'd prefer, but for the sake of simplicity, this is going to be the app I use during this post. Once you have your app opened, we're going to create two budgets for the months that have already passed. Follow the video below to make a couple past budgets, then move on to creating a budget for the upcoming month.
Now that you have two months of budgets under your belt, it's time to create one for real. Start planning next month's budget. One of the reasons I love EveryDollar, is that you can copy a previous month's budget so that you're not starting completely from scratch.
Set up next month's budget and make your best guess for your income and expense categories that you set up. Remember to keep these realistic. We'll talk about budgeting challenges in a but, but for now make sure you're setting good goals.
If you spent $400 on coffee in November, you probably shouldn't budget for only $10 in December. That's not realistic. Give yourself time to adjust to better habits. It's good to challenge yourself and find ways to save money, but try to focus on one change at a time.
If you want to eat out less and cook at home more, work on that for a month or two before also trying to cut back on online shopping, coffee and drinks with friends and less movies each month. Small adjustments will make better habits in the long run.
For more help setting up a budget and managing your finances, check out my Zero Strategy eCourse, we have an entire section dedicated to getting your finances simplified.
03. Saving Money
You can search the internet and find 5000 ways to save a penny. Below are some of the most impactful things we’ve done to cut back on unnecessary spending and save money every month.
Grocery shop for a month at a time - read about how we do this in this blog post. (Saving an average of $120/mo, plus we eat better food)
Cancel cable - we split YouTube TV with 3 people for $17/mo during football season (Saving an average of $32/mo, $49/mo without YouTube TV)
Sign up for Xcel Energy’s Time of Use Pricing - save money by running appliances at off-peak times (Saving an average of $30/mo)
Investing in reusable products to cut back on groceries and single-use packaging - get some ideas from this blog post (Saving an average of $40+/mo)
Getting off traditional insurance and switch to CHM instead - I had my baby for free with the gold plan, read about it here. (Saving an average of $206/mo)
Giving my husband & I $100 of “spending money” every month. We don’t feel guilty for shopping but we also allow ourselves a little wiggle room while planning for it ahead of time.
You can cut out coffee or cut cable, but if you truly want to save some big bucks consider a big change. Buy a used car with cash instead of leasing. Move out of your too-expensive home and rent for a year while you pay off debt. Car pool, stop taking vacations and stop eating out until you’re debt free. Big changes make big impacts, don’t be afraid to get intense for a year or two in order to get out of debt twice as fast.
04. Earning More Money
First, a warning about my view on starting our own business;
You cannot out-earn your bad spending habits. There’s no such thing as a get-rich-quick business. Multi-level marketing businesses are scams that prey on your weaknesses and they give you false hope that you can earn quick money from home. PLEASE don’t be that person that annoys the crap out of your friends and family by selling crappy makeup or unregulated oils. You can make money from your own business, but survey sites and MLMs are not the way to do it.
Don’t even bother arguing with me in the comments about this. If you want to earn extra money to pay off debt, save for a home or put your kids through college without loans you need to put in the work.
There are a ton of ways to earn more money. You could get a regular part time job at a fast food restaurant, Uber, rent an extra space on AirBnb, deliver pizzas, babysit, dog sit, etc. If a part-time job doesn’t fit your schedule or life right now, there are ways to earn an income online. Some jobs like transcription services or Fiverr gigs can help you make a couple hundred bucks a month but if you want something more sustainable and long term I recommend starting your own business.
The best way to decide what kind of business you want to start is to look at your hobbies. Maybe you can do photography on the weekends - get a portfolio site started. Maybe you know how to edit videos or you like to make videos - set up a YouTube account and start making ad revenue with Google Adsense. Are you crafty? Create an Etsy shop and sell your products. If you can do design, copywriting, ghost writing, coaching, sales pages - get a website set up and start selling your services to online business owners. Even if you have low tech skills, you can start a blog about something you enjoy and monetize it with ads, affiliate links, eproducts or courses.
I won’t go into details on how to set up a blog and get clients, because I have a TON of resources relating to this in the old blog archives or you can learn everything you need to know in the Zero Strategy Course. If you want to make extra money, start with a simple website and put in the work. Sitting your butt down in front of a computer and spending time on your business is the only way to start earning an income online.