Fabulous Financials

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I’ve always loved the topic of personal finance, but I haven’t always been responsible with money. When I look back, I began at rock bottom and continued through a progressive phase. I’ve grown so much, especially in my (nearly 3) years of PF blogging, FROM a low $60k salary, $25k debt, and a negative net worth TO a low $100k salary, zero debt, and a six figure net worth. Finally, I am on my way to building wealth and establishing financial freedom, but it hasn’t been easy.

I imagine most people go through a similar growth process, so I wanted to share what I think are 10 phases on the journey to financial freedom:

1. Digging the Hole: The general rules of personal finance, “live beneath your means” and “pay yourself first,” are stupid because “means” are menial so being able to “pay yourself” first is a pipe dream.  You work and pay bills, then it’s gone.  Occasionally, you buy something for yourself, but money is so tight, any slight deviation will throw your finances into a tailspin.  In an attempt to make things right, you rob Peter to pay Paul, write checks you can’t honor, pursue credit you can’t afford, and borrow from family and friends.  Frustrated with it all, you live for the moment, and the cycle continues.

2. Desire to Improve: At some point, you realize it is possible to change.  Either you have an “aha!” moment or you meet someone who inspires you.  Whatever the driver, you decide to make a change for the better.  You try to figure out where to begin, and out of desperation, take advice from any and everyone who will give it.  You also begin to read and research (a little), speak with and mimic the behavior of others who appear to be doing well financially.

3. Debt Reduction: You finally get the courage to figure things out, so you pull your credit to see just how much you owe.  Ack!  You’re surprised, but not really surprised.  You do more research, learn a few tips, put together a battle plan, then get started.

4. Lose Motivation: After one or two months of chipping away at your debt, you feel deprived and overworked.  Borderline depressed.  After all of those extra hours at work to earn more money, all of those weeks of “doing the right thing,” and all of the things you could have been doing, your total debt has only decreased by a few hundred dollars. *sigh*  You think to yourself “man, this is bullshit!”  So you start doing things to make you feel better.  You buy that new ____ to feel better.  You avoid your responsible friends to feel better.  In fact, you start calling them names like “boring, miser, scrooge, cheap, know-it-all, they have no life, etc.” to feel better.  You begin to spend more time with the friends who you think are living the good life - all to make you feel better.  After a few months of this, you don’t feel any better.  In fact, you feel worse.  By the time you realize this, you are right back where you started.

5. Back on the Wagon: Feeling silly and bamboozled, you decide to jump back on the wagon to take control of your finances once more.  You’re frustrated again, but this time, you’re frustrated with yourself, not your circumstances.  You know you can do better and you want to do better, but you don’t really know how.  Slowly, you begin to implement some of the things you learned from your previous reading and research.  Then you read and research some more.  You start tracking your spending and applying every extra dollar you earn towards your debt.

6. Learn to Save:  After spending a little time paying off debt, you realize, you don’t have a savings account - or if you do, there’s hardly anything in it.  So you try to follow conventional wisdom and “save 10% of your earnings” but that doesn’t work for long because you apply so much money towards your debt reduction that you find yourself dipping into savings just to make ends meet.  Eventually, you decide to stay focused on debt reduction and only save when there’s money left.  This doesn’t work either because there’s hardly ever anything left.  So you commit to saving $5 per week, that’s pretty easy and reasonable.  Then $5 becomes $10, and $10 becomes $20, and so on.  You like the comfort of knowing you have money in the bank, so you begin saving some of your tax refund and annual bonus money too.  Before you know it, you’ve saved a few thousand dollars and you’re excited.

7. Build Momentum: You never thought saving money and reducing debt could be habit forming.  Finally, a good habit!  So you begin doing things you never thought you would do before.  You’ve been tracking your spending for a few months now, so you start “evaluating” your expenses.  You identify ways to save money just so you can save more and pay off your debt faster.  You start grocery shopping with a list.  You turn off lights and disconnect appliances when they’re not in use.  You start packing your lunch during the week.  You start reading fabulous personal finance blogs. :-)  And good gawd, you disconnect your cable, remove all the fancy features from your cell phone, and stop shopping with your friends as a form of “entertainment.”  In fact, you rarely go shopping at all, but when you do, you head straight to the clearance racks.  Name brand clothes and designer handbags & shoes don’t appeal to you anymore because something else has caught your attention - saving and debt reduction.  Applying money to both has become a little game now and you like it.  The more debt you pay off, the more money you can use to “pay yourself first.”  With each dollar you save, you start feeling even better.  And the game continues.

8. Debt Freedom:  After months (or even years) of sacrifice, you begin to see the light at the end of the tunnel.  You’re down to the last credit card, the last few thousand on your car loan, or the last few payments on your student loan - and YOU CAN’T WAIT.  Debt freedom is so close, you can taste it.  You begin to make HUGE strides to pay off the last of your debt.  You pack lunch EVERYDAY.  You REFUSE to buy a new ____ even though you need it.  You begin recycling and reusing things to avoid buying new ones.  You sacrifice almost ALL non-necessities for MONTHS just so you can make HUGE lump sum payments.  And then, you make that LAST payment and it’s over.  You wait for that final payoff letter, that final statement, or you stalk your bank’s online service.  Then you see it.  Your balance is $0.  And you exhale.

9. Increase Savings: Proud of your debt reduction efforts, you begin to focus on saving.  First, you increase your emergency fund, then you consider a vacation fund, and a ____ fund for all the other things you’ve wanted but couldn’t afford.  Saving before you buy is important to you now because you don’t ever want to be in debt again - EVER.  So you take all the money you were using to pay off debt and apply it to your emergency fund.  Once your emergency fund is where you want it to be, you start having a little fun with your extra money, but you never stop saving.  After all, it’s a habit now.

10. Learn to Invest: Debt free, emergency fund, extra savings, and money to spare.  The only thing left to do is invest so you can stay ahead of that evil little witch called inflation.  You research, read, study, and speak with experienced investors.  You ignore the “get rich quick” schemes and even part of “conventional wisdom.”  You’ve worked hard for your money, and you want it to grow, but you don’t want to lose it by blindly following someone else’s “advice” either.  Based on your research, you decide on an investment strategy that balances the “conventional wisdom” of diversification, the “recommendations” you understand from people you trust, AND your personal risk tolerance.  It’s the perfect equation!  Everything else is noise so you tune it out.  During the learning process, you make some good investment decisions and some bad investment decisions.  Although the good outweighs the bad, you quickly learn that you shouldn’t invest what you can’t afford to lose.  Then you rinse and repeat.

The ultimate GOAL - FINANCIAL FREEDOM: The day when you don’t have to operate on a schedule, yet earn thousands of dollars every month without lifting a finger.  That time will come, but it could be years away.  For now, financial freedom could mean working a 9 to 5 that you enjoy, earning decent money, and always paying yourself FIRST.  Eating and living healthy.  Not worrying about bills.  Buying whatever you want or need (within reason) without incurring debt.  Making ALL decisions based on their impact to your quality of life, not financial constraints.

Hmm…do I see an outline for my book? Y’all are getting a sneak peak.  LOL just kidding!

Based on this list, what phase are you in right now?

Readers frequently ask “where did you start?” so I’d like to share MY personal transition through each phase.  I’m going to present it in a series of posts over the next few weeks months (what? you know I’m the Queen of Procrastination! Hmph! LOL).  Putting my experience into words will take some time to write, but I’m excited about sharing it with all of you.

By sharing my financial journey to date, I hope it will show you that I understand what it’s like to have been a struggling single mom with nothing.  If you haven’t already, I hope it will convince you to begin clawing your way out of the financial hole.  If you have already, I hope it will inspire you to move past whatever phase you are in right now.  And most importantly, I hope that by writing this blog and sharing the rest of my financial journey, you can learn from my mistakes and exceed all of YOUR financial goals.

Stay tuned for more!

My friends and I went to see Sex and the City yesterday and we had a fabulous time. The movie was followed by lunch and drinks (watermelon margaritas are tasty LOL), a trip to the mall, then a birthday party that was catered by Carlye’s. A fabulous day indeed!

For someone who has never ever watched an HBO episode, I can finally understand what all the hype was about because I absolutely loved it. I cried, laughed, cheered, AND was mesmerized by all of the fabulousness. Shoes. Handbags. Oh my! From the plot, setting, fashion, and characters - this was one of the best movies I’ve seen in a LONG time. Speaking of the characters…

[warning: possible movie spoilers to follow...]

Carrie (2nd left): she’s a writer, fashionista, and love struck puppy. She can be a little naive at times, but her 3 best friends keep her grounded and pick her up whenever she’s down. Her heart has been raked over the coals, but time and time again, she finds the strength to give love another try. She wants the Cinderella love story but soon learns that fairytales are only in books. Once she accepts this, she realizes that a pair of fabulous shoes are just what the love doctor ordered. Who knew! LOL Just kidding! She realizes what she was doing wrong all along - allowing society to dictate her actions and expectations.

Samantha (right): she’s an independent woman who defines life on her own terms. Although it would be nice to live the life that society thinks every woman should want, she’s aware of her own “needs” and refuses to settle for less. She isn’t perfect, and doesn’t claim to be, but she loves herself and all of her imperfections. She has a successful career, an amazing sense of self confidence, and knows how to make things happen. You say the word and Samantha will take care of it, so consider it done. You need something, she has the connections. You’re in a bind, she’ll help you get out of it. You want to know how to do something, she’ll find the information within minutes. She’s lovable, loyal, brutally honest, funny - and happy just the way she is.

Miranda (2nd right): she’s a superwoman - mother, wife, and successful attorney - she wears many hats and tries to carefully balance them equally. Unfortunately, she forgets that some things are a higher priority than others and requires extra attention. But because she does so much every single day, she expects her efforts to be appreciated. She’s very focused and driven, as well as methodical and logical - all good traits, but she often loses touch with the human element that makes mistakes. She can be a little stubborn at times and fails to realize that matters of the heart are more important than matters of the mind. She’s a work in progress.

Charlotte (left): she has the perfect life - perfect home, perfect husband, perfect family - everything one could possibly dream. She sees the good in all things and tries to be the voice of reason when her friends are upset, angry, frustrated, cynical, or just plain acting silly. Sometimes she goes a bit overboard and makes you wonder “what world do YOU live in?” but she does have a tiny mean streak that remains hidden until absolutely necessary. But for the most part, her life is a fairytale where everyone lives happily ever after.

My friends have pegged me as a Samantha(60)/Miranda(40) mix. Ha! I can’t even deny it! LOL

Which character(s) do you most identify with?

Do you have SATC-like girlfriends?

What do you love most about the characters?

I loved these characters so much, I wanted to buy every season of the HBO series so I can watch them from beginning to end. With a little time to spare before our lunch reservations, we went on a hunt for the DVD collection. I discovered that Best Buy had the entire collection on sale for $109.99, but I couldn’t bring myself to drop that kind of money on a TV show.

So I’ve decided to be creative and use multiple resources.

BB didn’t have the individual seasons, so we trekked to Circuit City where I found Season One on sale for $16.99. The DVD almost paid for itself because it came with a free movie ticket - valued up to $10.50 and expires June 29. Now I have a reason to see the movie again. Fabulous! LOL

I also have another girlfriend who owns a few seasons already, so I may have to “beg, borrow, and steal” Jennifer Hudson style. LOL! Hmm… Maybe if I buy her a bottle of Shiraz, we can have a pajama party and watch all of the old Sex and the City episodes together - *hint hint* Pam, I’m coming over! LOL Then whatever she doesn’t have, I’ll try to get copies from my local library.

I’ve also been told that the CW network plays reruns every weeknight at 11pm. I think TBS does the reruns every now and then as well. But if all else fails, this website has everything you need. Shhhhh, you aint heard it from me. LOL

What is your favorite SATC scene (movie or TV)?

I’m off to watch Season One on DVD.

I hope everyone is relaxing and enjoying this beautiful Sunday!

Image Credit:
[1] Socialite Life
[2] Smarter.com

photo credit: PIWO

I read a comment yesterday that made me pause and reflect. The fabulous reader said:

I used to be a very avid reader, but I’ve come to the conclusion that we are in different spots financially so I don’t feel as though I relate to much of what’s said anymore. I’m 29 and single (divorce, actually). Finally moved out on my own (again) about a year ago. I’m still paying off very old debt. My credit is shot because the ex didn’t feel he needed to help make the house payment and, at the time, I was bringing home $1600/mo and our house payment alone was $1100. Needless to say, we were foreclosed on.

The rest of the comment goes on to explain WHY they don’t read my blog [as often] anymore. “We’re so different. We’re not in the same place. I have a bunch of debt. I only earn $xx. Blah, blah, blah…” If you’re interested, the full text of the comment can be found [here].

Why am I highlighting this? Well, for several reasons. I’ve seen similar comments in the past, but I’m not sure if they’re all from the same person. I usually ignore them because I don’t need an announcement if someone doesn’t plan to read my blog anymore - especially when I’ve done nothing wrong. Wait, I don’t need an announcement then either. 9x out of 10, if I’ve said something that made you uncomfortable, I’ll probably say it again. LOL But you are always welcome back. It’s cool. Same goes for this commenter. But I want to openly address the comment, and hopefully, my response will benefit more than one person.

Here are my thoughts for ALL of you:

A BIRD WITH DIFFERENT FEATHERS

You should never avoid someone because they are in a better place than you. In fact, you should gravitate towards people who are BETTER than you. Now I’m not saying *I* am better than any of you, but let me tell you something - knowledge is power and information is priceless. When you associate with others who you “perceive” to be in a different (i.e. better) place, that is prime opportunity to latch on because there is always something you can learn. If you put insecurities aside and hang around long enough, you may become privy to something you wouldn’t have otherwise known and/or feel motivated to improve your circumstances.

Single Ma’s Personal Reflection: Almost all of my employees are more experienced than me. But guess what? That’s the way it should be! Wanna know why? Because they make ME better. Oh, and they make me look good too. LOL Furthermore, I am in the prime of my career. As a result, I gravitate towards people who have been where I am today. People who can pave the way to make my journey easier. People who can guide me through a rough period. People who will help me avoid costly mistakes. Many of my trusted colleagues are in higher positions and earn at least $20k+ more. They’re in a “different” place than me, but I rely on them to make sure I am continuously improving.

NEW WINGS

When you’re going through the “butterfly” phase - this is when you’re trying to shed the old to bring in the new, then spread your wings to show off your fabulosity - in any area of your life, it’s better to avoid people who are exactly like you. Before any of you start typing a comment to disagree, let me explain. I’m sure you’ve heard the saying “misery loves company” and we already know it to be true. So if you’re trying to improve your circumstances, why break bread with others who are in the same predicament? Unless you want to throw a pity party, it’s counterproductive.

Single Ma’s Personal Reflection: All of my friends are smarter or better than me in some area of life. For example, I live a semi-sedentary lifestyle and I need to lose weight. Subconsciously, I gravitate towards people who exercise and eat healthy. In fact, one of my newest friends is a certified Jazzercise instructor. Not only is she healthy and active, but this chic has more energy than the Energizer Bunny. LOL I can’t keep up, but she influences me daily. Another fat person will have me at McDonald’s eating a heart attack burger with an extra large order of diabetes.

AFRAID TO FLY

To address a latter part of the comment:

You once adviced that I should move to a place where I can get a better job. In a perfect world, I would do that. I would love to do that. But all personal factors involved, it isn’t a reality.

First, Single Ma doesn’t give “advice.” When asked a question, I only share what *I* would do if I were in a similar situation. So I’ll just say this. A 29 year old, divorced, and (I assume) no children. Hmm…if I had a bullshyt stick, I’d throw it at you. There’s no such thing as a “perfect world” and it doesn’t have to be. Regardless of “personal factors,” if you want to improve your circumstances, you would challenge all odds and do whatever is necessary to make changes in your life. YOU create the life you want, not circumstances. However, if you CHOOSE to limit yourself, then that is YOUR decision and you should stop complaining.

Single Ma’s Personal Reflection: Now I don’t want anyone to read this and think I’m insensitive. I write and speak from experience. When I moved for a better job (the 1st time), I was a single parent with a 9 year old and a dog, no child support, no support system, no friends, closest family member over 400 miles away, and a starting salary that barely covered my basic necessities every month. However, I was able to see the big picture and began creating the life that I envisioned for my family. In MY opinion, financial independence and a comfortable lifestyle are THE most important “personal factors” and nothing, I mean NOTHING (short of a debilitating illness of course), should get in the way.

FAMILIAR WATERING HOLE

If there is someone in your life who makes you comfortable with your circumstances because they are also in debt, or they are also divorced, or they are also struggling to pay their mortgage, or they can “relate” to the struggle of living paycheck to paycheck - BUT they aren’t doing anything to improve their situation - cut ‘em off. I mean it. Snip, snip - effective immediately! When the blind leads the blind, the odds of running into a brick wall is not a bet against the wall.

Single Ma’s Personal Reflection: I have no desire to associate with people (like me) who think losing weight is too hard. I have no desire to associate with people (like me) who are in the midst of career development. These people can “relate” to where I am - sure - but they can’t help me become a better ME.

FIND A NEW FLOCK

You want to find others who are doing bigger and better things. Surround yourself with people who are where you aspire to be. You won’t miss the old flock. I promise. Debt freedom feels so fabulous, you’ll need the extra room to spread your new wings anyway.

This is a guest post by Kimber at No Limit Ladies. If you like what you read, please check out her blog and subscribe to her feed.

During a recent party, while chatting it up with my girls, I was introduced to a new person. She asked the standard ice breaker, “What do you do?”

I honestly didn’t know. I was stunned at first and then blabbered through some convoluted explanation, my buddies, all the time, snickering into their beverages. Ever since, they ask me what I do at the beginning of every conversation.

What DO I do? Am I a corporate consultant? An investor? An entrepreneur? A blogger? A writer? No one wants to hear that laundry list of occupations. I have to pick one.

Very difficult.

Many of us have this issue, especially women. If we take maternity leave, are we temporary stay-at-home Moms or corporate gals on a break? If most of our income comes from investments yet we work as accountants, are we investors or accountants?

And why does it matter?

Because our “label” tells others what our focus is. If I say I’m a writer, the conversation will turn to writing. Perhaps the newcomer knows a book reviewer or better yet, a small press friendly agent (do they exist?). There is potential for growth. There is potential for wealth and career building.

The natural inclination is to “be” who you’re best at being, to impress people. I do the opposite. I introduce myself with my weakest title, the one I need most help with. If I’m looking for an agent, I’m always a writer. If I need a contract gig, I’m always a consultant.

It is when I don’t need anything that it becomes challenging.

How do you define yourself? Does it change depending on the circumstance?

Kimber Chin also writes romance novels based in the business world , in addition to her blog at No Limit Ladies.

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photo credit: accrama

I’m in a very relaxed mood, but I have nothing to write about today. Actually, I have several posts in draft, but none of them are ready to be published. So I’ll just tell you what’s on my mind:

I received my paycheck, but the amount is still wrong. $1k too much. My benefits have been confirmed but the only correct deduction was my 401k contribution. They forgot the match. *grrrr*

My 2 year contract with Verizon Wireless expired on the 19th. Thank gawd! That was a tight leash on a one-sided relationship. I’m looking for a new love.

The red shoes came in the mail this week. The heel is kinda low. Amazon’s description said 3 inches - they’re more like 1.5 or 2. The toe is more round than I expected. The patent is cute. Love the sling back buckle. Fit nice. Comfy. I’ll keep them. No more shoes from Amazon.

My tenant offered to repaint my house before he moves. Isn’t that nice? I declined.

I’ve only spent $52 dining out this month. Great, right? Unfortunately, I’m about to blow my entire dining out/entertainment budget in one weekend. Ha! Can you say warm stone massage? Saturday can’t get here fast enough.

School is out June 12th. On June 13th, we leave for our extended family vacation. I can’t wait. BabyGirl doesn’t know it yet, but I’m leaving her down south for the ENTIRE summer. We’ve had a rough year and I need a break. Thank God for grandparents!

I had an annual exam and the results were better than expected. I am very healthy and I’ve loss weight. Only several…uh…thousand or so pounds to go.

Hmm…what else?

Oh yea, one more thing. The nature of my career field is crazy, but I’m loving the new job.

Ok, that is all.