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Need to reset your money? Learn how to do some spring cleaning with your finances to start building momentum with your biggest goals!
When You Hit Hurdles with Your Financial Goals
For some reason, I like to use April is a sort of reminder to review our financial progress. Maybe because of the deadline for taxes.
Or maybe it’s because it’s financial literacy month.
Anyways, during April I’ll poke around all our accounts, including investments to make sure we’re moving in the right direction.
I’ll also review our goals for the year and see if we need to adjust anything.
If you’ve signed up for the community newsletter you got a look at a few of our goals for this year.
We’re looking to:
- Make a dent on our mortgage with extra payments
- Have enough saved up to replace a car
- And for me, I’m working on getting in shape to tackle a 5k obstacle course
And if you haven’t, go ahead and take a little extra time checking your goals and numbers.
Things can be going smoothly, which is awesome.
But it’s not – like you’re behind on a goal or you two can’t seem to make any headway on something, this episode is for you.
We’re going to look at how you can reset things, do some financial spring cleaning, and build up some momentum.
In this episode we get into:
- Why finances are a lot like fitness
- Best resources to get on the same page as a couple and
- How to start paying off debt faster, saving more, and creating your own path to financial freedom and independence
Hope you enjoy!
Resources to Stay on Top of Your Money
Want to learn more about getting a redo on your money? Here are some resources to check out:
- Best Budget and Money Apps: Personal Capital, Tiller, Mint
- Grow Your Stash Faster: High Yield Savings with CiT Bank
- Automatic Saving: Qapital
- Jumpstart Your Marriage and Your Money
- Debt Pay off Worksheet
- Change Your Habits and Own Your Finances
- Which Debt Payoff Method Is Right for You?
- 3 Steps to Staying Motivated While Paying Off Debt
- 50 Ways to Give Your Finances A Fresh Start
- How to Start Investing (with $1,000 or Less)Paying Off Your Debt Faster as a Couple
- How to Build Wealth While Raising a Family
- Using Snowflakes to Pay Off Debt Faster
How Finances and Fitness are Related
Finances and fitness. On the surface, those two don't seem to go together.
When we started our journey with getting out of debt and then really began saving, though, I saw the connection and I'm not the only one.
Many in the personal finance space through their own journey noticed that there were definite patterns to both.
Ramit Sethi, personal finance author of The New York Times bestseller I Will Teach You To Be Rich, noticed many parallels himself.
For example, say you were telling your friends that you're trying to get back into shape. What usually happens?
You get a ton of advice from people about what to eat or what not to eat when to eat exercise tricks and hacks that they've read and some of them are reasonable and some of them just seem a bit crazy.
Let's be honest with fitness – if you really look at it most of us know the essentials of what we need to do. We need to eat better and we need to exercise more.
Even if you don't have an exact plan or you're not following a specific diet you can have results if you follow just those two main principles of advice and then look at finances.
A lot of it is the same when you're telling people that you're trying to get out of debt or maybe you're trying to save more. They have plenty of advice. Some of it could be reasonable. Some of it can seem like a get rich quick scheme. But what do we know the fundamentals are the same.
You want to spend less than you earn and in some cases that means cutting back and being smarter with your expenses.
Other cases it means that you have to grow your income and then for most people, it's a little bit of both.
Getting back into that example of getting into shape getting back into fitness What do you have to do. It's really about changing your habits.
For me, I started exercising first thing in the morning because I knew if I waited later I just wouldn't do it. I switched up my breakfast one.
I now consistently have breakfast and I decided the easiest thing for me to do is a protein shake. It's something quick and simple I can do in five minutes. And then I began changing my diet.
Overall cutting out the processed foods and starting to eat healthier. But I didn't do it all at once. I started changing these habits one at a time and it's working.
I'm dropping the pounds but I'm also fitting into my old clothes. I feel stronger and have more energy at the end of the day. And it's the same with your finances.
You two probably have several goals you want to tackle but what's your priority. Which one would you like to knock out first? If you're not sure which one you two need to tackle try this go ahead and pull your numbers.
Which part of those numbers makes you feel most uncomfortable? Do you feel like you don't have enough saved for emergencies? Are your debts stressing you out?
Maybe you're looking at your investments and you feel like you're way behind for where you guys are at.
Look at the numbers and talk it over and see if the two of you can choose one goal to tackle because when you have one goal it's easier to stay on task.
It's easier to follow your plan because your attention isn't trying to do a million things at once it's just trying to do one.
Which Money Goal to Tackle First?
All right. So it's time to do a little spring cleaning with your finances. And I know we have several different goals that you guys could do but I've got to break it down into three main categories.
- Paying down debts
- saving more
- investing in your future.
Now the good news here is you already done two important steps you've picked or at least you're close to choosing the priority that you're in a focus on what goals most important to you.
And then you have your numbers in front of you. And this is crucial because if you don't know where you want to go or you have no idea where you are now financially it's hard to create a path moving forward or to get over the roadblock that you have.
So with these, I'm just going to knock them out one by one some common problems that couples have when they are trying to reach these goals and see if we can get you unstuck.
Paying Off Debt
Two main hang-ups that many couples have when it comes to knocking out their debt:
- they can't seem to agree on which debt pay off method will be best for them
- just staying motivated when you have a large amount of debt in front of you.
There are different ways that you can tackle your debt and pay it off. But it boils down to basically two main methods are you going to pay off your debts one by one based on the interest rates which is known as the debt avalanche approach or are you going to pay off your debts by the balance which is known as the debt snowball.
While you can find really strong opinions for either one. It really boils down to what motivates the two of you to knock this out.
For many people when they see the interest rates especially with credit cards compared to a student loan they want to attack their credit cards first because the interest rates are much higher.
You're talking about around 20 percent or even more depending on what card you have. And that makes a lot of sense now for other couples.
Another way that makes sense to them is having this momentum this idea of. We've knocked down the small bill could be someone that you owe a hundred dollars.
It could be a small credit card balance and then working your way up is what keeps them motivated.
And you really have to determine what works for the two of you some questions you might want to talk about is the timeframe depending on the balance that you have.
There could be a drastic difference between paying and off by interest rate or paying it off by the balance.
If you want to find out for yourself, check out this free debt payoff spreadsheet that will allow you to quickly and easily compare to two methods to see what works for you.
Just a heads up, if you do have a very large balance there could be a significant enough difference where maybe you switch off methods. But for most couples that listen to the podcast, it's not that big of a deal.
What's more important is that you find a method that you two are able to stay motivated on and I will add many times if this is just a numbers game you wouldn't be in debt.
It's a behavior thing it's a mental mindset that we have that got us into debt who are thinking well if we can afford the payments this is fine we're well within our budget.
Staying Motivated While Paying Off Massive Debt
The second hurdle that couples have when it comes to paying off debt is again staying motivated especially when you have a huge amount of debt. Sometimes you'll see these stories online or in the news about people that paid off huge amounts. I'm talking about like sixty thousand seventy thousand or even one hundred thousand in two to three years. And while I think it's fantastic that they're able to make that much progress I also know that sometimes these stories and only hearing and seeing these stories can almost be a deep motivator for you. You might have a very large amount maybe student loans or a second mortgage that you're trying to knock out. It will be years before you're able to dig out of this. So staying motivated is absolutely crucial but how do you do this. Well there's three tips that I recommend for couples. The first one is set minimum goals so you do have the total balance in front of you. You know how much debt you're in but break it down by type of debt. Do you have credit card debt then set a goal for knocking out your credit card debt. That is a huge win. And then if you have medical bills or car payments break those things down make sure that you're aware of the progress you're making. And if you have a large debt say student loans you might even want to break that down into segments could be 5000 dollars segments. Make sure that you put it into more manageable smaller chunks so it doesn't seem overwhelming.
The second key step is tracking your progress with paying off your debt. It's great to have something visual that you can look at where you see that the balances are going down. Now if you read my book jumpstart your marriage and your money I have a whole section on this on how to do many dates how to review the numbers and I recommend different tools and apps that are out there which you can get for free over a couple money on the free toolkit page. And while you might be looking at the numbers you or your partner may also need something more visual. I'm talking about charts or even I know some people what they do is they have a picture of what they're trying to pay off as a reminder. Whatever works for you use it so you can keep focus on becoming debt free. And this last one I see with couples where one is very focused on paying off debt and the other does want to get out of debt. But they are not exactly on board. Maybe they're dragging their feet. So my key tip here is limit deprivation. Yes it's important to optimize your budget so you have more money available for paying off the debts but that does not mean that you can't have some fun. Yes you can still go on vacation have some entertainment. Yes even regular lattes but instead of for example taking a vacation and relying on your credit cards you're going to save up for them ahead of time. So these are debt free vacations. You also are going to look for ways to go out and you're going to become an expert of your city you're going to see where all the free and low cost festivals are and if there are any college bands in town or if you're going to go to a big event if there are any discounts.
And yes you can get that latte but instead of paying for it on a daily basis you're going to make it a weekly treat. Now because you've reduced and not eliminated these areas in your budget it's something that you can live with long term rather than cutting out everything that's fun. And then quitting because you guys just are too deprived now with saving more what I notice as the biggest hurdle with couples is figuring out how aggressive or I guess you can say conservative they are with their emergency funds and savings.
Generally, I get emails or you guys message me. It's what if you needs to have a large amount of savings to feel comfortable while the other is perfectly fine with a very small buffer. And this is something that my husband and I personally deal with. For him having six months or more of expenses stashed away in savings makes him feel more comfortable. While I'm a little bit more flexible in this is a case where I really think you need to sit down and talk about why it's important for either to have a large emergency fund or why you preferred to have a smaller buffer. I think what you'll discover is that you both have very valid reasons and it's a lot easier to come up with a compromise for us. We do have a higher balance with our savings because I think he sleeps easier at night knowing that there's that safety net. You too could be sitting down and having a similar conversation but come up with a different conclusion and that's fine. The important part of this is for you to understand where your spouse is coming from with these feelings of either feeling comfortable or uncomfortable with certain parts of your finances.
Once you have that in mind and once you understand why they feel that way it's much easier to come up with a solution that works for both of you and finally with investing. The biggest hurdle that I see with couples is that you have completely different approaches when it comes to investing for your future. One of you may prefer to keep it relatively straightforward you're for one K maybe your IRA the other one wants to try different things. Investing in real estate or starting a business this doesn't mean that you're incompatible. But my advice is to sit down again having these conversations is absolutely crucial. But look at your investments together as a big picture. Where do you guys want to go. How aggressive are you going to go with investing and work out a plan where between the two of you can reach your mutual goals now we can go really deep with investing and I have some great episodes with certified financial planners and other financial experts which I'll include in the show notes. The main part of this is for you to create an investment strategy that hits your mutual goals. And that also reflects your personal risk tolerance.
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