Part 1 of a 3-Part Series on Goal Setting
How are you doing on your New Year’s resolutions?
If you are like most people, then you may have already abandoned your resolutions or simply forgotten about them.
What is True Financial Freedom and How Do I Get It?
My goal is to help you take control of your money, so you can pay off debt and work toward true financial freedom.
But what is true financial freedom?
Financial freedom can be somewhat of an elusive idea. Let’s define it so we know where we’re headed.
When my husband Mike and I decided that we needed to be more intentional with our spending, I dove in to learn as much as I could about personal finance.
I realized that there are actually three stages to financial freedom.
The three stages are financial security, financial independence, and financial freedom.
Economic Security
Economic security is defined as “the condition of having stable income or other resources to support a standard of living now and in the foreseeable future.”
What does this mean?
This means that one feels reasonably secure that his or her current income stream(s) will continue so that they can maintain their current lifestyle.
When I was growing up, I was the only child of a single mom. Money was tight, and we lived paycheck to paycheck. My mom worked two jobs for most of my childhood, and as the end of each month neared, we would frequently have to put off grocery shopping. When the last day of the month rolled around, we would go shopping in the evening so that my mother could write a check knowing that it would not be cashed until after her paycheck had hit her account the following day.
I always knew that money was a stressful subject for my mom. She never wanted to disappoint me, and she always wanted to provide the best for me. Because I was a good student in school, we had high hopes that I would one day break free from the weight of living paycheck to paycheck.
As I transitioned to adulthood, I longed for the day when I would feel financially secure.
From 2006 to 2008, I paid off the credit card debt that I had accumulated from college through my mid-twenties. Slowly but surely, I began to feel more secure in my financial situation. I was earning enough money in my job to cover my expenses and save up for our wedding in 2009, but I knew I still wanted more.
What I wanted was financial independence.
Financial Independence
According to Wikipedia, “financial independence is generally used to describe the state of having sufficient personal wealth to live, without having to work actively for basic necessities. Financially independent people have assets that generate income that is greater than their expenses.”
Financial independence takes it up a few notches from financial security.
My interpretation is that someone who is financially independent has enough income-producing assets such that they could quit working for a prolonged period of time and still be able to maintain their standard of living.
Therefore, to achieve financial independence, one must have several pieces of their financial puzzle in place.
Financially independent people have the following:
- a fully-funded emergency fund,
- little or zero debt, and
- income-producing assets, such as stake in a business or investments in real estate and/or stocks.
Currently, my husband Mike and I are working toward financial independence, but ultimately we aspire to become financially free.
Financial Freedom
Financial freedom signifies that one has accumulated enough wealth or income-producing assets (likely, a combination of both) such that they never need to work again.
(It is important to note that while financially free people do not need to work to survive, many will continue to do so because they have found work they love.)
Financial freedom builds on the three aspects of financial independence listed above and takes them a step further.
Here are the three pillars of financial freedom:
- Financially free people maintain their fully-funded emergency fund.
- Financially free people have no debt. Why would they need debt when they are building wealth? Debt is just a weight on their bottom line.
- You have probably heard of the benefits of diversifying your investments. Well, wealthy people diversify their income streams. Income streams may include a day job, owning and running businesses, and having multiple investments including real estate and stocks.
According to the authors of The Millionaire Next Door
“If your goal is to become financially secure, you’ll likely attain it…. But if your motive is to make money to spend money on the good life,… you’re never gonna make it.”
― Thomas J. Stanley
My husband and I are working toward true financial freedom so that we can live the life we have always dreamed about. We are not concerned with acquiring a lot of material possessions, but we long for the day when we can travel the world and give generously to others in need.
If my husband were to lose his job for whatever reason right now, we would be scrambling to figure out how we would make our mortgage payment for the next few months. Thinking about that possibility is extremely stressful.
For that reason, the only logical and responsible path for our financial future is to pay off our non-mortgage debt as quickly as possible so that we can increase our emergency fund and then focus on paying off our mortgage early. Once our mortgage and other debt are paid off, imagine how quickly we’ll be able to save and invest.
We are no longer settling for the status quo of living paycheck to paycheck with unneeded stress. We are taking responsibility for our financial situation.
We are looking forward to the day when we no longer have any debt payments, we are sitting on a fully funded emergency fund, and we are able to maximize our retirement savings. That is when we’ll be on our way to true financial freedom.
6 Reasons Why You (Yes, You) Should Have a Monthly Budget
So you’re not convinced that you need a budget? You think that a budget is a good strategy for someone else, but it’s not necessary for you.
You might go from month to month with more than a few dollars left in your checking account. Maybe you don’t have a problem covering your expenses each month.
For the first four years of our marriage, my husband and I were like that, too. [Read more…]
Discount Insurance and More! 8 Effective Strategies to Reduce Healthcare Costs
Discount Insurance and More! 8 Effective Strategies to Reduce Healthcare Costs
Let’s face facts — Americans face some of the highest healthcare costs in the world. The average American spends over $10,000 per year on healthcare. That’s no small number, and many people struggle to make ends meet because of these expenses.
For many people, the high cost of healthcare means you either need to take on new debt, pull from savings, or just hope you get better. Financial stress like these can make things worse by impacting your physical health. The good news is that there are steps that you can take right now to reduce the impact of healthcare on your wallet.
Valentine’s Day: Money and Marriage Reflection
My husband and I haven’t ever really celebrated Valentine’s Day in the past. Early on in our relationship, our finances were an absolute mess and we were homeless together. While that’s thankfully no longer the case, we’ve always looked at it for what it was: a retail holiday. However, with our little one becoming more aware of holidays and other things, this year was a bit different. Honestly, this Valentine’s Day was great for our family and fantastic for our marriage.
Why We Didn’t Do Valentine’s Day
In the past, as I mentioned above, Valentine’s Day was typically a day that came and went without any fuss. Of course, we’d both say “Happy Valentine’s Day,” give the other one a kiss and go about our days. That’s not any different from any other day throughout the year though.
Our reasons for this varied. We had a lot of past relationship trauma from previous partners that made the holiday hard to enjoy. Not to mention, there were several years when celebrating some in-between holiday was not possible. We were broke and there was no room in the budget for any of it.
On top of that, Valentine’s Day always felt like a big deal for nothing. I’m not something who wants to be showered in flowers or candy – neither is he. We both enjoy more practical gifts and don’t like to buy into retail holidays (unless we are cashing in on the sales afterwards).
This year was a little bit different though, all thanks to my husband.
How We Celebrated This Year
The past couple of weeks have been tremendously stressful in our household. My husband and I are both working on multiple projects at our jobs. Our little one is cutting more teeth and, to top it off, our dog got very sick. After a few months of health issues myself, everything piling up made the world feel like it was on fire.
Being the man he is, my husband knew how to turn that around, at least a little bit. He snuck out of the house during the day, grabbed me some roses and grabbed our daughter a small present. We both got little Reese’s candies. Then, he revealed he’d planned to order dinner in so that I didn’t have to stress over dinner after a busy workday.
In truth, it was absolutely perfect. It was a nice pick-me-up from the weeks and months of stress piling up. Even more than that, the gesture brought a spark back into our marriage that I hadn’t realized fizzled to begin with.
All of this to say, if you’re against V-Day, I understand. But don’t let a single day go by without telling your spouse you love them or making some small gesture to brighten their days. Don’t go way out of your budget or do anything crazy, but the smallest things can make a huge difference.
We’re people that celebrate Valentine’s Day now. What about you? Do you celebrate?
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Why Doing Headstands Will Improve My Financial Outlook and More…
Throughout my entire pregnancy, I practiced yoga. I went to two or three classes every week up until I gave birth and it became something I really enjoyed. I was eager to practice again once my doctor cleared me for physical activity. There were so many awesome poses that I just simply couldn’t do with a nine-month prego belly (and others that just weren’t safe while I was pregnant). So, at the beginning of the year I set up one-on-one yoga sessions with my instructor/friend.
My goal for my practice? Headstands.
Why Headstands?
I’ll preface this by saying I practice with a YogaFaith instructor. My first true goal when I roll out my yoga mat is to get closer to God. I usually bring a Bible verse with me to think about while I hold poses and breathe. This has brought me a lot of peace over the last year or so. My time on my mat is time to spend with Jesus and time to spend with myself.
As I’m sure you know if you have followed the blog for a while, I am a fan of reflecting. Yoga is a chance to do that in a quiet, supportive environment while also working towards a physical goal. For me, my 2022 yoga practice is focused on the idea of grace. One of the verses I’ve been bringing to my practice is this…
Let us then approach God’s throne of grace with confidence, so that we may receive mercy and find grace to help us in our time of need. – Hebrews 4:16
Do I always feel confident or graceful when attempting a pose that demands balance? Absolutely not. There are times I feel like a newborn baby gazelle who can’t use its legs properly. When I lay those insecurities at the feet of Jesus, I can do anything. I am full of His grace.
My First Headstand
I’m about five one-on-one sessions into my practice for the year. I have already made huge strides in what I wanted to do. My balance is improving, the connection between my breath and the way my body moves is there.
What many people don’t realize is that, while yoga does take a certain amount of strength, much of that strength comes from focusing your energy inward. When I put my shoulders into the inverted yoga chair and kicked my legs up for my first assisted headstand, it was amazing! I decided to take that energy and focus and discover other places where it could positively impact my life.
How Headstands Will Help Improve My Finances and Beyond
As I said, doing a headstand takes a lot of focus, but you also have to be extremely self-aware. Your body will always let you know when you should stop when it comes to exercise, stretching, etc. Actually, your body probably let’s you know when to stop other things too, but most of us ignore it. My goal is to listen to that intuition more.
From a financial standpoint, headstands are training me to be more patient, focus on the end goal, and be more aware. Every move I make has an impact on the integrity of my headstand and, potentially, my safety. The same is true of my finances. Every dollar I spend (or don’t save) has an impact on my long-term financial health. The same can be said of my health, relationship, and creative goals.
Take some time to think about what would help you truly focus. Meditation, regular exercise, and even simply journaling can help you make progress. What works for you?
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Gifts for Debt-Free or Money Conscious Couples
Valentine’s Day is here once again. Many Americans plan to drop some serious money on the holiday. If you and your partner are money conscious or working towards being debt-free like we are, there are some gifts that can show your love and support. Here are five gifts I love for debt-free or money conscious couples.
Give the Gift of a Money Tree
I’m a certified plant lady – I accrued more than 20 while I was pregnant. One of my favorites is the money tree. The money tree represents wealth and is thought to bring you luck in your finances and/or profession. In some cases, it is believed that the money tree brings about a great sense of well-being and even luxury. Ours hangs out in between our desks in the office. It has brought us a fair amount of luck. Plants like the money tree can be a great gift because they will continue to sprout new growth throughout the year. Not to mention, having plants has been proven to benefit people’s moods and increase happiness. So, it makes a great gift.
Pay for Special Budgeting Tools
There are a lot of paid fintech tools on the market. See if the person you are buying for is currently using the free version of any paid app and pay for a few months or even a year. Typically, paid versions of the app unlock new financial tools and additional help. If they use the app on a regular basis, the change can truly make a difference in their finances to have the paid tools available.
Buy a Financial Planner or Journal
If the person you’re shopping for isn’t necessarily tech-savvy or prefers to write things down, a financial planner or journal may be a good gift option. Personally, I write everything from our budget to financial goals down in a planner. So, each year, I spring for a nice one and use it for the next 365 days. Journaling is also something that can help people on a debt-free journey and, honestly, journaling can be therapeutic. Buying a nice planner or journal can be the perfect gift for someone on a journey of their own.
Purchase Dave Ramsey’s Financial Peace University
This one is a little more expensive than the other gifts listed above, but it is a great gift for money conscious couples. You and your partner can go in on the purchase of the online program together and take the courses. Over the span of the Financial Peace University program, you will both learn more about finance and get on the same page about your money. Giving this kind of gift can draw you two closer together and improve parts of your relationship. It’s another gift that keeps on giving.
Make a Cash Rose
If money is your love language, make your own cash rose. For this, you decide how much you want to spend. Get the cash together (using small bills is a good idea). Then, watch this YouTube video instruction on making your own cash rose. Your honey will surely appreciate the gesture.
Readers, what do you think of these gift ideas? Do you have any to add?
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How to Cover Dental Emergencies
It never fails. Things seems to be going great and then you are hit with something that costs an arm and a leg. For me, last month, the unexpected costs were related to dental emergencies. If you don’t already know, dental insurance is a racket. So, when it comes to covering the cost of an emergency, it usually falls on you. How do you cover it if you don’t have the cash upfront?
Types of Dental Emergencies
Believe it or not, just because it seems urgent to you doesn’t mean your situation is a dental emergency. There is a set of criteria the dentist uses in order to decide whether or not your problem is an emergency or not. Some common dental emergencies include:
- Unexplainable toothache – this is your body’s way of telling you there is something wrong in your mouth
- Swollen jaw or mouth – swelling in the jaw or mouth may indicate infection
- Exposed nerves – when this happens it can be extremely painful and needs attention immediately
- Missing tooth – if they are contacted quickly the dentist may be able to preserve the tooth
- Missing filling – without the filling your tooth can easily break or chip
- Broken crown – any broken dental work in your mouth needs fixed as soon as possible
- Abscessed tooth – a tooth abscess is an infection and needs medical attention
- Food stuck – being unable to remove food from your teeth is annoying but it can cause infection and even shift your teeth if stuck too long
At the end of the day, your dentist will be able to tell you whether or not the situation is an emergency. They will usually be able to get you in within 24 hours for issues that need immediate attention. That being said, dental work is crazy expensive. How do people pay for this stuff?
How to Cover the Cost of Unexpected Dental Work
When it comes to covering the cost of dental emergencies, the numbers can be steep. For instance, I don’t have dental insurance. Because of this, I have to pay out of pocket for dental services. I pay $234 for “in-house insurance” with my dentist. This covers two cleanings a year, all x-rays, and discounts off any other services. However, it didn’t cover my deep cleaning gum therapy last Friday. The discounted bill that I paid out of pocket was $785. They drew up a plan for me to have all four wisdom teeth extracted as well (another $1,700 at some point down the road). Thankfully, I was able to get this paid, but if you are looking for ways to cover these astronomical prices, take note of these options.
- Inquire about making payments: Smaller privately-owned practices may allow you to make payments on the services you receive. Ask about any payment options the office provides.
- CARE Credit: CARE Credit is a credit card that you can use for medical services. If you get a CARE Credit card it can help you pay for anything medical, not just dental services. Be wary though, this is another line of credit that you’ll need to pay off.
- Dental schools: One hygienist talked to me about going to a dental school for some of the work I needed done. If that is something you are comfortable with doing, check for dental schools in your area. They will give you huge discounts on services so their students can get the practice they need.
As a last resort option, you can always borrow money or get a small loan for dental emergencies. After all, anything that impacts your health is important enough to invest in.
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Birthday Reflections: How Last Year Changed the Way I Look at Life
January 29 is my birthday. Every year, I take a moment to reflect on the previous year, how I grew, changes that happened, and so on. This year’s birthday reflections left me feeling thankful and glad for the life I have.
Why I Reflect Every Year
Many people take the time to reflect at the end of the year and the beginning of the next. While I do love to reflect around January 1 like everyone else, reflecting around my birthday has always been important to me. Every year, the number associated with how long I’ve been on this planet goes up. People often associate your age with certain milestones. Next year, the year I turn 30, is a big one for many people. You’re “supposed” to have met so many milestones by the age of 30. It’s easy to feel like you’re falling behind peers your age.
That is one of the biggest reasons I sit down and reflect every year: not to compare myself to others but to compare myself to who I was last year. It gives me a version of myself to say, “Wow, I’ve come a long way.” My 28th year of life was kind of crazy, but in the most special way. I grew closer to my husband, we grew in our careers, and we welcomed our daughter into the world. It was truly an amazing year, but how have I personally changed?
My Birthday Reflections: Year 28
This year was definitely one to remember. Now granted, I spent most of the year pregnant and preparing for the birth of my child. However, that experience and other things I went through last year have completely changed who I am fundamentally as a person. I grew in more ways than one. Last year, I started practicing yoga, which has become an important part of my life. I did a lot of things that made me uncomfortable to improve myself as a person (including taking new classes, meeting new people, and going to the doctor more).
Financially, I’m nowhere near where I’d like to be, but our finances grew in 2021. We were able to save, set up everything for the arrival of our baby, and spend a solid eight weeks with her after she was born without having to work. That was fantastic. Honestly, money has become less important to us as a whole. Spending time together is where we’ve been focusing our efforts.
The biggest change for me this year was the idea of family was altered in a huge way. I’ve always had a large family (my dad is one of nine children). There have always been aunts, uncles, cousins, out there somewhere. The family I’m talking about is a bit different though. Leading up to my 29th birthday, I learned a new sense of family. My husband, daughter, and I have such an amazing, close-knit support system. Seeing how these individuals rallied around me, around us, last year was amazing. Twenty-nine is starting out to be an interesting year already. Change is in the air and I’m excited to see what the next year brings.
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Should You Shop at Going-Out-Of-Business Sales?
Toy R Us and Babies R Us both announced they will be closing their doors, kicking off some seemingly great going-out-of-business sales. For growing families, these sales may be tempting. However, most people are better off just staying home.
Going-Out-Of-Business Sales Are Tempting But…
Our Debt Free Family’s sister site, Saving Advice, had a colorful description of zombie toys in the back of liquidated stores. What you should really be scared of is the impact wasting money on a going-out-of-business sale might have on your wallet.
According to the Federal Trade Commission, many of these businesses have ways of making you spend more when all is said and done. If it is a large retail chain, like Toys R Us, the sale is most likely being handled by a liquidator. This also means there will be huge discounts advertised, but you may not be getting that great of a deal. In many cases, liquidation sales are marked down from seriously inflated prices. Here are a few questions to ask yourself before heading to any liquidation sales.
Questions to Ask Yourself
- Would you be buying this item anyway? Shopping sales just because things are on sale is a bad habit to have! Don’t go out shopping going-out-of-business sales unless you already planned on purchasing the item. In the case of Toys R Us, you may be able to save a little on larger Christmas gifts or birthday presents for your children.
- Is the sale being handled by a liquidator? If your favorite mom-and-pop shop is going out of business, they probably aren’t being liquidated. However, Toys R Us and Babies R Us will be. This can mean price mark ups.
- Have you researched the price of the item you are there to buy? This goes back to #1. If you have been thinking about buying the item, you know how much it costs elsewhere. Compare the sale price to prices available at other stores. Make sure you’re actually getting a good deal.
- Does the advertisement have the original price of the items? Many liquidation sales don’t offer the original price in the ad. The advert will just say “75% off all items in the store.” This is a sign that the prices are probably marked up prior to being discounted.
- Is there debt you could be paying off instead? Consider other things you could be spending your money on. If you hear about a going-out-of-business sale and have some extra cash, think about snowballing your debt or adding more to your savings.
No matter what kind of sale you’re headed to, price comparison is the best way to protect yourself from false discounts. Know what you are purchasing and what the average price is before going crazy at a sale.
Readers, have you been tempted — or even tricked — into buying items at a going-out-of-business sale?
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