How to Stop Procrastinating and Get Shit Done

How to Stop Procrastinating

It is early in the morning, and I have a very long to-do list that hasn’t been getting done. I can feel myself avoiding life, and slowly being swallowed by my depression. And while to some degree I can’t help the depression as it is an ongoing issue between me and my brain chemistry, I certainly don’t want to help it along.

As I sip my coffee and ignore the list sitting on the left edge of my desk I wonder why I am avoiding life? I know if I just got started it would all be done by now. It’s what I tell my daughter when she whines about homework or chores, “if you had started already it would be done by now.”

Sage advice, but clearly not helpful otherwise I wouldn’t be avoiding cleaning the bathroom.

Why not? Why am I procrastinating?

According to Psychology Today, chronic procrastination affects at least 20% of the population and represents a problem of self-regulation.

I’m overweight and I know I have an issue with self-regulation (hello carbs), but until now I didn’t realize that procrastination was another version of my shitty ability to say no.

Procrastination isn’t one size fits all. Nothing in life is.  According to Joseph Ferrari Ph.D., associate professor of psychology at De Paul University, and Timothy Pychyl Ph.D., associate professor of psychology at Carleton University in Ottawa Canada, there are three main types of procrastinators:

Three Main Types of Procrastinators

  1. Arousal types, or thrill-seekers, who wait to the last minute for the euphoric rush.
  2. Avoiders, who may be avoiding fear of failure or even fear of success, but in either case are very concerned with what others think of them; they would rather have others think they lack effort than ability.
  3. Decisional procrastinators, who cannot make a decision. Not making a decision absolves procrastinators of responsibility for the outcome of events.

I was the first type in college completing my projects last minute and getting great grades felt good. And gave me time to have a life and complete school work. But I’m no longer being graded, and as a self-employed person, I’m setting my own deadlines.

I don’t have a problem making decisions, so I’m going to guess I am somewhere in the second type. I am avoiding work. Feelings. Stress. All of the bad things.

Why work when I can relax instead?

Can Visualization Help?

One helpful technique I read about while researching procrastination was visualization. If we can clearly see our goals then we are more likely to reach them. “A study looking at brain patterns in weightlifters found that the patterns activated when a weightlifter lifted hundreds of pounds were similarly activated when they only imagined lifting.” Meaning that imagining the positive outcome has the same mental affects as actually experiencing the outcome. 

And yes, when I sit here and imagine eating fresh home cooked bread with dinner tonight I am motivated to get up and start baking. But then again baking bread is something I really enjoy.

When applied to something I strongly dislike doing the visualization doesn’t work as well. I can visualize a clean bathroom, and feel the positive effects of enjoying a clean bathroom as I soak in the tub with a glass of wine and a good book. But that does not make me want to clean it. Not enough to actually get up and do it anyway.

Clearly visualizing is important, but not enough by itself.

Turns out I am biased toward the present rather than thinking about the future.

In behavioral economics, they call it time inconsistency. For example, if you say, “next month I’ll start…” budgeting. Or working out, or eating healthy, you are putting off the pain and discomfort of self-regulation in favor of doing whatever you want right now.

Psychologists Neil Lewis of the University of Michigan and Daphna Oyserman of the University of Southern California tackled present self vs future self in a recent study published in Psychological Science. “In order for the future to energize and motivate current action, it must feel imminent.”

In the study, they asked participants about important events like a wedding and then asked them to judge how soon that event was occurring.  When asked how many days away the event was people responded with between 13 and 33 days sooner than if they were asked about how many months away the event was.

Other participants were asked about saving money either for retirement or when a child’s education at 18 years old. When given the length in days, rather than years, people were four times more likely to start saving sooner.

Let’s try some practical application.

Think briefly about getting your goal. For weight loss you might choose how you feel, the attention you’ll get, clothes you’ll get to buy.  The energy you’ll have. Want that life? Awesome.

Now, think about the effects of not taking action. You’ll be 5 years older, you’ll still be overweight, unhappy. Your clothes will be old and ratty because you don’t shop because you don’t like how you look. Or look farther out and think of missing out on your children’s lives because you didn’t change your habits now.

With finances imagine being debt free. Or only having a mortgage. Oh, the glory. How much money will that free up in your life? Think of saving for that vacation. Not a weekend with your mother in law (even if she is awesome) but a real vacation. A week, or two, away from life without worrying. And think of how fast you saved, or even better how fast you can save for another trip because you don’t have to have debt as a priority.

Now consider the opposite. 5 years from now. How much extra will you have spent on interest? You’ll be tired. And even more tired of paying off your debt. Maybe you are locked into the job you hate because it pays enough to cover life and bills and debt. No real vacations. No real treats because in the back of your mind you’ll know you still have to pay off your debts. Consider the exhaustion and health effects of prolonged stress from your debt. Maybe you’ll even be 20 pounds heavier.

If I sit here and imagine not cleaning the bathroom for another week and see the germs spreading over every surface, and smelling the grossness that will accumulate in another week. Let’s not stop there. Almost all visualizing advice says to incorporate as many feelings and senses as you can, so let’s be honest and accept my anger and irritation for having a gross space I have to spend an hour scrubbing instead of 20 minutes. I will probably be cranky and make the other people I live with cranky because I’m venting my anger on everyone even though I know I shouldn’t.

I can easily see how procrastinating cleaning this mess can ruin a whole day by starting it off on the wrong foot and letting the negativity snowball from there.

Avoiding those negative feelings and that awful hour of cleaning makes me want to ensure I get to cleaning the bathroom today. Now.

After cleaning, I’m going to spend some time thinking about my priorities and what impact not achieving my goals will have.

Monthly Budget Planning: February 2018 Preplan

I tried to start budgeting around November of last year but I just wasn’t able to make it work. I understood the theory of budgeting and started using the YNAB. I enjoyed looking at where my money was going but couldn’t seem to stop myself from breaking the budget. Not in one category. In all my categories. Apparently, budgeting doesn’t work if you aren’t 100% honest with yourself.

The problem?

I wasn’t 100% honest with where all my money was going. Little bits were being spent without being tracked. I didn’t have enough categories to properly account for everything I need and I even forgot to include a few reoccurring bills.

Between the end of November and now ( the end of January) I have just tried to not spend too much. With the great gray beast of February starting tomorrow it is time to get in gear so the rest of 2018 can move us toward our financial goals.

A little look back:

Good news is we came out of the Christmas Holidays with a nice bank balance. Which we will add to now, going into Valentine’s Day. We put all the income from Porter & Hazel into a separate account and take monthly distributions to live off of so we can be sure we can still pay for life during the slow months. One of our goals this year is to diversify our income so slow months are less of a problem. But for now, this ensures our future survival without having to get a regular job.

On Monday I deposited $6000 into my bank account to last through February. Somewhere around the last week of February, I’ll do the same thing to get me through March.  Though hopefully, I’ll be able to deposit less. We’ll see.

Category Breakdown

 

Housing: Budgeted: $2390.01

This includes my mortgage and all of the bills that it takes to run the house like sewer, trash, gas, electric. Unfortunately, there isn’t much room to save money in this category for the month of February. We have a 15-year mortgage so even though we bought our home for around $150k our mortgage is almost $1700 a month. High but a bit of perspective for this expensive category.

My gas bill is quite high this month. Probably means I forgot to pay it last month. December is crazy for us, so that is entirely possible. However, that does mean that I’ll be able to have this category be lower for March.

I do overpay on my mortgage every month including February (already made the payment). But I’m serious about debt relief so starting in March I’m going to pay the required amount and put that extra towards a credit card.

Health & Fitness: Budgeted $918.36

This category is a bit of a guesstimate. I saw a Get Rich Slowly review of YNAB and he used a health & fitness category which kind of blew my mind. Like Duh. Of course, medical expenses don’t just go in with regular expenses. Especially since this is a pretty big area for my family. Thankfully this area will go down quite a bit after February.  Spending $250 on an emergency room visit is a hard to swallow but sometimes those things are unavoidable. The other big guesstimate is what to set aside for prescriptions. We don’t spend $100 on prescriptions a month, but I put that into the category because I am on a pricey medication that will have to be refilled in the next month or two. So I’ll use what I need and put the rest toward future refills, and add to this category again next month.

True Expenses: 148.48

This category contains items that are important and non-negotiable. But this also means this category is flexible. This month my daughter needs a few things but hopefully, she’ll find a job soon and then I will be able to pay less for her life. This is where I also track my dwindling extra money. The oh so lovely “stuff I forgot to budget for” category is down to $25. While looking over the budget for this post I realized I forgot my the car inspection, my health insurance, gas for the car, and a few other things.

Credit Card Debt Payments:$413 minimum payment, $628.13 paid.

This was actually higher than I thought it would be. But that’s ok because it includes an additional $215 towards our lowest card paying it off! Woot!

Next month I’ll finish paying off our next lowest card (which currently has a balance of $77 and then throw the rest onto our Discover card which has balance (before this month’s payment) of $624. Hopefully, by then we will be pulling in some extra cash from side hustles and we can throw more money at the debt.

Other Categories

Automotive: $345.52 – car payment, gas, and maintenance

Phone Bill: $147.60

Student Loans: $463.33

Charity: $60.00

Travel: $100
After Valentine’s Day, we are going up to New York to see some family. This should cover the gas and other expenses while we are up there. Honestly, we might not spend this at all. So I might be able to apply this elsewhere in the latter half of the month!

Final Thoughts

Being this nitty gritty about my budget makes me feel responsible and very adult. So much so that I can’t see why everyone doesn’t want to do this. This is much less stressful than just ignoring my money all and hoping it works out. I feel a little like I should get an award for adulting.

My biggest struggle is not comparing my beginning to the current successes of other bloggers. I couldn’t run my house on $3,000 if I tried. My house isn’t 1500 sq ft. Sometimes looking at the budgets where people are saving over half of their income is crazy!!! I feel like I’ll never get there.

For now, I just have to accept where we are in this process and keep moving forward to the life we want.

Book Review: You Need A Budget by Jesse Mecham

You Need a Budget: The Proven System for Breaking the Paycheck-to-Paycheck Cycle, Getting Out of Debt, and Living the Life You Want*

By Jesse Mecham.  Publisher: Harper Business

Rating: ⭐⭐⭐⭐

BOOK JACKET SUMMARY

Think of a budget as a lifestyle-design blueprint. It’s a working plan for taking your life from where you are now to where you really want to be: Zero debt. Homeownership. Retirement plans. Travel. More money for eating out. Much less frustration and anxiety. Pick a goal that speaks to you and budget your way to success!

In this indispensable guide—the first book based on the successful tenets of the award-winning financial platform—you’ll be given the tools to learn how to track your expenses, stick to a spending plan, and make your money work for you. 

By learning to budget, you can finally break the paycheck-to-paycheck cycle, become debt-free, and save more. As Jesse Mecham shows, a budget won’t make you feel more restricted—it will make you feel free. You Need a Budget outlines his four simple rules to completely revolutionize the way you think about managing your money: 

1. Give every dollar a job. Take your cash, checking, and savings accounts and assign jobs to that money. Begin now with what you have on hand. Pick your priorities and make sure your dollars are helping you move closer to the things you really care about.

2. Embrace your true expenses. Identify your larger, less-frequent expenses—such as insurance premiums, birthdays, holidays, car repairs—and break them into manageable monthly amounts. This will help you even out your spending, decrease your stress, and make better decisions.

3. Roll with the punches. Life always changes and unexpected expenses happen. If you need to change your budget, just do it. The YNAB philosophy not only tolerates changing your budget; it encourages it.

4. Age your money. Increase the time between earning and spending, and finally, break the paycheck-to-paycheck cycle.

These four rules are the pillars of a tried-and-true system that keeps you engaged with your money. Following the rules, you’ll learn to adjust your habits, become proactive, and ultimately control your finances. Say goodbye to stressing over last month’s statement and say hello to taking charge and finally building the life you want.

Budgeting means that, soon enough, you’ll have money sitting around (just in case your car or home needs a repair), and finally be able to do the things you’ve been dreaming about—like take a Hawaiian vacation with your honey—knowing that the rest of your life is covered.

In November I started a free trial of the YNAB budgeting software. I love the flexibility of the system but I struggled to get a hang how to make it work for us, so when I saw the release of a YNAB book I preordered it to my kindle hoping for help and an insight to the YNAB method so I could get control of our budget better.

I love knowing where our money is going and seeing debt being paid off, yet I still stress out like crazy when I know I have to sit down and pay bills. Watching all that money just go poof is depressing.  I know its important, but I am still building our systems and I still want to avoid looking at the numbers. The stress of trying to sit down and deal with money is SO much worse than the actual budgeting.

In the introduction, Jesse says, “ when we’re stressed about our finances, its because we’re not sure our money decisions are aligned with the life we want to be living”. I can still feel the ring of truth to this deep in my heart. The reason I spend money the way I do is because I don’t have a concrete goal for the life I want to be living. I have a general idea and a hope that it will magically happen some day. But taking the responsibility to change my behaviors to ensure I reach those goals is a new thought for me.

THE TRUE STRENGTH OF YNAB

Most budgeting systems are controlling, and strict. With little flexibility. They seem to focus on reducing spending by cutting out all non-essential items.  Instead of asking “can I afford this?” YNAB encourages you to ask yourself, “does this move me closer to my goals?”

The difference between the two is a mindset switch from deprivation to empowerment. I am not avoiding the things I love because I can’t afford them, but I am choosing to make or skip a purchase because I have a specific goal in mind.

THE BOTTOM LINE

If you are new to budgeting you should read this book. Simple as that. It doesn’t drown you with tons of personal finance knowledge and focuses on the personal aspect of personal finance.  While Jesse encourages readers to slay debt, he also believes we all need to make the decisions that are best for us.

After covering the four core concepts the book goes over some specific situations like budgeting as a couple, getting out of debt, and teaching kids budgeting. Along the way, there are examples from real-world people that help illustrate the philosophy and how it can be implemented by real people – not personal finance experts.

Surprisingly, the book is NOT a marketing tool for the YNAB Software platform. Jesse openly admits that you could use a spreadsheet program to meet all your budgeting needs. That being said after reading the book I feel more ready and able to use the YNAB platform to reach my financial goals.

Plans for the New Year: 2018 Goal Setting

Hello. I haven’t introduced myself properly. My name is Jessica. I’m self-employed. I work with my husband making custom leather jewelry we sell as Porter & Hazel. When I started this blog I wanted to be anonymous. I was (am?) ashamed of my debt. While working our long holiday hours I decided on a plan of action for 2018 and to do it justice I needed to be me. And not a pen name. So here I am, warts and all.

After all, debt is the new black right?

For me, the holidays aren’t a happy go lucky, spread cheer everywhere, kind of season. At Porter & Hazel, we get A LOT of orders between Black Friday and Christmas. And we work super long hours to try to get everyone their orders before the holiday.

Watching money come in is always fun. Especially with our goal of paying off our debt. But that doesn’t make the work easier. For us, the holidays are sixty plus hour weeks and we collapse at the end.

It is now almost two weeks into January and I am finally starting to breathe. I’m getting over exhaustion and I can finally destress and start to figure out what my life will be in 2018.

The Science of New Years Goals

According to the New York Times, “By Jan. 8, some 25 percent of resolutions have fallen by the wayside. And by the time the year ends, fewer than 10 percent have been fully kept.” This does not give any of us great chances of reaching our goals.

Early in life, I was told that to succeed I would need a lot of willpower. And when willpower isn’t enough, someone decided you needed to have “grit” as well. Grit is the difference between people who can set and keep goals, and the rest of us. The research on grit is less than enthusiastic about its importance. The article goes on to say that “people who are better at using self-control have more success when it comes to resisting temptations but at a cost to their health. They suffered from increased stress responses and premature aging of their immune cells”.

As if that wasn’t bad enough, you can even overthink yourself into failure. Research done by  NYU Professor of Psychology Gabriele Oettingen indicates too much visualizing success can be a problem. “The more positively people fantasize and daydream about their future success, the less well they do in terms of having actual success,”. The act of visualizing isn’t the problem. We start to impact our success by focusing on ourselves as already having reached goals instead of overcoming the obstacles it will take to get there.  The feelings gained from visualization don’t last as long but maybe that doesn’t matter. When facing a large task short bursts of imagined happiness can be enough to deter us from working hard.

Awesome right?

Thankfully, there is some good news. David Destino, a psychology professor at Northeastern University, has done studies that show positive emotions such as pride, gratitude, and compassion help renew us and strengthen our willpower. Choosing actions that create positive emotions has more impact than we realize. Emotions such as pride, gratitude, & compassion improve our perseverance, “and have been tied to a greater willingness to exercise and eat healthily, and lower levels of consumerism, impulsivity, and tobacco and alcohol use.”

Goals for 2018

What you need to know reading my 2018 goals is that for me the past few years have been total shit. Full of stress and stress and then some more stress. I have finally hit the point where it is too much and I have to change and I have picked Five areas to work on.

After my research on new years resolutions, I want to focus on positive emotions. Having a sense of community and creating projects that help other people is a good place to start.

1. Build Eighty-Six Debt

First, I’m going to focus on building Eighty-Six Debt. This blog will help me keep on track with my financial goals, and give me a platform to connect and interact with others. In the past, I have given up all my blog projects after about 2 months. To prevent blogging burn out I’ve signed up for FinCon 2018 in Florida. I now have a commitment that I hope will help me force myself to stick with it and build this blog. I’m conscious of not over scheduling and I want to prioritize quality over quantity. I am going to start the year writing two posts a week and will reevaluate in 6 months.

Other Blog Related Goals:

– Write 1-2 guest posts a month

– Start & grow a newsletter list

– Build a presence on Facebook & Pinterest

2. Start a new business.

This goal is inspired by my fellow personal finance bloggers. I completely agree with the belief that to get out of debt I need to clean up my spending and know where my money goes. Yet, the real secret to getting out of debt fast is in making more money. So I need a “side hustle” (a term I HATE).

Many bloggers talk about side hustles by suggesting low paying, low reward activities. I cringe when someone suggests filling out surveys, walking dogs & delivering papers. Technically, you’ll make money but the time cost is high and the pay is way to low to be a realistic suggestion. 

Next week I will be starting a Building a Side Business series, where I share the whole process from scratch. A lot of side hustle reports focus on income generated from a blog, which is great if you want to build a business with writing. However, I’ve had way more success without a blog than I’ve ever had with one. So I want to share the process of building an online business that doesn’t focus on writing. I have plans for both digital downloads, and physical products. I will use popular platforms like Etsy & Shopify. I’m  also considering a Kickstarter campaign. I’ve never used Kickstarter, but I’d like to see to see what kind of success an entrepreneur without a HUGE following can achieve.

Lists of 75 side hustle ideas a great starting point. But I want to go deeper on how to start and run a side business.

3. Paying down as much debt as possible.

This is a goal that is affected by the previous two. Building this blog and a new business will bring in extra money that will go towards debt. First credit card debt, then our car loan, and fully funding at least one of our retirement funds. After we meet those financial goals we will start attacking student loan debt like our lives depend on it.

Chris and I are seriously considering selling our home and moving into a smaller home that has a tenant to help keep our mortgage costs down. I’m sure that will throw a HUGE wrench in the flow of life, but financially it is going to really help us get out of debt faster.

4. Lose Weight.

I am overweight by more than I’m ready to admit here on this blog. I need to get healthy this year. I’ve broken out a few mini goals:  working out 4x a week and eating healthier. To be more specific with my food I will eat less bread & pasta, and increasing vegetable intake. All my food will be tracked using My Fitness Pal. If you care to join me on MFP I’m Kaleisi21. And I’m on Run Keeper as Kaleis

5. Learn French.

This is the least related to improving my day to day life, but it is the goal that brings me the most joy. Not only because I love the French language, but because it also makes me feel like I am moving closer to my goal of living in Québec. I started learning French in college and I have studied on and off since then. 2018 will be the beginning of my first serious attempt to become fluent in a second language.

 

 

Book Review: Broke Millennial by Erin Lowry

 

BOOK JACKET SUMMARY:

Stop Living Paycheck to Paycheck and Get Your Financial Life Together (#GYFLT)!

If you’re a cash-strapped 20- or 30-something, it’s easy to get freaked out by finances. But you’re not doomed to spend your life drowning in debt or mystified by money. It’s time to stop scraping by and take control of your money and your life with this savvy and smart guide.

Broke Millennial shows step-by-step how to go from flat-broke to financial badass. Unlike most personal finance books out there, it doesn’t just cover boring stuff like credit card debt, investing, and dealing with the dreaded “B” word (budgeting). Financial expert Erin Lowry goes beyond the basics to tackle tricky money matters and situations most of us face #IRL, including:

– Understanding your relationship with moolah: do you treat it like a Tinder date or marriage material?

– Managing student loans without having a full-on panic attack

– What to do when you’re out with your crew and can’t afford to split the bill evenly

– How to get “financially naked” with your partner and find out his or her “number” (debt number, of course)  . . . and much more.

Packed with refreshingly simple advice and hilarious true stories, Broke Millennial is the essential roadmap every financially clueless millennial needs to become a money master. So what are you waiting for? Let’s #GYFLT!

I was hooked from the back cover. As a thirtysomething who is just starting the debt relief portion of my personal finance journey, I hoped that Erin had some wisdom to share and I was not disappointed.

On page 3 Erin shares a story that sums up my former relationship with money, “…money just really stresses me out! I just don’t pay attention to it and then I hope I have enough at the end of the month.”

Who doesn’t relate to that at some point in their life? I know some people who are nowhere close to the millennial target market of this book that still uses the hope and pray method to manage their finances.

I found this book written in a friendly easy to understand voice, more like a friend giving me advice than a teacher admonishing me for showing up unprepared. But as an almost thirty-six-year-old, I am probably in the outside age range of Erin’s target audience.

As I read I kept my daughter (18) and my sister (21) in mind. What do I want them to know as they just begin their adult lives? Well, honestly I’ll just be giving them copies of this book but for the purposes of this book review I’ll point out a few things that really jumped out at me.

Highlights

Chapter 4 – Dealing with the Dreaded B Word (budgeting)

This chapter covers three different styles of budgeting: the cash diet, tracking every penny, the envelope system (split into traditional vs digital) followed by budgeting 201where she talks about advanced systems like percent budgeting and zero-sum budgeting.

First, the chapter covers the concept of a cash diet as a budgeting style. Basically, use only cash to pay for things because scientists have proven we spend less when we actually pay with cash. I think doing a cash diet as a reset for a few weeks or even a month is a great activity I think it is impractical for long time use considering how digital life has become. And while you can do it long term the book does say that a cash diet and the tracking every penny style of budgeting should be used “for at least two weeks by everyone at least once in their financial lives.

The longest section of this chapter is the zero-sum budget, “the black belt of budgeting tactics.” A stance I fully agree with. She breaks down the zero-sum system into easy actionable steps:

  1. Know your income
  2. Crunch your bills and lifestyle costs,
  3. Employ your dollars
  4.  Evaluate your spending categories
  5. Time to get your penny tracker on
  6. Prioritize your categories and trim the fat
  7. Get a month ahead
  8. Always run the numbers and adjust accordingly.

All in all, this is a great short summary of a topic whole books have covered. Informative but not so much as to be overwhelming.

Chapter 8 – Yikes, I already have consumer debt. What Now?

Unfortunately they will both have to deal with student loans at some point so I found this chapter to be great as a bit of an advanced primer on how to handle paying on their debt when it comes.

The chapter does primarily deal with credit card debt, offering three methods to deal with it – snowball or avalanche, balance transfer, or personal loan. Inside those three topics, she addresses the importance of paying on time, what your APR means and how that can affect your balance and different things you need to watch out for as you talk to companies about handling your debt such as an upsell of add-on insurance.

I really loved the end of the chapter where Erin reminds us that “you can’t succeed without changing your habits” and then gives a great step by step plan to deal with debt on page116:

Five actional steps to crush your consumer debt

  1. Forgive yourself
  2. Face the numbers
  3. Pick a method (snowball vs avalanche)
  4. You can do it on your own
  5. Stick with it
Things I Would Change About the Book:

Erin starts off with a great memory of selling donuts and her first interaction with earning money starting the book off in a very friendly memoir style. My favorite quote from page 3, ““…money just really stresses me out! I just don’t pay attention to it and then I hope I have enough at the end of the month.”, Is actually part of a conversation Erin had with her friend. While she does remain friendly throughout, it becomes a little more just the facts as the book moves on into the meat of personal finance.

In part, I expected this, after all this is a book about finance, not a memoir. Still, I would have loved to see a few more quotes and anecdotes from other millennials new to dealing with their finances. Sharing even a few stories in this manner would have added a break from the core financial teachings and given a greater sense of relatability. Knowing that Jen, 26 from Somewhereville USA had struggles and is working on them would give me someone else to relate too, especially since Erin is the expert who comes across as friendly but not struggling with debt and money as much as other millennials.

Overal

Broke Millennial by Erin Lowry is a great primer on how to be an adult and handle your finances instead of avoiding them and hope it all just works out. Filled with the information we should have learned either in school or from our parents and probably didn’t. Definitely going to be part of my gift for any recent graduate in my life.

Buy Nothing Day 2017

Today is Black Friday and there are so many deals out there. But the truth is I don’t need them. I am not shopping today. In fact, I am kind of coming around to the realization that while I don’t mind shopping I kind of hate spending money. I hate having to log into my budget software and see my balance drop lower and lower.

Maybe it’s holiday hangover (thank goodness not a real one) or the fact that you can’t blink your eyes today without seeing information about a “great” Black Friday deal but I’m feeling very bah humbug today. It’s officially Buy Nothing Day, ironic since I’m pretty sure most Americans unofficially celebrate Buy Everything Day today.

Since I’m buying nothing, I’m going to spend the day making something. Spending the day at home in my office working on building my new business will be less stressful, more rewarding, and ultimately add income to my life.

Sinking Fund: Envelope Method Your Savings

I Need to Start a Sinking Fund

One of my very few memories of money from when I was small was my mom explaining her Christmas Club to me. The bank auto transfers $20 from every paycheck into a savings account which they will disperse to you in October for holiday shopping. A memory that has stayed with me for years, but mostly relevant in December when I again remember that I didn’t save for Christmas all year long.

Fuck. It’s almost December again and well you can guess how much I have put away for holiday spending.

As I grow into my personal finance superpowers I am trying to keep my husband informed so we can make decisions together. My attempt at trying to explain the sinking fund went something like this:

Me: We need a slush fund.

Him: I’m not sure you need more wine.

Me: To save for important expenses. Like our medical expenses or to fix up the house.

Him:

Me: Besides, wine makes everything better. Do you think I should budget extra for wine?

Him: Probably. But how is wine connected to saving for medical expenses?

Me: because that’s what its called when you put money aside for important shit.

Him. I don’t think that’s the right word.

Me: slush?

Him: Well, now that I think of it, it does fit.

Maybe we I shouldn’t talk finances while drinking. Anyway, let’s talk about sinking funds. Prior to deciding to be a personal finance master I never heard the term sinking fund. It definitely seems like something I want to avoid (because who thinks sinking is a good thing) but essentially it is applying the envelope method to your savings. A way to handle reoccurring or large expenses that don’t happen every month.

To start I have chosen to just have one savings account at Capital One 360 because they offer a better rate than my local bank. The fact that they also don’t have a brick and mortar location will make any transfer requests take at least a day so there won’t be any immediate spending.

Balancing between saving and paying down debt is hard. Because my first inclination is to put every penny into debt. But emergencies happen. And large expenses happen. And I don’t want to be caught off guard.

Sinking Fund Categories

I want to focus on our debt snowball, and then saving money in an emergency fund before funding too many sinking funds. While saving for some known expenses is important, we need to cut spending so I’m trying to get this list down to a few essentials for now.

MEDICAL – doctors visits & medications. And between the three of us, this would need to be at least $1500. One of my medications isn’t available as a generic yet &  it’s expensive!

HOME – We are still fixing up the house so there is a lot to save for here, but getting someone to mow our annoyingly large yard next summer is top of the list. That will run us $40/wk so to have it mowed from May to October we are looking at $960.

ANNUAL PAYMENTS– We haven’t tallied this one yet. Amazon prime, a few software subscriptions. Probably less than $500

CAR EXPENSES– oil changes, new wipers, brake pads. The car is relatively new even though we bought it used. So we shouldn’t need too much for expenses. The peace of mind knowing I won’t have to worry if I can’t afford an oil change right now will be wonderful.

OTHER– This is to account for the things I will forget to budget for when expenses pop up that aren’t emergencies. A birthday gift, dinner out, trip to see the inlaws.

With the extra expenses of Christmas, we won’t be starting any sinking funds until January. But I will be pinning down the Mister to decide on how much we should put in each fund.

Side Hustle: I Need to Generate More Income

Let’s talk about income. If my family is really going to get out of debt then Increasing our income is the best way to do that. And frankly, I need a change from thinking about how I got into debt to thinking about how I’m going to get out of it.

Building the Right Side Hustle

Having a “side hustle” is all the rage right now. Every finance blog I have come across has a post somewhere talking about the importance of making extra money on the side.  I’m no different.  Increasing your income is the best way to get out of debt fast.  Not to mention that you can budget to your heart’s content but much like a starvation diet if the budget is too strict you will fail and eat all the Oreos in the package. At once. With wine because you are classy like that.

However, not all side hustles are created equal. There are two ways to bring in extra money one: one or one: many. I’m sure there are better names for this principle but I haven’t found them yet.

Both my husband and I are self-employed. We no longer trade hours for dollars and have made more money than we would have otherwise. But our business still has a problem. It has a one: one ratio.

We make jewelry & accessories. (This reasoning plays out no matter what you make, or what services you provide.) When we make a piece of jewelry we can sell it once. Each order is a separate item we can only sell to one person. Retail, wholesale, it doesn’t matter. I can not sell that item to 2 people because it is only one item. This is a one: one ratio. A lawyer, a designer, an artist all primarily function the same way. Typically you get a client, agree on an assignment, complete work and get paid.

I have had a lot of side hustles over the years and they have all been one: one. Don’t get me wrong there is nothing inherently wrong with having a one: one business. They are a quicker way to get extra money in your life, but one: many are more profitable. Income generated from a one: many project allows you to make one item and sell it to many people. I can write a book, make stock photography, or create a class. These kinds of items are typically front-loaded with effort but have a long tail for sales to build over time.

Let’s say I wanted to build a business as a tutor. Tutoring is literally called one on one help. Finding a few people to tutor is easy, though you are limited in the amount of money you can make by the hours you can devote, and the price people are willing to pay. You can transform this one: one into a one: many by taking your experience tutoring and writing a book, guide, or self-paced class helping people through the areas your students are struggling with. You’ll be able to help a lot more people and increase your income because of it – even though your product is priced at less than what you would charge to do it yourself.

Creating My Own Passive Income

I am an artist and graphic designer. My first inclination to bring in more income was to put my portfolio up and start looking for clients. I have always wanted to pursue a career as an illustrator but in that model, I’d be making another one: one business. Yes, the work would be different, more creatively engaging and less stressful on the body than making jewelry but in the end, I can only sell each illustration one time. I have come up with a few plans to take the desire to illustrate that will fit my goals better.

  1. Licencing my art.All of the products you purchase with designs on them have been created by an artist. Sometimes in-house, though often by an independent artist who has sold the right to use their art. There is a huge market for this, even a trade show at the Javits Center in NYC every year for artists to show off and court businesses interested in working with them.Starting in 2019 I will be putting together a licensing portfolio and marketing my art to be licensed. While I’d love to participate in the NYC show, it is very expensive and my business would have to generate enough income to warrant that kind of expenditure before going. That or I’ll have to start a business saving and hit $10,000 to be sure I can cover all the costs and extras that come with a trade show like this.
  2.  Create my own company to sell products with my designsI’m actually really excited about this one. Most of my experience is in selling retail so this business is easiest to imagine realistically. I am creating art that will be on my own finished products I’m going to start with some digital download designs (like coloring books) and easy to make on-demand items (like prints)  that will allow me to make some income before I invest in stocking actual products. I will also get to know who my customers are and create products that will appeal to them instead before investing money and finding out I’ve guessed wrong and wasted my money. Who knows, if this goes well I might not pursue licensing because this could be more profitable, or at the very least being able to exert complete control over the finished products with my art is so comforting.
  3. Write books and guidesI have been making money as an artist for over a decade. I definitely have enough knowledge to write a book that can help other beginning artist entrepreneurs on their journey. I’m going to do some brainstorming to refine this idea down from the very general “make money as an artist” so something more specific that will help my books solve a specific problem.
  4. Make a Web ComicThis one isn’t so much a money maker as it is a side project that has the potential to make money if I connect with an audience.
  5.  Affiliate IncomeI know some people go crazy on this and make tons of money. That’s not my style. However, I am not opposed to generating a small amount of income when I do mention products I use and love whether that be books via Amazon or referrals to YNAB.

Tell me, what is your favorite side hustle or passive income project?

The Stress of Starting To Clean Up My Finances

Starting to clean up my finances

I have spent the day digging through my personal finances and holy fuck everything’s a mess. I need to keep reminding myself that this is all fixable – which honestly, at this moment, feels like a really big lie. I have way less money than I thought. But no shortage of bills. While the rational part of my brain keeps telling me everything is going to be fine, the anxiety feels like a 5-year-old on a sugar high running around the room screaming, “we’re doomed!” at the top of her lungs.

My husband and I run our own business, we are artists and do quite well. With half of November left, and Black Friday coming it is the second most profitable half a month in the calendar so I know, that by the end of November we are going to be fine and perfectly able to go into December without worrying if we can pay the bills.

This is a bottom of the barrel moment for me. I am comforted by the thought that many people who decide to really fix their finances have, and survive this feeling. I am not alone!

So let’s look at some of the good things that have come out of today.

1. I don’t want my daughter starting her life out with the complete lack of knowledge about how to handle her personal finances that I had.

My stunningly large lack of knowledge led to some super poor choices, one of which was bankruptcy because that was the primary way my family dealt with debt. My mother and stepfather have both declared bankruptcy at least twice, but I’m inclined to say three times.  I am kind of ashamed at how poorly I’ve taught my daughter to handle money just through how I’ve talked about it and how I have openly avoided it. But it changes now.

2. I have owned my debt.

I am aware of all of its existence and while this is depressing I am no longer afraid of being responsible and dealing with my money. I would avoid bills. Lay them around the house willy nilly and forget them I would get to adulting eventually.

3. I know where our financial problems have come from.

While yes, I have some credit card debt the real problem has been my refusal to be an adult and say no I don’t need to purchase that now. I usually pay cash. This is encouraging. I’m still working on a plan and family budget for how to deal with this, but it feels doable because I am the primary person I have to control.

4. You can’t change what you don’t track.

This is true for all areas of life. Now that I’m aware of my debt I am building systems to track my money so I can get to the future I want. I’ve come up with a plan on what to do with bills, and how I am going to pay them so I know 100% for certain that I afford them. And I have been really bad at saying no to myself when it came to purchases. Knowing I have a negative net worth forces me to ask, “Do you need to purchase that?” followed by, “Do you need to purchase that today?” and ”Is this the best price?”

5.  I am finally going to start a side hustle. Or three. 

Let’s be honest. There is only so much financial belt-tightening that anyone can tolerate. If I am really going to make a dent in this debt it is time to start working on some of the extra projects I’ve had in my head.

As a freelancer, I have been aware of passive and diversified income for a while. I just never did anything about it. I was too busy, or too stressed out to devote actual time to work on extra income generating projects. Now I feel both energized to work on these ideas, but also the financial pressure of contributing more to my families recovery and success because my irresponsibility helped get us here.

In the end, I am hoping that the stress of being on top of my finances is less stressful than being unaware and afraid of every purchase and bill that comes my way.

Today’s action item: work on a flexible food budget & meal plan system that will rein in spending at the grocery store.

 

Debt Reveal Day: First Monthly Review of My Finances

Its Debt reveal day. I have been collecting and listing my debts, and honestly, it isn’t as bad as I thought it would be. But before we get to the numbers, I read an article in the Wall Street Journal about the lack of financial literacy in America called “How Financially Literate Are You Really?” By Meir Statman and until now I never really thought about my lack of ability with money as a poor financial literacy.

There’s a financial-literacy crisis in the U.S. And it is probably even worse than it seems.

Study after study shows how poorly Americans understand money and investing. Consider this common question posed by surveys: “Suppose you had $100 in a savings account and the interest rate was 2% a year. After five years, how much do you think you would have in the account if you left the money to grow: more than $102, exactly $102, less than $102?”

This is one of three questions typically used to measure financial literacy. Incredibly, only one-third of Americans older than 50 answer all three questions correctly.

As I started the article, I worried I would find myself described inside, thankfully I passed the test. But just because I show a small amount of financial literacy doesn’t mean it crosses over into demonstrating real comprehension through action.

Is getting out of debt like losing weight? Something you learn about and think about more than once before you apply the principals to your life? I hope so because I have thought of getting out of debt before. I have learned a bit about finances from books, but also through trial and error.  Maybe that makes my current debt worse because I knew I was acting stupidly. I wasn’t  thinking at all. I was just living by whatever I wanted. Without regard to finances.

I am about to go through my accounts and provide you with a rundown of my debts and a light overview of my plan to eliminate them. But after reading that article this morning, it occurs to me that getting out of debt is only part of the answer. If I don’t go forward and purposely increase my financial literacy, comprehension, on and action, then I am doomed to get back here.

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Thoughts On All This Debt

I am missing a few interest rates, which I will dig out and update. But for now, it is quite shocking to see that without my mortgage I am worth a negative $101,098.75.

Yes, I am aware that the mortgage is a debt, but since the house also has a value and since the mortgage will be the last thing we pay off I am not worried about it. If you want the details, it is a 15-year mortgage meaning we are already paying it off faster than the average person with a 30 year. The car has value too, but we won’t be selling it. More likely than not it will go to my daughter when she gets her license.

I am comforted that most of our debts are not stupid spending choices, but educational debt. That doesn’t make it less daunting to pay off. But I feel like I am a lot less financially stupid.

The Plan

Pay off all credit cards first, in the snowball method- husband’s card first, then my card 1 because it has a higher interest rate than my credit card 2 which was a promotional rate for 2 years same as cash. The two credit cards that are gaining interest (his credit card 1, + my credit card 1) total $5,114.65 which is a lot. But I’m sure I can pay that off next year. Hopefully early in the year.

After the credit cards are paid off we are going to go after the student loans. And I’m going to have to do some math and figure out what is best. Should I prioritize balance or interest rate? I didn’t realize until putting this post together that some of our student loans were getting such high-interest rates. 6.8 – 7.5 is pretty high for a student loan, even 5% is high.

These loans are grouped into 3 consolidated payments, which is then split up and applied to the individual loans. I can pay on each loan separately, and I can pay extra above the minimum payment. But as I looked into the details of these loans I can tell you that some of the lower balance loans get only $7 applied to them and that is split between interest and principal. At that rate, they will take forever to pay off. I am inclined to pay off the lowest balance ones first and then go after the larger loans. I feel a little bit like it doesn’t matter, as long as you are paying something off.

To start dealing with the student loans I am going to call and see if there is anything I can do to lower the interest rates – especially on those with the higher balance. I hate adulting and talking to the loan companies but debt won’t just magically disappear without work on my part right?

I’m going to be honest, collecting this list was kind of stressful, and I need a little room to breathe. So I’m going to take a few days to look at our household budget to find places we can trim excess spending and look at our sources of income to see how we can bring in more money.

 

Until next time,