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Where to next?
Hello again! If you remember at the end of last week's post, the 2 things I wanted you to pull from my story were: Plan To Save and Avoid Lifestyle Inflation.
There's an old saying "If you fail to plan then you plan to fail". This is absolutely true! Just look at me - I made no plan to save my income, made no plan to pay off certain debts, made no plans to retire by 30.
I just wanted to do all of things with no real planning or way of achieving them. How much do you want to save? By when? What do you want to pay down first? How are you going to secure enough passive income to retire by 30? These were questions I failed to ask myself, so here I am 2 years later with no real savings, in debt, and relying on a single non passive income. My goal for myself this next week is to write down some well...goals. I'm going to set financial goals for the remainder of the year, 1 year out, 3 years out and of course my goal of retirement by 30. I'm also going to share with you my PLAN, because honestly goals with no plans are just dreams. Also, please don't limit your planning just to financial goals. Where do you want to be physically, spiritually, professionally by the end of the year? 1 year from now? 3 years from now? How are you going to get there???
Avoiding lifestyle inflation is pretty difficult because... "Treat yo'self". I can't be the only one to hear that little voice when that extra cash is burning a hole in your pocket. I'm going to go ahead and label this a skill; something accomplished by the extremely disciplined. This one skill need to hone and develop. Instead of taking the extra dollars in my paycheck and applying them to debt, I opted to buy a few extra drinks at the bar, eat out a few more nights a month, subscribe to premium movie channels, upgrade my wardrobe, add an extra hair cut, buy a video game, etc. etc. etc. It goes on and on and on and once you start down this path its hard to stop and even harder to reverse. Now you have items and services you don't want to part with- they've become a "necessity" to you. Before, you were living just fine with homemade lunches, your TV streaming service, and maybe one night out a month, but now inflated you has a panic attack just thinking of living that way again. Sometimes I find myself spending next year's raise or making plans for next year's bonus and tax returns, but none of these daydreams involve a way to improve life beyond the superficial or ways to retire at 30. A little sacrifice now can save you from a lifetime of 'OK' living and 40 hour work weeks. Ask yourself if that steak dinner or extra 10 mbps in internet speed will have a long term effect on your life.
Next week, keep an eye for my goals and plans!
What are you guys' goals? How have you planned to save? Any lifestyle inflation horror stories? I'm interested to hear. Please drop a comment!
10/18/2016 02:06:51 am
I find it interesting that what often gets us in trouble in life isn't what we don't know, but what we know and don't implement; there is a saying for this: "If it was easy, everyone would do it." I agree, Alex, it is so easy to spend when you are not conscious and disciplined. I think that it is pretty clear that you have to develop better personal habits, but what are your thoughts on external noise? Ever tried a strict diet? Yeah, you will quickly hear negative and discouraging comments. The importance of saving is a personal responsibility, but the desire to is also influenced from external comments like "come on, it is just one night out." So, my question is this: how do you discipline yourself while dealing with outside influences?
10/18/2016 05:35:23 pm
I agree with you in that its so hard to focus on your goals when the world and everyone/everything in it seems to be against that goal. I don't believe there's a "how to" on tuning out that external noise - it's just something you're going to have to work on and develop. Humans work on a reward system (at least I do). Set incremental goals. Say for instance you have a problem with saying no to a night out drinking and you want to cut it out for a month or a quarter. Tell yourself you're going to avoid it for one weekend, and when you do - reward yourself mentally : "Damn Ryan, one weekend down. That's $100+ you get to keep. Lets go for two weeks." Orrrr you could take that $100 you were going to spend that weekend and put it in your savings, now you have the visual reward of seeing an extra hundred bucks in your savings account annnddd you have an extra hundred bucks in your savings account. Boom. Two goals with one stone! Just have to find out what works best for you! Let me know some different methods you decide to try and I'll share them with everyone.
10/18/2016 06:19:58 am
Good write Alex. Interesting take, I see evidence of this everywhere. I got friends in the mid 20's with $800+ per month truck payments, fancy pleasure boats, motorcycles, mortgages, $100 bar tabs couple times a week, and not a dime in savings. Meanwhile, I drive the oldest car I've ever owned and support a household of 4 on one entry-level income. We still put money away every month and my fiance is on school which will add a substantial income to our home in 2 years. We take steps now to live below our means and strive to be happy via mental and physical health..... not thru materials that depreciate. Those that think happiness has a price tag will likely never find it.
10/18/2016 05:43:22 pm
Thanks Andrew! Great on not getting sucked into the foolishness and sticking to what's really important. I'm interested in hearing how you structure your savings and budget for your household if you're willing to share. Maybe we can all learn something from ya!
10/18/2016 10:09:41 pm
AA, great article hope it inspires everyone who reads it. I've taken this journey you are starting. Trust I've done some dumb stuff with zeros behind them. I used 7 steps on my journey, I'll share 3 today.
10/19/2016 08:13:59 pm
Thanks for sharing unk. I was planning on doing a post on the snowball payoff in the coming weeks! Would you be willing to post a comment, next week, sharing some details on how you used your 7 seven stop process to meet your financial goals? I can make it its own post. You've always been a great example in my life and I'm sure you can be in others. I still remember you teaching me about compound interest!
My dear Alex! I'm right with you about being financially independent and work for myself when and where I want! It is not going to be easy but I know you can do it! I believe in you as your future business partner, we can do it!! Can't wait to read Moreno on your next post!
11/1/2016 04:36:51 pm
Thanks Linh! I need the encouragement! Please stay on me with the socks!
11/20/2017 07:06:37 pm
Starting this bad boy from the beginning.... going to treat it like a good show on Netflix that I just have to binge on for a while #blogread&chill
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