Reality Bites

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So apparently, I can’t be trusted – not even by myself.

I won’t bore you with the details, suffice to say this last week has been a matter of rinse-and-repeat of less-than-stellar habits and resulting outcomes, and rather than continue to beat myself up and feel horrible about myself and this rut that I just can’t seem to get out of, I looked at how I manage to keep doing the same things, over and over.

Not just the why (that’s a no-brainer, just another incredibly emotionally stressful week in the life of this weary girl), but the literal how – if I keep making a good budget, and I keep paying my bills and essentials first up (which I have, yay me!!!!), how is it possible that I can keep spending money that I shouldn’t have to spend?

The answer was right in front of me, and until today, I didn’t even see it.  Cards.  I have a couple of debit cards that only work when there’s cash in the account, and when I leave funds in those accounts for future expenses, something in me still sees them as available funds, that are very easy to access when I’m feeling vulnerable and looking for the quick fix.

Fortunately, the solution to that part of the issue is easy – as evidenced by the photo above.  No more cards = no more access to enabling my own poor spending habits.  I’m still working on the emotional connection part of it, as I keep saying, it’s one step at a time.

On a more positive note, I’m feeling less overwhelmed by the status of all my current debts, as I finally seem to have nearly everything sorted – payment arrangements made with various companies, direct debits set up, smaller amounts owing assigned to the budget.  It is a constant juggling act, especially when those unexpected things come up – sometimes I feel like I’m constantly potting out spot fires and trying to stop everything from going up in flames.  But I know that this will pass, and that every single day, I have exactly what I need.

Baby Stepping

So how did you go writing up your budget?  Whatever you’ve done won’t be perfect, and will be continually subject to change, but I hope that you’ve worked out at least the beginnings of some framework to manage your income.  It’s an ongoing process, believe me!!!

I feel like I need to back up a bit, to give you a bit more insight into my process in dealing with my financial situation.  I have been dealing with financial ‘issues’ my whole adult life, and as I’ve mentioned before, I’ve gained a wealth of information through all my investigating and researching over the years.  I’ve tried so many ‘methods’ – which have ultimately failed due to me, not the method – but a couple of resources have really resonated with me and the principles have ‘stuck’, even if I haven’t adhered to them.

Dave Ramsey’s Total Money Makeover has been a literal guidebook as I’ve been navigating my way through financial waters.  It is based on the US financial system, however the basic principles can apply to anyone, anywhere.  Dave talks about starting with 7 Baby Steps:

  1. Build up a $1000 emergency fund
  2. Pay off all your debt with a ‘debt snowball’
  3. Save 3- 6 months worth of living expenses
  4. Pay 15% into your retirement funding – (here’s the first difference between Australian and US systems)
  5. Save for your kids’ ‘college funding’ – (another difference)
  6. Pay off your home early
  7. Build your wealth and give

Right now, I’m working towards building an emergency fund, and as I get overwhelmed by too much information and too many things to focus on at once, I’m focusing on this one goal for right now.  An emergency fund serves as exactly that, funds for emergencies – things that we don’t anticipate, like the car breaking down, or a cricket ball going through a window, unanticipated medical expenses, the list could go on forever.  This fund isn’t for the things that we can anticipate – needing to replace appliances, general car or household maintenance, ongoing bills etc.

Dave has a program called Financial Peace University, available as an at-home study and as classes (only available in the US, to my knowledge), and the website also has a forum community (limited access for free, unlimited access for a subscription fee, along with other tools), and in FPU, the baby steps are broken down even further.  These extra steps are very sensible and relate to what we’ve already talked about.  Here they are as they make sense to me – what to do even before you start your emergency fund (Step 1):

  1. Vow and declare that you will NEVER borrow money for anything ever again, except maybe a house.
  2. Cut up any credit cards you have, and if need be, any other cards that access your money (this actually comes after Step 1, but I needed to do it now)
  3. Make a budget
  4. Stop any contributions into super (for the time being)
  5. Get up to date on ALL your bills
  6. Get life insurance if you have considerable debt, that would be a burden on your family if you died
  7. Get rid of any major ‘Luxury’ items that you’re currently paying off, that would stop you from paying off your debt snowball within 12 months
  8. Cut out any spending in the ‘Luxury’ category so you can put that money towards your emergency fund.  Get a second job if you can!!

Once you’ve done all this, you can start building your emergency fund.  For me, I’m at stage 5, getting up to date on all my bills, although I can already tick off steps 6-8 as well (I’ve stopped spending, don’t have any major items to get rid of, and I have life insurance through my superannuation fund)!!  Once my current bills are up to date, I can start putting any extra funds towards my emergency fund – at this point in time, it’s going to take a few more months before I can do that, but I have that next step as my goal.

It helps me to have a plan, with clear, specific steps along the way that show me where to go next.  And for that to be broken down as much as possible, so that when I get overwhelmed, I can just look and see what is the next thing to do – transfer a payment, revise the budget, call a company to discuss a payment arrangement.  Small steps, but ones that are realistic and manageable.  ‘Pay off my debt’ is overwhelming.  ‘Write down my current bills’ isn’t.  That’s it – not even ‘work out how to pay them’, just write them down.  Here’s a great article on The Art of Simple about simplifying and focusing on your financial goals, and for more encouragement, another mum’s journey to getting out of debt.

Here and now is where I need to look, where my focus needs to be.  When I look too far ahead to there, when I think about living in The Land of When, it all seems hopeless, too far away, that it will never happen.  But I can do now, I can cope with what’s right in front of me, as challenging as it may be.

And you?  What are your particular challenges in the here and now?  How do you manage with doing all-the-things?

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