I will never forget the New Year when I woke up and my bank account was overdrawn. As a slightly superstitious person, that experience really filled me with dread about the financial year I was about to have. Fortunately, I was already in the midst of a long-term debt repayment plan and had learned a ridiculous number of financial lessons along the way. In this episode I’m going to talk about setting financial goals in 2021 no matter where you are financially right now. I will touch on two topics related to financial goals: paying off debt and earning more. This is a short episode. Listen on!
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Show Notes
One of the top lessons that I’ve learned about money, in particular in the United States, is that you’re always planning for disaster. Or, maybe it’s better to say, that you’re always planning for financial uncertainty. Whether it is a job loss, overdrafts, an injury, or a Pandemic, a significant part of personal finance is preparing for the unknown. Within that uncertainty is one truisim:
- Your situation can change-But, there’s a lot to factor in.
- Mindset
- Support and Community
- Consistently working towards your goals.
- Access to financial allies
- The ability to earn more.
But, I’m going to let you in on something that may surprise you. I totally understand why so many people quit working towards their financial goals. After paying off over $60,000 in unsecured debts I totally understand why people will shrug their shoulders and just say “fuck it.”
Also, I’m not going to judge you if that’s your choice. Instead, I’m going to encourage you to regroup, reenergize, and start again over and over again. Eventually, hopefully, you’ll build on the small successes that you’ve worked towards.
Debt Complexity
This is a topic that very few personal finance content creators talk about and it drives me crazy. The more complicated your debt situation, the more difficult it will be to hit your goals. I bring this up because there are so many stories about extreme debt repayment and then you discover that the person had 1 student loan and a car loan. That was not my story and I imagine there are many people out there unknowingly dealing with this issue. Here are three tips to manage this issue.
- Focus on simplifying your debts-Basically, work towards owing as few different types of creditors as possible.
- Find more cash-You can’t out frugal your debt. You must find more cash.
- Use the system that you can commit to.
- If you prefer the percentage process fine
- The energetic process
- Snowball from lowest to highest
- Snowflaking
- Basically, you have to pick whatever you can stick to.
To Pay Off Debt
If this is your financial goal for 2021 congratulations! I wanted to give some additional pieces of advice.
- Tier your goals. Have one that is the absolute must reach goal, then set a mid-range goal and stretch. When setting these goals the lowest one should feel a little it like a stretch.
- Revisit and reevaluate your goals. This could be weekly, monthly, or quarterly. Ideally, it’s a mix of all three.
- Be kind to yourself. There’s no point in using language such as:
- “I wish I had” it’s too late and you didn’t.
- “I feel so stupid” you’re not stupid. You either didn’t know what you didn’t know. Or, you had some crap habits. It’s irrelevant. What are you doing moving forward?
- Find tools that actually work for you. To this day, I cannot use YNAB (You Need a Budget). It’s just a tool that I don’t understand. In fact, I brought this up in a closed Facebook group that I belong to (a FIRE group) and it was shocking to me how many people couldn’t use that tool. I wasn’t alone. Find the tools that you understand and will make your life easier.
- Be careful of who you share your goals with. Even some of the people who love you might disappoint you with their feedback, etc. about your goals. This is why all of the financial groups online are so important.
Make More
I’m going to share one of the really interesting experiences that I’m pleased to be having right now. Basically, it is fascinating to see how my income is growing as my debt goes away. Remember that debt complexity I brought up? That complexity took away from my ability focus on income growth. Basically, I had to manage so many things that it was hard to focus. That’s not the case anymore.
The less complicated your finances, the easier it is to focus on growing your income. However, there are a few things that you need to be aware of.
- You have to have financial allies. Those people who will be transparent about their earnings. Individuals who will open financial doors to you.
- Set tiered earnings goals-As you reach each goal assess what got you there and then decide if you would like to work towards your next goal.
- Assess how you’re making money right now. Is it possible to make more with the job that you’re working now?
- Do you have additional time?
- How would your family life affect your ability to earn more?
- How can you make more money in less time? This is actually something I reflect on often. Especially as an entrepreneur. But, when I was still side-hustling, my favorite side-hustle was a brand ambassador gig. It paid well and we would be paid for the entire shift regardless of when we completed our work.
- Remember there’s a ridiculous number of ways to make money. I’m going to read through a list to consider.
- Sell stuff you don’t need on Etsy/Facebook Marketplace/etc.
- Evaluate your job and the earnings potential. Can you…
- Work overtime?
- Pick up hours at another division?
- Write Ebooks
- Run errands for someone who’s unable to do it? Concierge service.
- Create content
- Ghostwriting
- Freelance writing
- Copywriting
- Editing
- Virtual Assistant Work
- Social Media Assistant
- Website reviewer
- Customer service
- Bake pastries-Unique ones such as gluten-free, etc
Some Final Thoughts
I’ve often said in passing that personal finance is personal. Please don’t judge your financial journey by someone else’s. I’m not here to judge what you do. Now, let’s be clear, I have opinions. But, everyone has opinions. I’ve also often said that I understand why people quit their financial journeys.
It’s so damn hard to work towards a reality that is outside of most social norms. Even the government wants to encourage our consumption. The idea of paying off debt, sacrifice, and staying focused on long-term financial goals can be exhausting. So, when people tell me that they’ve backslide on their goals or just quit. I get it.
And, for those of you who say the following:
- Well if I could do it, they can too
- These people don’t have willpower
- Why don’t you follow Dave Ramsey?
Here’s my response. You don’t know what people are dealing with. Their other financial stressors, their family obligations, if they have support. Basically, you don’t know. Lift people up vs. being self-righteous.
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