I’m about to bring something awkward up, but I feel it has to be discussed. If you're a creative, and you’ve ever felt like you’re always running out of money — keep reading OR listening. As always, I have ultra-actionable steps below.
You can also listen to the entire thing in this mini-podcast below:
So a few weeks ago, I welcomed 58 students into my Braver Goals goal-setting e-course. While it’s not my first time to teach this topic, I used to do it in-person, in a workshop format, in one short & jam-packed afternoon. Here's a class photo from one of many workshops I've taught:
But in this workshop-format, time is limited, so I pack in all the lessons in 3 hours, making it as meaty and valuable as possible in that short amount of time — BUT, the time for individual reflection, as well as student-teacher interaction, was not as long as I would like.
But here's what I LOOOVE about online courses:
- Since Braver Goals is a self-paced course, there’s more time for my students to dig deep into their goals. And...
- It comes with the opportunity to get personalized feedback from me, as a mentor. And so this was the VERY FIRST time that I really got to know and guide individual students, one by one, have them walk me through their thought process, and get up close and personal with their plans.
It has been EYE-OPENING just to see the differences and similarities among these ladies’ stories and perspectives.
But after going through all their e-mails and worksheets, here’s my sad discovery about my students:
See, I thought that the major barrier to making ideas happen was not knowing where to start. Apparently, that was just the 2nd thing.
The #1 thing holding them back: LACK OF MONEY.
But that’s not even the sad part.
More specifically and most frustratingly, the MOST PREVALENT problem that 50% of my students had was...
CREDIT CARD DEBT.
- One student has over $1,000 in credit card debt.
- Another student failed so bad at paying her credit card bills regularly — that she DOUBLED her debt.
- One travel-loving lady would always get too excited over airline seat sales, and would immediately reach for her card (instead of checking her budget), and so she's now struggling to pay it off.
And the one thing they had in common?
They were STRESSING about it, big time.
One student said it was like having a “perpetual black cloud over your head” because she couldn’t stop thinking about how in the world she was gonna pay it off with her meager salary.
And here’s the thing, when that black cloud is always over your head, you get very limiting thoughts. You keep on pushing passion projects back, because you “don’t have funds,” or “you’re broke."
Because you don't have money, or you're paying off debt, you keep delaying...
- Your small experimental business
- Your novel
- Your blogging or freelancing career
- Your traveling adventures
- Your future home or future family
- Your startup business
- Your education: e-courses and/or masters degrees
You keep delaying the THINGS THAT MATTER.
And for what? Because your credit card company needs you to pay up?! #creditcardslave
I remember very vividly how my high school economics teacher would repeat, again and again in a crazy voice:
“Don’t get addicted to credit cards! *waves hands around angrily* Why would you spend money you don’t have?!?! Don't get credit cards!!!"
I know she put it in a very simplistic way, and now I know that credit cards can be used well — but what stuck to me ever since was: DON’T SPEND MONEY YOU DON’T HAVE.
Quite simple and extremely logical, right?
I know money is usually an awkward topic to talk about — especially for creatives. But the thing is, money is a fact of life. You can’t view it as evil, or the enemy. It can be a tool for tremendous growth.
But it’s hard to grow FORWARD...
when you’re stuck in debt.
THAT'S PAYING BACKWARDS.
So, who here has credit card debt? Don’t worry, I won’t judge: raise your hands!
(PS. If you’re a university student, this might not be relevant to you now, but stick around — and you might want to get back to this lesson after graduation!)
For those who raised their hands, I’ll share with you three actionable things you can do in the next 60 minutes.
The Simple 60-Minute Guide to
Dealing With Debt
STEP 1: Take a “debt inventory."
Look at all your credit cards, how much you need to pay off, by when, the interest rates involved. Also, look at what you spent the most on using your credit card — this will give you an idea of budget areas you can cut down on.
STEP 2: Pay off the lower balance first (if you have more than 1 debt).
If you have two or more credit card accounts (or two or more debts - i.e. school loans, work loans, etc.), target the lower balance first.
So let’s say Credit Card A has $200 in balance, and Credit Card B has $800 in balance — focus on paying off Card A first. Paying off one account will give you a sense of accomplishment, and build your momentum.
STEP 3: Set an end goal -- when will you be debt-free?
Look at your debt balances, and set a goal for yourself:
"I will be debt-free by <month + year>.”
Take this into consideration: the longer you take to clear it out, the higher the interest and fees!
So, let’s say your goal is:
I will pay off $1000, and be debt-free by December 2016 (in 11 months).
STEP 4: Divide it into REGULAR bite-sized monthly payments.
Divide the amount above by the number of months you have from today, until your debt-free target date. This gives you the amount you need to pay per month.
So, in our example: $1000/11 = $91 per month.
STEP 5: MOST IMPORTANT - automate that payment!
Most, if not all banks, have automation services where it automatically deducts a certain amount of money from your account per month, and pays/transfers it to wherever you assign it to.
So, let’s say your salary gets deposited into your account every 31st of the month (Jan. 31). You can schedule an automatic debt payment of $91 to go to your credit card bill every 1st of the next month (Feb. 1), the day after.
This way, you don’t have to stress about manually paying it anymore, and all you see reflected in your account is the deducted amount. After a while, you’ll forget you’re even getting closer and closer to getting debt-free — because you’ve already taken it off your hands and automated it!
STEP/TIP 6: Adjust your lifestyle accordingly.
But wait! Doesn’t that mean I now have a smaller amount of salary to spend each month? Yep. That’s exactly what it means.
Adjust your lifestyle accordingly. Make that amount work for you: BUDGET ONLY THE MONEY THAT YOU ACTUALLY HAVE .
The six steps are easy, now all you gotta do is to summon the willpower to do it! 60 minutes or less, that’s all it takes. ;)
4 Long-Term Actions to Get Better at Managing Your Money
Lastly, here are four long-term actions you can take so you no longer get controlled by debt.
1. STOP using your credit card until you pay off your debt.
Stop digging your hole even deeper. Work on budgeting the money you have every month.
2. Look into getting a prepaid credit card instead.
This is a card that functions as a VISA/Mastercard for any offline or online transactions, but you need to load it with money first. Tada! You’re using a credit card, but spending money you ACTUALLY have RIGHT NOW. (Not next paycheck.)
3. Review your budgeting basics: The 3 E's.
Make sure you classify your budget into 3 things, and in this order: Essentials, Endgame, and Extras.
If you want to learn more about it, join my FREE course on Grow Your Passion Project Fund: The Basics of Budgeting, Saving, and Earning.
The concepts I teach here are exact things I learned in the past year -- the very same concepts that have helped me EARN DOUBLE MY MONTHLY INCOME* FOR 6 MONTHS IN 2015 because I became more proactive about my financial goals.
*For 6 months, I proactively pursued side-hustles, and l diligently found resourceful ways to turn my passion into profit.
4. Download an expense tracker.
There are A LOT of free tools out there. My favorite budgeting tool (paid) is called YouNeedABudget (YNAB).
It has changed my life -- and I say this with 300% integrity and truth, no bullsh*t. Since using it one year ago (January 2015), I have hit savings goal after savings goal LIKE NEVER BEFORE.
Can you believe I’ve saved over $8500+ in the course of one year, mostly because YNAB helped change my mindsets about money?
By making me more organized & more VISUAL about how money flows in my life -- I was able to identify areas where I can earn more, save more, grow more.
I’ve since invested those $8500+ in savings into life insurance + my business + enrolling in classes + travelling.
You can get a free trial of YNAB for 34 days — try it here. (Not earning anything from this, I just love them that much.)
Make sure to watch all their easy educational videos, too! Here’s one in particular about dealing with debt:
Action steps for today:
- Deal with your debt with the 6 easy-to-follow steps above (you can do it right now, it will take you an hour, max!)
- Look into more long-term changes you can make in your personal finance.
And don't forget -- my FREE course is not just about budgeting: it's about how you can become more proactive and search for sources for extra income. Enroll by clicking the image below.