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Money Savvy Resources

Resource referenced in the Money Savvy , Destination: Financial Security published on 8-19-15 in the Durango Herald.

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7-Day Plan to Eliminate Financial Stress

Day 1: Make a list of things you’d like to do, places you’d like to visit and people you’d like to see. Nothing is off limits.

This will be your motivation for getting out of debt.  Debt and unconscious spending are likely stealing your dreams – and it is certainly limiting your choices.  The goal is to take back your options and dreams from the dream thief.

The purpose of your dream session is to begin to consciously design your lifestyle. Getting your dream list down on paper will help you see what’s important to you and what was important to you, but might not be any longer.

Start your dream session by getting a notebook or a journal. On top of each page write one of the following categories:

  • Financial
  • Adventure
  • Creative
  • Material
  • Intellectual
  • Legacy

Then find a quiet place and start writing. Don’t worry about being “realistic” or about what others might think. Just write. Write down eight to 10 dreams for each category. In some categories, dreams will come easily; in others, they will require searching and imagination.

Use your dream for inspiration and guidance to help you see the lifestyle you’d like to create for yourself. When choices arise, ask yourself, “Is this going to lead me in the direction of my dream?” If your choices are not leading you toward that dream, stop, change your behavior and get back on course.

Day 2: Review your list of dreams and choose the dream that will motivate you to face your money problems.

So today let’s set a direction by identifying one dream. I prefer vacations or adventures because they are achievable and inspiring, but pick what motivates you. By the end of the month I want you, and your partner if you have one, to have picked a dream and created a dream board.

A dream board provides a goal to focus your actions. It’s the incentive to change. Using pictures is effective because they tap into the emotional side of our minds and can be strong motivators.

Creating a dream board is a powerful and fun process. Here’s how:

  1. Get a large piece of paper or poster board.
  2. Gather magazines with images of your dream vacation destination or adventure.
  3. Find your perfect picture and glue it in the center of your paper.
  4. Glue supporting pictures around the central image.
  5. Hang your dream board where you can see it every day.

With your destination in sight the journey can begin.

Day 3: Make a list of all of your debt. Start from the smallest to the largest and note the minimum payment and due date. Don’t forget money borrowed from friends and family.

Day 4: Create a realistic budget. Include necessities, obligations, less-than-monthly expenses and a few nice-to-have items.

The first step in developing your budget is to determine your total monthly household income after taxes. If your income varies each month, use the minimum you realistically expect to bring home. A conservative estimate in this case can prevent overspending later.

Now determine how you are spending your money by separating expenses into four categories. For this to be effective, you must be honest about your spending habits. No fudging the facts here.

Begin by listing your essential items: shelter, groceries, utilities and gasoline. These are your Level 1 expenses.

Next, list and total your monthly payment obligations, such as car payments, credit cards and other loans. These are your Level 2 expenses.

Level 3 targets your non-monthly expenses – money that can be easy to lose track of. This includes insurance, car repairs, clothing and anything else that you pay for on an irregular basis. By saving for these items ahead of time, they won’t cause minor financial emergencies. For example, if you want to spend $800 on Christmas, about average for U.S. families, you will need to save $67 a month starting in January.

Level 4 expenses are the “nice to haves.” Restaurant meals, lattes, beer, vacations, and trips to the movie theater can all fall into this group.

Now that you’ve identified expenses in these four categories, compare their total with your monthly income. How are you doing?

Look for places to squeeze each budget item. Make sure to leave a little free spending money so that you don’t feel too deprived and quit. If you are left with additional income, use that money to pay off debt. No debt? Then save or invest it.

Remember, this is not an exercise in deprivation; it is an exercise in empowerment. The goal is to reduce debt more quickly and allocate more money toward achieving your dreams and pursuing activities that bring you joy.

Day 5: Make a plan to pay off your debt in 12 to 18 months. Divide your total from Day 3 by 12 to determine how much you’ll need to allocate to debt each month to be free of it within a year. If this seems too hard, divide by 18 months. Too easy? Try six or eight months.

Day 6: Go for a 20-minute walk. Exercise is a great antidote for stress.

Great you walked today.  Now do it tomorrow too.  Consistent exercise is one of the keys to having more energy and a clear mind.  Try to add 5 more minutes each week until you increase your daily exercise from 20 minutes a day up to 60 minutes.

Remember it does not have to be done in a single 60 minute session – try 30 in the morning and 30 in the evening.  Or 20 in the morning, 20 at lunch and 20 in the evening.

The point is to get moving.

Day 7: Go to bed 20 minutes earlier than usual. Extra sleep also helps reduce stress.

Like the exercise – add five minutes more each week until you wake feeling rested.

If you have more questions I’m here to help.  You can reach me at matt.kelly.durango@gmail.com or 970-749-0644.

Matt

How to avoid money emergencies – the answer may surprise you.

 

Tracking sheet for your Momentum Account – click here to get it.

  • Tim Birchard

    Awesome!

    I find that capitalone360.com serves my needs for a momentum account beautifully; it’s an online bank account with as many sub-accounts as I want, and I name each one accordingly (car insurance, life insurance, rental insurance, etc.). I simply totaled all of those amounts and divided by 12. Automatic withdrawal from my primary account every month ensures that when the insurance bill comes due, the money is sitting there waiting for it.

    Thanks again for this wonderful resource, and for all you do, Matt!