Financial Freedom: 18 Ways To Get There In 2018

*this post is by a LWL guest contributor*

“You might get 85 years on this planet– don’t spend 65 paying off a lifestyle you can’t afford.” -Cait Flanders

2018 is newly upon us and a lot of people are in the process of making resolutions for the new year. While I’m not a huge believer in “New Year Resolutions,” I do think this time of year is a great time to take stock in where you are and compare it to where you would like to be in the future.

With that in mind I put together a list of 18 financial tips for 2018.

Let’s face it, life is expensive. It is so easy to go out and work 40+ hours a week and still end up with nothing at the end of the month. That’s not encouraging at all. Who wants to work all their life and have nothing to show for it? Crickets.

That’s what I thought. If you want to make the most of 2018 financially, below are 18 steps that I recommend.

1. Figure out where you stand financially.
Ahhhh! This is so scary! I get it, it’s not fun figuring out where you are financially. It’s like standing on that scale the day after Thanksgiving knowing you ate three pieces of pie. But, there is absolutely no way that you will be able to gain control of your finances if you don’t know where you stand.

So, here is a list of things you need to know about your finances:

• How much do I have in checking?
• How much do I have in savings?
• How much debt do I have?
• How many credit cards do I use on a regular basis?
• How much do I/my spouse make every month?

If you’re not able to answer these basic questions, the next 17 steps will not be possible. This is also a great time to get on the same page with your spouse about your finances.

Every time I watch a true crime TV show where the husband is a Columbian drug lord, the wife never knows where their money comes from. While I doubt you’re married to a Columbian drug lord, you should know where your money is coming from and where it is going. That leads us to our next tip…

2. Make a master list of all bills.
If you’re like my wife and I, we have 87 different logins for everything. Most things are on auto draft. It’s so easy to just let things come out of the bank automatically without checking to see what’s going on. While auto draft is a great thing, it can be a budget killer. Here’s why…
How many monthly subscription services are you signed up for? Has Comcast raised your internet bill now that you aren’t on a promotional price? Are you getting double charged for Apple Music when you could be on a family plan?

All of these things happen when you don’t keep an eye on your auto drafts. Prices creep up, double charges happen, or you end up paying for a service you don’t even use anymore.
Here’s what I want you to do (and it’s going to be painful, I know).

Pull up your bank account transactions. Anything that came out as an auto draft in the last month, go to the website, figure out your login information, and cancel what you don’t need or use. As you go make a list of the items you keep and all of your other bills.

The goal here is to have a master list of all known monthly expenses. This is your baseline for the budget we are going to build on step four. I just lost half of you, didn’t I? People that hate budgets, skip to #5 where we talk about spending money, then come back here. 😊

3. Look at spending in September and October 2017.
This is the last step to take before building a budget for next year. Look at your expenses from September and October of 2017. You may be thinking, why would I go back to September, why not just use December? The reason is simple. If you’re like most people you probably spent double your normal expenses in December.

What we are looking for is what you spend in a normal month. You need this information, so you can build a realistic budget. What we don’t want is to assume that you spend $400 on food and make a budget based on that number, when you actually spend $1,400 on food.

4. Build a budget for January 2018.
The dreaded B-word. Some people shudder just thinking about establishing a budget. I used to be one of them. “A budget is so constraining,” I used to whine. “I can’t eat out every single meal for lunch when I have a budget” is what I really meant.

Great news, a budget is a good thing. Here’s why… YOU control the budget. That’s right. Y. O. U. control how much money goes to each line item.

If you want to spend $2,000 a month on Polka Dancing lessons, go right ahead. The point of the budget (I’m stealing this from Dave Ramsey) is to tell your money where to go, instead of wondering where it went.

Make a line item for everything that is on your master list that we created earlier and for what you spent money on in September/October. Then at the top put how much money you bring home.
First time budgeters, here’s some good news, there are a ton of websites that make it really easy. Click here for the one that changed my life and finances.

5. Include spending money in the budget
Hi free spirits from point number two! That’s right, money in the budget should be allocated to each adult in the budget for discretionary spending. That means, if that bag of Cheetos in the check out line screams “Eat ME,” then you have money to indulge.

Here’s the way I look at it, you’re going to spend money on something that is outside of the normal budgetary items. You might as well budget for it!

6. Make a list of financial goals to achieve in 2018
Alright people, it’s time to start dreaming. What are your goals? What do you want to achieve? These dreams don’t just have to be ones for 2018. Do you want to retire early? Do you want to go lay on the beach for three weeks straight? Do you want to exchange all of your money for gold coins and swim in it Scrooge McDuck style? Dream with yourself or with your partner, make a list, then put on your work clothes and go make it happen!

7. Spend less money that you make
Yes. You read that correctly. Spend LESS money than you make. It’s very simple to type it out like that, but actually doing this is very difficult. I know for some people this is truly impossible. I’ve been there. Making minimum wage, working as much as I can and barely making ends meet. If that’s you, I’m not talking to you here.

But if you’re making good money, and you’ve let your lifestyle creep up over time to where no matter how much you make you spend every dime, I’m talking to you. You need to make some lifestyle changes. It’s worth taking that next pay raise and throwing it into savings or into an investment so you can secure your future.

8. Look for ways to make more money
There are so many ways to make more money. I truly believe that having a side hustle will be a huge game changer in your life. I know because I’ve experienced it in my own family.

My wife runs her own company and I do woodworking on the side for fun. In the past we both worked two jobs so that we could pay off debt. There are so many different ways to make side money that can fit with almost any schedule. Check out the Side Hustle School podcast for some cool ideas!

9. Build a cushion of $1,000
If you can’t tell by now, I’m a big believer in Dave Ramsey’s plan. My family used it to great effect in our lives (paying off over $76,000 in debt) in a little over 2 years.

The first step to being in a better place financially in 2018 is to put a cushion between you and life.

Saving as little as $1,000 can change the way you look at life completely. Something that used to be a huge deal that caused so much stress is now just annoying. If your battery dies and you have $5 in your bank account and you don’t get paid until next week, that’s really stressful.

If your battery dies and you have $1,000 in your emergency account… It sucks, yes. But it’s not the end of the world. It doesn’t keep you up at night wondering how you’re going to eat. It keeps you from signing up for a 33% interest card at the dealership (yes, I’ve done that before).

10. Start paying off debt
You’ve taken stock of where you are. You know how much money you spend on a monthly basis. You know how much debt you have. Now is the time to start punching that debt in it’s ugly face. I hate debt. Do you hate debt? Have you ever had to make a payment to a credit card for a steak dinner you have 3 years ago? That’s the worst!

If you hate debt like me, if you’re tired of being tied up, if you’re over sending all of your money to the bank so they can build bigger buildings… now is the time to give them notice.

You’re done. They’re fired. Get them out of your life.

11. Re-work your original budget
After about two days of living on your budget you’re going to realize that you forgot something, or that you can’t in fact live on $25 a month of food.

At that point you’re going to need to adjust the original budget. The first couple of months there will be a lot of changes as you figure everything out. But the important thing is to get it on paper and work it until it begins to work for you. Just keep going. 

12. Sell some stuff
Look around your house. If you’re like most people you probably have things that you haven’t touched in months (maybe even years). My wife is the most minimalistic person I know, and we still find stuff all the time that we just simply don’t use anymore. Take this stuff and sell it.

Opening an eBay account takes 15 minutes. Set up all your items as auctions and list the minimum that you would want to sell it for. Before you know it, you could have your $1,000 emergency fund set up from just stuff you have laying around the house.

13. Read at least one book on finances
We’re about 1800 words into the blog right now, so obviously you’re a reader. Take the time to pick up a book on personal finances. I truly believe that a book can change the trajectory of your life.

When my wife first brought home Financial Peace Revisited by Dave Ramsey, it started us on a completely different path. Plus your local library will have hundreds of books to read on personal finances.. all for free. Score.

14. Work on building financial boundaries
This can be a tough one for some people. If you find yourself supporting the bad habits of someone financially it may be time to step back and set some boundaries. It is so easy for parents/family members to take advantage of you and use the fact that they raised you as a guilt trip.

The truth is, they decided to have you without your input. You can’t be guilted in to supporting them because they chose to support you. Supporting a spending addiction is very similar to supporting any other type of addiction. Be loving in your approach, but draw a line when necessary.

15. Make sure your tax withholdings are correct
This is one I don’t think a lot of people realize could have an impact on your monthly budget. If you’re getting a very large tax refund, it may make sense for you to change your deductions so that you get that money back on your paycheck.

The truth is, if you’re getting money back you are loaning the government your money every month.

16. Stop using credit cards
Take it from someone who ran up $16,000 in credit card debt in 18 months. Credit cards can be your worst enemy. I know there are people who use credit cards for the points and they pay them off every month. If that’s you, then by all means continue to do what you’re doing.

But if you find yourself carrying a balance or deeply in credit card debt, I would council you to stop using credit all together.

Try to move towards using cash as much as possible and your debit card for everything else. If you have to use a credit card for business (I personally have to as well) then only use it for business transactions that you will be reimbursed for.

Credit cards are so scary because they dull the senses to spending money. It doesn’t feel real, so we don’t associate it with spending actual money. This is why spending cash is so effective. It makes the purchase feel real— causing you to spend less money.

17. Cut back on holiday expenses
Here’s one to think about for next year. How much money did you spend on Christmas this year? Did you buy little Johnny so many presents that when you asked him what he got he couldn’t remember any of them?

In our consumerist society, it’s so easy to buy into all of the marketing around how much we should spend on the holidays. It’s sad that a holiday that is supposed to be about spending time in celebrating with friends and family is now all about spending money.

As you plan for next year, think about spending less money and more time with family. I truly believe that three or four well-thought-out, meaningful gifts mean so much more than 25 pieces of plastic.

At the very least have budget for next year’s expenses and don’t get to November with no plan as to how to pay for all that plastic.

18. Take Financial Peace University
This is my final piece of advice and it’s the only thing that will actually cost you money on this list. I’ve mentioned Dave Ramsey several times throughout this article. He doesn’t know I’ve written this blog, but as someone who was once a member of his team and had my life changed through his message, I can’t help but share it with you. I just believe so much in his teachings because of the impact they had on my life.

The class is $100 for you and your spouse to take, but will save you more than you could ever spend on it. It is nine weeks long, one night per week. It walks through everything you need to do in order to take control of your finances and attain financial peace.

Whew, that was long. I really appreciate you taking the time to read this list. I hope you got something beneficial out of it. I wish you the best in your financial endeavors in 2018! Enjoy the freedom!

-LWL Guest Contributor 

 

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