“Don’t be follower; be a student. Make sure
your actions are the product of your own conclusions.” - Jim Rohn
I've struggled mightily with my own personal finance. I've made many mistakes...some I've discovered, and some I will probably find out later in life. So I wanted to try to help those starting on their journeys through sharing what I've learned and the mistakes I've made. This blog is my own personal opinion; I want readers to do their own research, and make their own decisions!
Habits and Values
“Most people have it all wrong about wealth in
America. Wealth is not the same as
income. If you make a good income each
year and spend it all, you are not getting wealthier. You are just living high. Wealth is what you accumulate, not what you
spend…It is seldom luck or inheritance or advanced degrees or even intelligence
that enables people to amass fortunes.
Wealth is more often a result of a lifestyle of hard work, perseverance,
planning and most of all, self-discipline.” – Thomas J. Stanley, The Millionaire Next
Door.
Building wealth and getting out of debt
is more about your habits than your income.
Develop good habits of saving and living within your means. Of course where you spend your money and what
order to place your financial goals depends on what you value. How does debt make you feel? Can you live with debt or does it cause you
great anxiety? How
important is owning vs. renting? Can you
be content with less than the Jones? Should you investing in USA funds or global
funds? What about tithing and giving? You should probably spend some time thinking
about what is truly important to you because your values should be reflected in
your financial plan.
A Basic Plan
I’ve been reading as fast as I can (with a book in one hand
and toddler in the other) to learn about personal finances. It started with taking Dave Ramsey’s
Financial Peace through a local church, but I started to question some of his
teachings. So I read blogs and websites
(Money Girl: Quick and Dirty Tips, You Need a Budget Podcast, Dave Ramsey, The
Vin Foundation Student Debt Center). Then
moved on to books: The Millionaire Next
Door, The White Coat Investor, and more soon). Most financial gurus have quite a bit of
similarity in their plans. All of them
involve good spending habits, consistent saving/investing, and having a plan
for debt. Here’s a basic plan adapted
from Dave Ramsey’s Financial Peace and The White Coat Investor with a touch my own opinion. This is not meant to be a be-all-end-all
guide to your financial future, but a springboard to dive in. Y’all are some of the smartest people I know,
you can do this!
The Plan Components
- Save for an
emergency.
- Formulate
a debt strategy
- Protect
your Assets
- Save
for retirement
- Save
for children’s college
- Pay
off your home
- Give
and live life!
The order you accomplish those items will depend on your
values and goals, but I recommend doing the first 3 STAT.
Over the next few weeks, I plan on going through some of the basics I've learned on each component. May it help someone out there!
1. Emergency Fund
If
you take Dave Ramsey’s Financial Peace University or read his Total Money Makeover, his “Baby
Step 1” is to rapidly save $1000 for a rainy day. Sell some furniture. Sell so much, the kids
worry they are next. If you don’t have
this much in the bank, do this NOW.
Commit to not spending more than you make. If that means cutting up the credit cards,
cut them up! The last thing
veterinarians need is consumer debt on top of student debt. Although Dave Ramsey recommends saving $1000,
paying down debt, then saving 3-6 months for a real emergency fund, I was far
from comfortable only having $1000 in the bank for the time it takes me to pay
down (or serve my time on IBR) my 6 digits of student loans. For
that reason, I’m not committing to his order. For my own stress level, I want
an emergency fund fully funded first!
Where to put it?
– Consider
your habits and your feelings toward debt/risk.
– Money
Market/High Yield Savings– less volatile than mutual funds, but earns
less. Readily available through banks. This is where Dave Ramsey recommends putting
it. This was too close for me. It only took 1 tiny little transfer to get to it…
– Mutual
Funds – May not instantly be available, but might earn more…or it might lose
all value! If you need money instantly,
do you have enough credit to cover it?
How do you feel about credit?
This is risky but has more potential for it to grow.
– Roth
IRA – Your contributions can be withdrawn without penalty. Risk level depends on how it’s invested. More on Roth IRAs later…
But Wait… How does
one save money?
“Some may say it is easy to save when you have
a high income, but the savings and donations percentages I listed essentially
remained the same regardless of whether we were making 45,000/yr as a resident
or the much higher income that we now earn.
If you are not disciplined to save on a $45,000 income, it won’t be any
easier on a six-figure income.” – The
White Coat Investor
If you are living paycheck to paycheck, in order to start
saving something must change. If you
keep doing the same thing and expect a different outcome, that’s insanity. You really only have 2 options:
If your life is anything like mine, the thought of one more
job exhausts me. How could I possibly
pick up another side-hustle? Another part-time job? I still have kids to
raise. However, I can always spend
less. The key is a BUDGET. You need a budget. Even if you make more, without a budget you
will find that your expenses rise to consume that money. You have to work for your money, so put your
money to work too!
“A budget is telling
your money where to go instead of wondering where it went.” - Dave Ramsey
I'll blog about budgeting and post it in the next week or so.
Peace and Love, y'all!
