Tiny House, Tiny Living, The Tiny Life.

Money Habits of People Who are Debt Free

Whether your goal is to become debt free, run a marathon, or simply declutter your home and live a more minimalist lifestyle, we often turn to those who have had success and do what they do. It’s called studying best practice.

If you want to learn how to run a marathon, you would talk to other runners and follow a training plan. If you want to enjoy a more minimalist lifestyle, you would read up on minimalism and talk to other minimalists. If you want to become debt free, you adopt the money habits of people who are debt free.

Organize and Pay Attention to Your Bills

Rather than just piling up the bills and walking away from them, people who are debt free open their bills as soon as they come in. They check to make sure that the statement is accurate and organize them in a way to ensure that the bill is paid on time.

Live Within Your Means

People who are debt free do not spend beyond what they earn. It seems obvious, I know. But in these days where credit is easy to come by, and most aren’t spending intentionally, it’s easy to spend more money than what comes in every month.

People who are debt free follow the principle that if you don’t have the cash, you can’t afford it. So part of living within your means also requires you to strengthen your savings muscle and set aside money each month for larger purchases like vacations, home improvements, or a new-to-them vehicle.

Don’t Try to Keep Up With the Joneses

People who are debt free have learned to practice the art of contentment and are grateful and happy with what they have. They don’t worry that their neighbors just purchased a shiny new vehicle or just upgraded to a 75-inch flat screen television.

They also avoid the trap of emotional spending and buying items to make them feel better. They know that these unplanned purchases only have a temporary effect on one’s feelings, and if anything may lead to feelings of stress later on in the month.

Demonstrate Self-Control

In order to live within your means, it’s important to be intentional with your money and develop a spending plan. Debt-free people create a budget before the month begins which gives each dollar coming in a job, helping to eliminate money that disappears or gets wasted.

Part of living on a budget also means avoiding impulse purchases. These impulse purchases can quickly destroy a budget. Instead try avoiding the stores that you know cause you the most temptation when it comes to buying impulsively. You know that trip to Target that you made to purchase one item and ended up walking out with $100 worth. Trust me, been there, done that!

Be Proactive

It’s no surprise that being proactive is the first habit discussed in “The 7 Habits of Highly Effective People” by Stephen R. Covey. People who gain control of their finances and live debt free have learned to be proactive. This means that they have looked at ways to cut their budgets and their spending to free up extra income to pay off their debt and then start saving. They will also look for ways to earn an extra income if it’s necessary to reach their financial goals.

Your Turn!

  • What’s one money habit that you would like to improve?

Announcing 2018 Tiny House Conference

We are officially launching the 2018 Tiny House Conference website!  I want to invite you to join us in Charlotte, NC to celebrate our 5th Conference!  The Conference will take place on March 17th-18th in south Charlotte for two full days of amazing speakers and connecting with others who are just as passionate about living tiny (or small).

This year I’ve decided to focus the conference on the core things people need to know in order to build and live in a tiny house so we can really dig deep into these topics.  As a result I’m limiting the number of seats to just 100 people so we can have better conversations in a focused format. This means we are definitely going to sell out early.

We have Early Bird special right now that will take $100 off your ticket, but the early bird special ends October 31st!

Find All The Details At
TinyHouseConference.com

How Minimalism Saves Me Money

I found minimalism through a Ted talk, and I was immediately drawn to the simple way of life. I wasn’t expecting to save so much money – but it was a pleasant side effect. This is how minimalism saves me money.

How Minimalism Saves Me Money

Intentional Shopping

I stopped impulse shopping and became more intentional with my purchases. This was a massive wake-up call, as I had never realized until this point how much I was spending on little impulsive purchases. A coffee at Starbucks, a quick stop for snacks at Whole Foods, and a drink with a friend at night can easily add up to $40 in a day of money I didn’t need to spend.

When I became more intentional with my purchases, I also learned more about sustainability. I quit purchasing fast fashion and started buying my necessary clothes from second hand stores. By creating a uniform, I saved even more money.

I Cut Out a Lot of Bills

When I adopted the minimalist lifestyle, I cut out everything that I didn’t need. I quit my cell phone plan and ran off wifi only. I cut out cable, I stopped drinking as much, and I cut back on extras like coconut waters and kombucha. I stopped renewing subscriptions I didn’t need like audible, spotify and other services that I could get for free. I quit my gym membership and started running and hiking outside, which I enjoyed more. I moved for cheaper rent, and I spent a lot more time with my family. How Minimalism Saves Me Money

I Sold My Extra Stuff

When I went through the decluttering process, I had a lot of clothes that I was getting rid of. I sold as many as I could. I had lots of purses and shoes, and I sold those too. I sold anything and everything that I wasn’t using regularly, and then I sold most of my furniture so that I could travel full time and live out of a backpack.

I Saved on Groceries

How Minimalism Saves Me MoneyI simplified my meals and started eating the same thing for breakfast every day. I would eat similar meals that required few ingredients, and I started flavoring my meals with spices instead of sauces. I stopped eating so many processed foods, stopped eating desserts regularly, and started buying less expensive wine. I started using a reusable water bottle so I wouldn’t need to buy bottled waters. I learned how to cook, which resulted in eating out less.

Minimalism has saved me so much money over the years, and this simplified way of life has allowed me to cut my living expenses drastically. I now travel the world full time and work completely online, which allows me more freedom than I could have ever had at my 9-5.

Your Turn!

  • How has minimalism saved you money?
  • Would you use any of these tips?

How We Paid Off $59,000 in 24 Months

There’s no easy, fast way to pay off your debt. It takes a lot of hard work, sacrifice, and focus. The good news is that it is possible, no matter how overwhelming it may seem, and the end goal is worth it.

March 17, 2014: I was sitting at my dining room table surrounded by bills, sick and tired of making a decent income, but having nothing to show for it. The stress of juggling payments and the fear that there was going to be more month than money had gotten the best of me, and in that moment I knew we had to make a change.

You may look at the title and think to yourself, “Well if you paid off $59,000 in 24 months that must mean that, on average, you were putting just over $2,400 towards your debt each month.” Putting that amount (37% of our take home pay) wouldn’t have been possible if we hadn’t been willing to change our behavior as well.

Getting Real With Your Spending Behavior:

I added up the debt and had no idea where that money had been spent or what it had been spent on. We didn’t have any fancy clothing, we don’t have a home filled with the latest and greatest technology, our furniture was mostly purchased second-hand, and our car was certainly not the fanciest (not unless you consider a well-loved Honda Odyssey fancy).

So in order to see where the money had  gone and where the leaks were in our spending, I decided to do a six-month spending analysis. I grabbed six months worth of credit card statements and bank transactions and got to work. I quickly realized that we were the “death by $20” types, meaning we would spend $20 here or $20 there. Although that amount doesn’t seem like much at the time, it quickly added up.

Take Responsibility:

overspendingWhen married, in debt, and stressed, it was easy to blame the other person and their spending behavior for getting us into the mess that we were in. Completing the spending analysis put both my husband and I in the position where we had to take responsibility for our part in the problem.

We could see exactly what we had spent over the last 6 months. The truth hurt but it was in front of us and the numbers didn’t lie. Once we saw the holes in our spending, and took responsibility, we were now able to come up with a plan to get out of the mess that we each had a part in creating.

Develop a Budget Where Every Dollar has a Name:

The biggest part for us in our journey of becoming debt free was to get on a monthly budget where every dollar was given a name. We started at the top with our income and worked our way down through our expenses until we got to the end. Any money left over each month was then thrown at the debt.

We preferred the debt snowball when determining which debt we wanted to attack first. In the debt snowball, you list your debts from the smallest balance to the largest balance and then start paying them off in that order. We loved the traction we felt as those smallest debts got paid off quickly.

Cut, Slash, and Free Up Your Income:

In order to be able to put an even larger amount on our debt, we looked for ways that we could cut our spending. We slashed our average monthly grocery budget by $200 a month by meal planning, shopping with a list, and making as much as we could from scratch. We cut our clothing budget by shopping at the thrift stores and the clearance racks. We only bought what we needed and skipped the things that we wanted.

Stick With The Budget

budget moneyOK…This was a hard one at first. We really needed to get into a routine and pattern that worked for us when it came time to checking in with the budget. When first getting started, I had a budgeting app that was on my phone that I checked in with at least once a day (sometimes, several times a day…I’m a bit of a numbers geek).

Writing a budget is one thing, but checking in with the budget is the important part. We had written budgets before, but as the debt rose, it became clear that a budget isn’t a set it and forget it tool. Your money will not magically behave just because you put some numbers down on paper.

Get the Biggest Shovel Possible:

Aside from getting on a budget and sticking with the budget, finding extra work and making extra money was hugely important in us becoming debt free as quickly as we did. When you want to get out of debt so bad you can taste it, sacrificing some free time to work extra hours or a get a second job in the short term is a great way to put your debt pay-off into overdrive.

Stay Focused on the End Goal:

During our debt free journey, it was tempting to take a break, and enjoy some of the extra money that we now had by working extra jobs. We knew though that if we stopped, getting back on track was going to be even harder, so we had to stay focused on the end goal.

We reminded ourselves of our “Why?” Why we wanted to get out of debt. What a debt free life would look like and feel like. We tracked our progress and made every purchase intentionally by asking ourselves, “Do we want this item more than we want to be debt free?” When you know where you’re going and why, getting there becomes much easier.

Your Turn!

  • What does financial freedom look like to you?

What’s Your Wisk?

Today we have a new video about changing the little things in life that bother you.  This quick little hack has made my life so much better and it’s as simple as asking…. What’s Your Wisk?

 

how to live a better life

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