Being a millennial you have the choice to start being smart about your money and create a plan to lead a better life, or you be like millions of Americans who live paycheck to paycheck until retirement.
I don’t know about you but I would much rather go with the first option. But, how do we get there?
It is not easy in today’s world. We are continuously presented with the latest and greatest products that will make us feel better about ourselves if we buy. From clothes to electronics to cars, etc…all of these products only provide a small stint of happiness but never a lasting effect. What if we passed on these so-called needs and decided to start an emergency fund? pay off our debt? or even invest?
You have the power to take control of our financial life. I promise you if you decide to grab ahold of your finances, you will be able to retire younger and happier than you thought. Think about what you could do with that free time?
This doesn’t mean that you have to cut fun out of your life. But, you will have to understand how to be smart with your money and have fun at the same time.
I hope you all take this journey with me. A journey that hacks the way to build wealth and leads to a better, more fulfilling life. Sometimes all you really need is an ounce of inspiration to make something happen. There is no better time than now.
For the first blog, I want you to understand the 4 basic phases of the money hack system. I want to give the credit to Dave Ramsey, and if you haven’t already, please do yourself a favor and pick up his book, “The Total Money Makeover”.
I want you to write these four phases on a piece of paper and put somewhere in your home where you can see often.
- Phase 1 – The Most Important Step
- Phase 2 – Pay Off Your Debt
- Phase 3 – The Emergency Fund
- Phase 4 – Invest
Phase 1: The Most Important Step
Accidents happen in life. A broken leg, a lost job, unforeseen bills all of these things can happen in a split second. We need to do what we can to prepare.
So how do we prepare?
Set two very important (and very easy to remember) goals:
- Save $500 in the first month.
- Save $500 in the second month.
There you go! You just saved $1,000 in two months. Keep in mind, this is a marathon, not a race!
This money should ONLY be touched in emergency situations (and no, needing a pedicure or the new Halo video game are not emergencies).
If you are not able to save $500 in two months then you need to make it your duty to bring in additional income. Get a part-time job, become an Uber driver, freelance your talents, mow lawns, do whatever you can to save $1,000 in two months.
Phase 2: Pay Off Your Debt
I want you to list out all of your debts from smallest to largest. Include the minimum payment and the interest rate. Now, in order to get the momentum of paying off all of your debt going, you need to start paying off your smallest debts first until you get to the largest ones.
You must completely pay off one debt before you move to the next. Soon, you’ll start to see this list of your debts getting smaller and smaller, while your smile gets larger and larger.
Let me remind you that any income that remains after all expenses (and no expenses do not include the 50’’ flat screen or the new fashion designer jeans..expenses are necessities) should be going towards your debt! We need this paid off!
If you want to accelerate your debt repayment (and I would always advise you should) then, like mentioned above, get a secondary source of income until your debt is paid off. Trust me, it is worth it.
Phase 3: Emergency Fund Time
You’ll hear most people say your emergency (or rainy day) fund should be 3-6 months of your necessary expenses (sorry, no designer jeans). I always recommend 6 months. As you know with our economy, you have no idea when you might be laid off and how long it will take to find a new job. Always better to be safe than sorry.
Phase 4: Invest
You have your two sets of $500, your debt paid off, and your emergency fund. Now it is time to start investing your money to let your money work for you. This includes your own business, the stock market, or real estate.
If you have made it this far, I thank you. Are you ready to take the journey? Not every person’s financial cards are dealt the same in life, but we can all take the right actions to make our lives better.
Please take a couple days to think if you are really ready to make a life transformation. Together, we can become financially secure and live better lives.
Please leave any questions or feedback in the comments below.