I messed up my life! That’s were the exact words I was telling myself in the year 2018.
Reason? My finances are a mess, a complete mess.
I was newly wedded but neck-deep in debt due to my spending habits and shifting to New Delhi.
After a couple of months, I lost my dad which was a huge blow to me emotionally. Again I shifted from Delhi to Chennai to be with my mother and brother.
This stress of financial debt caused me many sleepless nights and unhappiness. I started to blame myself.
Over a point of time, I even started to feel tried to blame myself. No matter how many days, or months I blame myself, It didn’t help at all for me to clear my financial situation.
Bankers started to call me a day several times, asking me to clear my monthly payment debts while they were on the phone.
I never such situation ever in my life. Bank official is demanding me to make my monthly due. That was a slap on my face.
After that incident, due to embarrassment or pride , I don’t know. I changed my habits and thinking.
I was debt free in six months , cancelled the credit card and cut the credit card in two halves & threw in garbage. Probably, that’s the place it deserve for the unhappiness it caused me:)
Right now, I didn’t achieve financially freedom but I hopeful to become one in a decade.
I want this article more of a testimony than advice.
10 things I did when my finances are a mess
Living on a Budget
The first important thing I did is create a budget.
After minutes I received my paycheck, I took my notebook , pen and start making a Budget.
I won’t delay for a day, after few payments I will make one. No such excuses I give it to myself.
If you are a person who is new to make budget , your aim is to create a habit of making budget first. I personally believe if you ignore the first point , try to follow other rules. It won’t have much an impact.
Also to make it easier, You can see the snapshot of my budget every month.
There is no one’s personal finance situation would be same. Above is only for an illustration purpose.
Also keep it simple , so you can stick with it. Never make it complicated one, Also don’t waste a lot of your time in researching which budget rule is best, etc.
Its your money and debt, you know the best.
2. Make your Financial plan
Another crucial step I have taken to clean my financial mess is financial planning.
Sit down & jot down in a note :
- Number of debts
- Interest rate
- Payment date
- Minimal due
Attack the high interest debt first and also pay your minimum due on the other debts.
This approach will make save money on your interest payments.
To know more in detail: Click here.
3. Stop the blame game
Its easy to blame others or situation for the financial mess I was. Blame game never helped me mentally and it also caused strain in the relationship.
Blaming others will never fix my problem.
Then I started to blame myself for the days I splurged my money, didn’t do academically well (My brain forgot that was million years ago) for the current financial problems.
Blaming yourself is better than blaming others! Too much of it might break you.
In my perspective, blaming yourself provides you a gateway to take responsibility of the problems in your life.
My finances are a mess, it was created by own hands. So it has to be cleaned by own hands then right?
So buckle yourself up to clean the financial mess.
4. Set specific goals
We all have goals & desires in our life. Both winners and losers have goals.
Then why losers lose & winners win? Is there a problem with Goals?
When my finances are a mess I had two kinds of goals:
- Bad Goals
- Good Goals
Bad Goals example:
- I want to be fit
- I want to be healthy
- I want to be debt free
- I want to be rich
I believe above are the wish (In their mind goals) for the 7 billion people who walks on the planet earth. Its pretty generic & end up in wishful thinking.
Good Goals example:
- After brushing & I am going to put my Running shoe.
- I am going to eat salad before 7;30 pm
- I will pay $500 in credit card debt after I receive my salary
- I will invest $200 after I get my paycheck.
In the above goals, For every action you want to take is inserted in to your routine (either before or after).
Once the normal routine finishes, your mind triggers you to perform the next action item by default. That’s makes you progress towards your goals.
All you need to focus on steps and making progress towards goals, not the results.
For more information , Please read atomic habits book.
5. Measure your success & failure
Periodically measuring your progress is important.
By doing this, you will get to know what works & don’t. In this way, you can maximize your efforts on what working favorable for you & avoid the unfavorable ones.
In my case to get my finances in order , buying stuffs from discount stores , watching movie on Amazon prime seems more pocket friendly than going to Movie theatres, shopping on online platforms.
Having an monthly review & reflection will help you. Also make it your aim to avoid one bad strategy & implement one good strategy.
6. Be flexible and make adjustments
Be willing to change for good. Don’t be rigid.
Keeping this attitude helped me to look areas for improvement. Even an inch progress matters for me.
This flexibility can be brought in buying grocery items, means of travel, etc.
Example: In travelling, instead of using uber car I use uber Motorcycles services, which adds extra money & reaches quicker in traffic.
7. Have an accountability partner
Sometimes it takes hell a lot of convictions to stick with your plan.
If you feel you might compromise on your plan, it good to have an accountability partner.
They could be your spouse, Mom, friends, Roomie, etc.
In my case, I have said before hand what I’m going to do her if I miss any of my Payment commitments.
It could be doing household chores of hers, Giving money to her, etc.
Whatever it could be that should benefit your accountability partner & cause pain to you.
The benefit will drive them to keep in check on you weekly , bi-weekly or monthly.
8. No Pain, No Gain
There is nothing painful than seeing my finances are a mess.
So i was willing to take any pain for long term peace of mind and fiscal health.
There were no indulgence of eating fancy foods, no travelling apart from necessary’s ones, no buying clothes, no shoes , etc. for six to eight months.
Whatever I saved by cutting down expenses were paid to clear my debts.
I took the pain, today I reap the gain 🙂
9. Small Extra payments
I use to be a guy who always glorify big things. It could be big paycheck will solve my financial problem.
Big house will make me feel home , Big vacation will create memories.
Boy! I was completely wrong. This train of thoughts will even flow when I decide to focus on finances. Big chunk of money will help me to get out of my financial mess. Its true!
But where is big chunk of money?
I ignore small money. Rupee worth $2, $3. But i will still go and use the small money to pay my debt. You may laugh at me!
But in a month I will do six or seven small extra payments like these towards my debt. Why I do this?
I simply don’t want to pay more interest. Even $1 in interest matters to me.
Its a free $1 to the Bank, but its hard earned $1 to me.
10. No Late payments
Banks and credit card firms punishes folks by charging late fees & penalty who do late payment.
The more you make the payment on time, the more you save money from getting out of your pocket.
Also paying on time have given me a sense of respect & discipline towards myself.
It might irritate or makes your blood boil, when you see late fee levied on you bank. You may think its not fair.
But the truth is , you have not been fair on your payments. Period!
Don’t expect the system to sympathize with you!
You might think I messed my life up for the financial stress you are in.
Don’t worry! All it takes a discipline & patience to clean the state of your financial mess you are in.
Whether you are in your 20’s, 30’s , 40’s doesn’t matter. There is always a hope to make things straight.
I hope the journey of my finances are a mess helped you a bit.
Thank You for reading! Let me know your thoughts in comment section.
Happy to help always.