Anyone who knows me knows how incredibly special my Daddy was to me. He and I had a bond unlike any other in my life. He was my constant support system, my go-to person for all things, my biggest fan (and I was his). When he passed away from cancer back in February 2016, I had a very hard time finding my footing once again. I touched upon my roller coaster of emotion, emptiness, depression and the eventual epiphany that life is not all that bad in my very first blog post, Making the Little Pieces of Life Fit.
This post isn’t actually about my sadness at all. You see, I had a visit from my dad in a dream last week. Some of my readers will believe that this visit was really his spirit manifesting in a dream. Others may think this visit was totally a product of my subconscious. Either way, he offered very sound financial advice and I felt compelled to share it with you.
My dad was a very finance savvy kind of guy. When he passed, we discovered just how much financial planning he had done in preparation for his departure from the material world. He was always the person I approached for financial advice, career advice, and pretty much any other practical lifestyle advice I needed. Just a sidebar – my mom is also a very smart and savvy lady. I’m just choosing to focus on my dad’s advice for this post.
My husband and I started a pressure washing company in May of 2016. As with any new business, the first years have been bumpy, especially from a financial standpoint. We both quit our jobs to take this leap of faith into entrepreneurship and as a result, we have experienced some financial hardship. As our company grows, our life has become more financially comfortable, but along the way, we incurred some debt that we want to eliminate so we can once again be homeowners.
Our looming debt and the intention of becoming homeowners again have been weighing on my mind recently. I’m sure some of you out there can understand how hard things can get. Usually, in a situation like this, I would call my dad and have a long talk. He would give me some good ideas to solve my financial crisis and I would hang up the phone with a gameplan.
I’m sure you can understand my surprise when I awoke one morning last week from a very vivid dream in which my father imparted some very valuable advice. In my dream, I was working on my laptop. My dad came up to me and asked me what I was working on. I told him I was trying to pay bills and figure out how to budget when our finances are all over the place. He looked at me and said, “Alea, you are overthinking this. Here’s what you do:” He then proceeded to detail what I need to do to get us back on our feet.
- Know Your Expenses
Okay, I know you are like, “Duh, Captain Obvious,” on this one. Hear me out. One of the issues I am experiencing is that I have bills set up for auto-pay. I do not always look closely at these expenses because they are already set up for payment. Month over month, these expenses are automatically deducted and I honestly don’t think about them. For our business, I know every dollar and every cent that comes in and goes out of the company. Why don’t I follow our family’s personal finances as closely? If someone asked me how much we made in sales last month, I would be able to tell them. If someone asked me how much we spent on groceries last month, who knows?!
In the dream, my dad said, “Look at all of your transactions for the year. Look at where you spent your money month over month. Get familiar with trends – which months you spend more, which months you spend less.”
- Trim the Fat
The next words out of my dad’s mouth were, “Trim the fat.” No, I wasn’t magically whisked into a kitchen, chef knife in hand, cleaning a side of beef. He meant I needed to look at our luxuries month over month and eliminate what I could. Today, I downloaded all of my banking transactions and after reviewing everything, I was able to trim $86.30 a month from our expenses! That’s $1,035.65 a year, y’all! Most of the expenses were unnecessary online subscriptions. When I told my husband, he said, “Awesome! A pay raise!” What a fantastic way to look at it!
- Quit Putting Stuff on the Credit Card
This seems like a no-brainer, but to be honest, when you’re in a pinch, a credit card seems to be an easy option. The problem comes when you can’t afford to pay much more than the monthly interest rate. You know that minimum payment due? That is interest only – if you pay the minimum alone, you are not actually working toward paying down your debt. You are just paying to keep yourself in debt. Meanwhile, if you continue to add to your debt by charging things on your credit card, the monthly minimum goes up, up, up! Cut those cards! If you can’t imagine cutting your credit cards, hide them somewhere safe in your house so you don’t have immediate access to them. This one step will likely deter you from purchasing something you don’t actually need and can’t afford since you don’t have your credit card in your wallet.
- Pay Down the Debt
The next piece of advice is what I will begin working on now that I’ve “trimmed the fat” and cut up my credit cards. I need to look at our debt and come up with a plan to pay it down. Some people prefer the Dave Ramsey “Debt Snowball” method. I think this is what I will be using to pay our debt down. I may have to keep updating this blog on my progress.
In my opinion, the two most crucial elements of successfully paying down debt are paying any additional money you can scrounge up toward your debt (hello trimmed fat!) and not incurring any additional debt, if possible. NO MORE CREDIT CARDS!
- Save, Save, Save!
In my dream, my dad said, “You can’t buy a house without a downpayment.” Great. I already knew this, of course, but having my father reiterate it hit me a little harder than just thinking it on my own. How the heck am I supposed to save while I’m paying down debt? The answer is so easy: BUDGET for it. Keep a strict budget and set a goal. Set aside a little money each month and grow it over time. As your income grows, increase the money you are budgeting for savings. I recently began using Mint.com to track my expenses, budgets and savings goals (for free!) and let me tell you, it has really changed my perception of my family’s finances. If Mint.com isn’t your jam, try tracking on a ledger, in a smartphone app, in a spreadsheet, whatever works for you! My sister actually writes her budget on a whiteboard and looks at it constantly. However you choose to budget, be consistent and hold yourself accountable (pun intended).
I am not an accountant or a financial advisor. I wanted to be sure to share this dream because it has struck a chord with me. My father always told me the best way to deal with a problem is to face it and guess what? I realized the key to financial freedom is facing my financial problems head-on.
Thank you, Daddy, for your advice. I look forward to future visits from you. Next time, let’s do something fun, though, okay? 🙂