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Is Your Money Creating Freedom or Stress?

Is Your Money Creating Freedom or Stress?

| November 06, 2019

Gene should be happy. He has a beautiful family and a caring wife. He’s been in business for over 15 years and has amassed a substantial portfolio. He recently changed jobs and moved halfway across the country to Minnesota as a medical doctor of anesthesiology. The light is at the end of the tunnel. 

Yet, he has been covered, he would say buried, under a mountain of debt—$60,000 of undergraduate and medical school debt, plus another $10,000 in credit card debt from spending a bit too much at Christmas. He’s been chipping away at the debts slowly but surely, but he can’t seem to stay ahead. On top of that, he just purchased a new car that came with a whopping car loan of $30,000!

He wonders darkly to himself, “How long am I going to be like this? When will I ever get out of debt?”

Maybe you are in a similar position, or remember having been in this spot years ago. What Gene needs now, more than ever, is a plan and a team to advise him. What if he had somebody to warn him, somebody to guide him? Perhaps his situation would be substantially different. Maybe he would never have been in this situation if an advisor had given him sound advice and held him accountable. Unfortunately, as has happened to so many others, he is now in emergency mode. He needs help, and he needs help fast.

If you do not check and recheck your savings and debt management status, money will most likely continue to create stress, not freedom. It is so straightforward to understand, but much more difficult to live. Still, the reduction in stress created from operating true to your plan is priceless. Spending more than you make creates a buildup of debt, a reduction in savings over time, and an increase in stress. In our line of work, we see far too many people like Gene who are depressed about life because they have no control over their spending and debt. We’ve seen some even turn to drugs or alcohol, effectively masking the pain, and doing nothing to address the underlying problem.

To avoid feeling like Gene, you need to create a financial plan and stick to it. Creating a plan and deciding where you want to go will give you “cause and control” over your future as nothing else will. It will help you keep your perspective in spite of minor setbacks. Creating and following a plan will help bring about happiness and peace because you will be more in control of your destiny.

If spending is a problem, a simple way to reduce the stress is to focus on your five largest bills and come up with specific ways in which you are willing to reduce them. If you are like most people, your largest bills might include your home mortgage, income taxes, cars, business expenses, debt, travel, child support, random purchases, home remodeling/repairs, dining out, and insurance.

Most people, unless focused primarily on reducing their largest bills, cannot afford the little pleasures that make life enjoyable, such as going on a date with their spouse, having a cup of coffee at Starbucks, or belonging to a health club. The results from cutting out the fun stuff usually are the same as going on a starvation diet: you do not lose weight and, over the long run, you just get heavier, or in the case of money, more in debt.

Instead, come up with ideas to reduce at least five major expenses. Then decide on realistic savings ideas you’ll truly implement to save at least 10 percent of every income dollar. Remember, it’s not about what you make.

I also strongly suggest you go outside your advisory board or “board of directors” to look for mentorship from your peers. Whom do you admire? Whom can you learn from? Whom can help hold you accountable to help ensure that your plan will succeed?

Here’s the deal. Do you want to have the life of an ordinary person? Or would you rather have an “extra”-ordinary life set on target, focusing on having the best possible financial health and living the life you want to live? Take the time to do these exercises and do what others don’t do. I guarantee 90 percent of people won’t. I dare you.

Material discussed is meant to provide general information and it is not to be construed as specific investment, tax, or legal advice. Individual needs vary & require consideration of your unique objectives & financial situation. Please consult with your accountant or tax advisor for specific guidance.