Rule 3: Realistically Examine Your Habits (#31WriteNow)

Realistically examine your habits.

Rule three is perhaps the second hardest rule in the “Building Blocks for Building Wealth”™ series. This rule requires that you take a fine tooth comb and go through your financial history. While doing this exercise, you’ll want to ask yourself:

  1. Over the past year, how much money did I make? Look at sources of income such as paychecks from your job, cash gifts, money from consulting work, etc.
  2. Over the past year, how much money did I invest into myself? This can be answered by looking at your savings accounts and other investment accounts (Retirement Accounts, CDs, Stocks, Mutual Funds, etc.).
  3. Over the past year, how much money did I spend? If you have a bank account, this is very easy to do (just look at the numbers in your debit column).

Special Note: Of the money you spent, you’ll want to break them down into major categories. The categories that I had were:

  • A. Housing (Rent/Mortgage)
  • B. Utilities
  • C. Student Loans
  • D. Medical Bills
  • E. Self-Care
  • F: Groceries
  • G. Fast Food
  • H. Shopping
  • I. Bank & ATM Fees
  • J. Other Loans
  • K. Miscellaneous

If you are anything like me, what you see will be absolutely scary. After going through my bank account, student loan statements and credit card statements, I quickly saw a pattern emerge. I had a hunch that I spent money in a reactionary way. By the time I was midway through examining my “fiscal year,” I KNEW that I was right.

I’m not a bad spender and on its face, I don’t even have bad spending habits. Like many people in my position, an enormous amount of student loan debt ($91k to be exact) and mounting medical bills (roughly $20k), I would say that I was doing pretty good on my sole income (after take home pay for the year, $23,600 — my tax return made me cry). Like much of the working poor, I was able to stay ahead of my bills and I paid them on time. I even had everything automated so that it would come directly out of my account and I wouldn’t have to worry about late fees.

Then something crazy happened – I had surgery.

I knew before I went in for my surgery that I didn’t have enough money saved up to carry me through the time off of work and I made the decision to cancel my auto-pay. If you want to know what happened, check out my Miss Celie Moment post. This was also around the time I began to shut down mentally. I’d been running in circles about leaving a job that reminded me of an abusive relationship; and when I looked at my finances, there were key moments that stuck out to me. In November 2012, I spent roughly $200 on a whim after a bad review from my Executive Director. In December 2012, I went to the movies and dinner and shopping as a way to cheer myself up. It was at this time that I found out I had a fibroid the size of a softball and needed surgery. In February 2013, after a clash with Senior Management, I spent roughly $300 on food, books and clothes (I should also mention that in February I was sleeping on an air mattress in my Cousin’s apartment).

But what also stuck out to me is that I would juggle between paying the bare minimum of a bill and paying a much larger sum on a bill based on my fear of adverse reactions. That same November, I paid almost $400 extra dollars on a student loan because I was afraid I was going to lose my job (my thinking – “better to pay a large amount at once in case I fall behind” – which is foolish). In December, I paid up and over on all of the utilities (don’t do this ever). In February, I transferred all of the money I had in my savings into my checking and again paid up and over on some student loans.

In each scenario, I was scared — terrified — that I wouldn’t have a job. Or that my health prognosis wasn’t favorable. Or that…

Well, it doesn’t matter what I was afraid of (looking back I can say that). What matters is that I now understand that realistically, I made decisions based on fear; and fear and finances are not good bedfellows. Now that I realistically know what my habits are, I can move into developing new ones.

Stay tuned for Rule 4: Build New Habits.

Have you examined your habits lately? What have you learned about yourself? 

My Financial “Miss Celie” Moment (#31WriteNow)

I find something very interesting happening as I write the “Building Blocks for Building Wealth”™ series. Well, not interesting because the more I think about it, the more I expect that to happen. What I mean is that I don’t post about a rule until I feel comfortable posting about it.

And I don’t feel comfortable until I DO it.

With that being said, one the next steps is to “Realistically Examine Your Habits.” By that I mean, take a sobering look at the things you do financially. I’ve written before about habits with money, especially bad ones, stem from something emotional. If you are like me, you’ve had lots of time to practice HIDING those emotions and so you probably don’t know the root cause of your money beliefs.

Today I decided to come face-to-face with one of mine — I don’t open my mail.

Largely, I get reminders of bills and their due dates. When something majorly traumatic happens in my life, those reminders escalate into notices of “Hey! Girl you know you forgot to pay your bill???” and if something absolutely crazy happens, then those turn into shut off notices. Now what does this have to do with a Miss Celie Moment.

If you’ve ever seen The Color Purple*, then you know that there is a pivotal moment for the main character Celie Harris Johnson. During the holidays, Miss Celie is preparing a meal for a large group and Shug (one of my absolute favorite characters ever) happens upon a letter from Celie’s sister, Nettie. Now, Nettie is in Africa and has been for some time after being forced to leave the Mr’s house because of “personal differences**”. As Celie prepares the meal, Shug tells her that she has something to show her and they find an empty room in the house where Celie finally sees the letter. Shug realizes that there have to be more letters because Nettie and Celie were absolutely close…and lo-and-behold, after searching through Mr’s personal belongings, they find them. Shug tells Celie, “Put them in order by date” so she can read them. It is in this moment that Celie faces a truth that she must have either felt foolish for holding in her heart OR it dashes whatever craziness she made up about why her sister (Nettie) never wrote her.

So what does this have to do with me? Remember I said I don’t open my mail?

Well….yesterday I was cleaning up and came across a huge stack of mail. I mean, some things go as far back as April when I had my surgery. The other thing that happened was that I had to face the realization that I worked over 40 hours a week at a job and couldn’t even take care of myself during an extended absence from work. Craziness. Bananas. Downright wrong.

Since April, I’ve been on a silent campaign of not opening jack squat and yesterday it really bit me in the ass (excuse my language). When I took my extended leave from work, I removed all of the auto-payments for loans and utilities from my bank account. I needed to control the payments that hit the account so it wouldn’t overdraft. And I did. But I never remembered to actually pay the bills. The end result:

  • 3 months behind on electricity
  • 2 months behind on phone bill
  • 3 months behind on 4 of 5 of my student loan groups

I’d put numbers to those things…but I don’t want to cry.

The thing I realized while putting my mail in order is that I had a habit of “out of sight, out of mind.” Financially, that’s a dangerous habit and it’s scary to face that part of myself. Fiscally irresponsible isn’t something I’d ever call myself, but that stack of mail tells me that’s exactly what I am. What’s even more stressful is that I’m like many other Black women (well, women of color in particular) in that my income doesn’t just support Me. To me, I realize that I’ve been unfair to others who rely on me which makes me selfish in the wrong way.

So during yesterday’s Miss Celie Moment, I learned a lot about myself. Now I think I can move forward somewhat on getting cracking on these financial goals.

Have you ever experienced a Financial Miss Celie Moment? If so, what was it? Don’t be shy, just share it below.

*It is a great cinematic piece. You should see it. No really. See it if you haven’t already.

**I don’t want to go into why she left. But see the movie…if you haven’t already.

Rule 2: Develop a New Mindset (#31WriteNow)

Thanks for coming back for the second rule in the “Building Blocks for Building Wealth”™ series. Initially, this was step 4 but I honestly had a LOT of trouble writing about this after the original Rules 2 & 3. Then it dawned of me that I could simply move it to the second step and after thinking about it, it works.

Developing a new mindset naturally envelops the next two steps so it makes PERFECT sense to put it here (I’ll give you a sneak preview — 3. Realistically Examine Your Habits and 4. Build New Habits).

Now Developing a New Mindset is hard! It requires you to take a hard look at yourself and to do some real work. For me, that meant taking a hard look at my relationship with money. I had to ask myself the following questions:

  1. What was my earliest memory of money?
  2. How was money modeled to me?
  3. What is my relationship currently to money?
  4. Why does it need to change?
  5. What areas do I need to improve?

Now, on its face, that series of questioning is easy. But if the answers were easy, face it, we wouldn’t be broke. Starting with numbers 1 & 2 (which I got while viewing an online life improvement seminar), I had to take a hard and cold look at myself. The first time I answered the questions, I actually pretended to just be an observer so the emotion could be taken out of it. I’ve put my answer to number one below so you have an idea of what could come up if you are taking a HARD look at yourself:

1. What was my earliest memory of money? It was Christmas in 1991 and my family (my Mom, myself and my two younger brothers) lived in Florida. I remember the apartment we were in being drafty and for some reason, this winter in Florida was a bit chilly. Because I was five and I believed in Santa Clause, I had planned on “camping out” on my sofa to catch how Old St. Nick would get into our chimney-less house. But as I sat on the couch, I looked at the wall. We didn’t have a Christmas tree but my Mom in her creativity, took a bunch of garland and hung it in a pattern of a “tree” on the wall. We then decorated that wall and my Mom said that next year, we’d have a tree. We just didn’t have the “funds”. Looking back, I realize how sad she was to share that with us but we were young and thought it was cool that our Christmas tree was sparkling. Seriously…it didn’t take much to please us. That night, I fell asleep before St. Nick showed up (I still can’t tell you how he got in) but I woke up to gifts being on the floor. Great! I’ll keep quiet until it was time for everyone to wake up. That day, the presents were cool. We got things we didn’t ask for, as a matter of fact, nothing under the tree had been a request but who cares!?! We had gifts! This was after a year of not having birthday presents so we were happy. And we got bikes! What made the day weird was a conversation I overheard my Mom and Uncle have about money and my Mom telling my Uncle, “Well, I’ll just pawn one of the bikes and get you the money that I owe you.” My Uncle said that he would just tell his Brother (my Dad) to send him the child support money that he owed. I walked away from overhearing that conversation not being able to really enjoy my bike. My Mom owed someone. She owed someone for the gifts. And she owed someone for the lights. And she owed someone for buying us groceries. And she always owed us something…and in my mind, she always owed someone because my Dad never sent his money on time. Probably because of his new family and I bet they had money. And lights. And gifts that they could enjoy. Never mind that….gifts that they ASKED for.

Now, after reading all of that, you can see why changing your mindset can be hard work. For me, answering those questions meant that I had to acknowledge that my earliest memory of money was one of lack and it brought up issues of anger with my parents (I was mad at my Dad for not taking care of us — his “first” family; and I was mad at my Mom for not being able to take care of us). For me to develop a new mindset with money, I’d actually have to work on forgiving those who are closest to me*. This forgiveness could help me in other areas, namely my relationship with my parents because they are definitely a BIG part of my finances (I’ll share more on how I’m partially supporting other households later).

The big thing I wanted to share is this — the absolutely GREATEST thing  in developing a new mindset around money is that you develop a type of freedom. You realize that you can let go of the negative feelings and emotions that creep into other areas of your life (think relationships) and work to build healthier habits in these areas.

So work on developing your new mindset.

What other questions have you asked yourself when examining your relationship with money?

*I’m still in the process of this. I’ll admit here that this is probably the LONGEST rule to work on. Trust me though, it’s something that you definitely want to deal with — and don’t be ashamed if you have to ask for help from someone else.

Click the link for Rule 1 — Rule 1: Define Wealth for Yourself

Weekly Financial Goals – August 5th – August 10th, 2013 (Day 5 of #31WriteNow)

Good day to you all! Since I’m actively working on being a better blogger through the #31WriteNow challenge thought up by the awesome Luvvie, I’ve decided to approach this blog in a few different ways. I know that building wealth is a constant practice and I want to make sure to be as transparent as possible without being overwhelming. So for this month, you all are getting some extra blogging awesomeness…and you can thank the challenge for that.

If you’ve been following my tweets (@Yng_Gftd_Brk), then you’ve probably read about my challenges with saving. Or just my challenges in general. One thing that always helps me is to share with others what I hope to accomplish within the big things that are going on in my life. I’ve decided to start a weekly practice of sharing with you all my Weekly Financial Goals.

Here are the “rules”:

  1. Each week, I will set five realistic financial goals on Sunday.
  2. Each week, I will share those five realistic financial goals with you all on Monday.
  3. Each week, I will give a progress report of how I did with my five realistic financial goals on Saturday.

Easy peasy! I think it would make it all the more fun if more of you joined in on this weekly practice via commenting or sharing it on Twitter. If you share it on Twitter, use the hashtag: #WeeklyFinancialGoals (I know!!! Snazzy, right?!?!). You don’t need to share a rationale for why you set the goal but if you’re led to do so, by all means, go ahead. You may inspire someone else with challenging themselves.

Without further ado, here are my Five Weekly Financial Goals for August 5, 2013 through August 10, 2013.

  1. I will not buy/eat out for lunch during the work week.
  2. I will save $20 in my Overflow Account.
  3. I will schedule an appointment with a financial advisor to speak with them about retirement accounts and investing for my future.
  4. I will set a budget for the month of August (I know I am super late on this and I’m a little shamed about it).
  5. I will actively work on draft 1 of my business plan for Professional By Design NOLA™.

Happy goal setting!

Rule 1: Define Wealth for Yourself

Welcome to the “Building Blocks for Building Wealth”™ series! I’ve been doing quite a bit of research on this topic because that’s exactly what my blog and my personal journey is all about! Before I go any further, I’d like to apologize for my absence and say thank you if you’ve continued to follow my Twitter account, @Yng_Gftd_Brk. Now without further ado, I present to you, Rule 1 in this series: Define Wealth for Yourself.

For me, building wealth is about more than amassing more riches than I could have ever imagined. It isn’t about having the latest model of any gadget or creature comfort (think car or remodeled kitchen). For me, my need to build wealth is a direct result of having been homeless as a child and living in poverty. It stems from the fact that there were most days and nights where things didn’t seem to make sense and we didn’t know what to expect next.

My need to build wealth stems from the fact that I want a secure future for myself and to live a life of relative comfort. These are two things that I wasn’t sure I’d ever have the opportunity to do and the more I thought about what it meant to amass wealth or to live in abundance, the more I realized that traditional rules that show you how to build wealth (save, budget, recalibrate) don’t really teach you the basics of building wealth. With my time away, I realized there are SEVEN basic rules that everyone must really understand if they are to build the wealth that they want.

The first rule is that you have to DEFINE WEALTH FOR YOURSELF.

This essentially means that you have to take stock of (1) what makes you happy and (2) what will support your happiness in the material sense. For one person, wealth is a certain amount of money in a bank account that allows them to not have to work again. For another person, wealth is being able to spend time with family and building memories (this may or may not take a significant amount of money). At any rate, in defining wealth for you, you have to ask yourself AND answer a few important questions. The three questions below have really helped me to start to think about wealth in a different light and I am beginning to realize that my wealthy life may look very different from what’s preached by many people.

  1. What does wealth mean to me?
  2. How would my life be different if I were wealthy?
  3. What can I do today to start living an abundant life?

As always, feel free to comment and share your thoughts and stay tuned for Rule 2: Realistically Examine Your Habits.