Lisa came to me with problems that were not unique. She was living paycheck to paycheck, had racked up some credit card debt and had stopped payment on her student loans. She, like many people, thought the answer to all of her self-proclaimed money problems was to earn more money, but when she got a significant raise her problems only got worse. That’s when she reached out to me!
We started with her goals. Lisa wanted to:
– Pay down $5,000 of credit card debt
– Come up with a plan to pay down her $50,000 of student loans
– Start actually saving money
– Live a full and vibrant life
Here’s how she achieved her goals.
We took an annual view. I have every single person I work with track their spending. It sounds so simple but we very rarely spend what we think we are so it’s a hugely eye-opening and important process. If you don’t believe me try it. If you do believe me, try it! 🙂 During our first meeting we laid out everything she planned to spend and earn in the next twelve months. This shows us the true impact of each expense and also accounts for bigger expenses like trips or gifts that don’t happen regularly. This is just a guesstimate because at this time we were still figuring out what she was actually spending and earning via her money journal. When we lay out the next year, it can be a bit of a surprise yet also validating. You might think, “no wonder money felt tight! I was spending $10,000 more than I was earning!”
We planned her spending each paycheck. We worked out of a shared google doc and went through and planned her expenses for each paycheck. We mapped out bills as well as expenses associated with how her week was planned. Given what was already in her bank account, plus her earnings from the paycheck, how would cash flow look? When you map it out, it’s easy to see if one paycheck a month has a lot more bills coming out of it. It can be really helpful to move some bills to the other paycheck to smooth spending out. With any extra money left over, we built up her checking account buffer and then started putting money toward her credit cards. #1 goal in process!
She became a saver immediately. One of Lisa’s goals was to become a saver and we could make that happen immediately by opening up an online savings account and setting up an automatic transfer. It’s ironic that we work hard for our money, prioritize our bills and never pay ourselves! Once we turned saving into an expense that was as important as a bill, Lisa became a saver! She was transferring over $100 per paycheck to her online savings account, while paying down her debt.
She got clear on what mattered to her. One of the keys to Lisa’s success was that she got clear on what mattered most. She realized what was truly treating her vs. treating her in the moment and she was able to prioritize her spending on what was most important. This is the trick to living a fabulous meaningful life while saving. You just have to let go of the waste!
It was an absolute honor and pleasure to work with Lisa because she had big goals that she was ready to work for. She made real changes in her life! I’m happy to report that by the end of our four months working together, Lisa had paid off her credit card debt, saved over a thousand dollars and created a plan to pay down her student loans that she felt great about. She was happier, more relaxed and confident about her finances and was living the fabulous life she wanted! Woohoo!