It’s easy to say, “do this” or “do that,” but I will be the first to tell you that, through the years, I’ve adjusted my financial model multiple times to cope with the realities of urgent circumstances.
In fall 2017, I travelled to Japan for a two-week vacation. My friends were incredibly generous in paying for most of my meals and letting me stay at their homes. So, my main expenses were services (like massage), the occasional toy or gift, transit, and a few solo meals.
I’d budgeted a certain amount of money for my trip and was proud of myself for coming in well under after returning home to Canada.
And the trip was well-earned and well-deserved. I’d worked hard, done right by people (as much as I could), and besides, I was starting to burn out. My emotional resilience was at an all-time low.
From about 2015 to 2017, I thrived financially. But everything started to change after I returned from Japan.
First, my car broke down. So, I had to replace it. Then, the government chickens came to roost, asking for an exorbitant sum of extortion (otherwise known as “taxes,” apparently – you live and learn).
Since that day, I have survived. I have had good months, for sure, but thriving is now a faint memory. And that has been an important lesson all its own.
One thing I can say about survival is that it keeps you on your toes – you rarely if ever find yourself resting on your laurels!One thing I can say about survival is that it keeps you on your toes – you rarely if ever find yourself resting on your laurels! Click To Tweet
And so, what I want to share here are some truisms, some principles, that probably will never go out of style, unless our global financial model changes drastically in the coming years (which I’m not writing off).
It’s remarkable how few principles have stood the test of time in my life.
Pay Yourself First
It’s a hard lesson to learn, but it’s the most important one you can ever internalize.
The government, the credit card companies, your services providers – name anyone that is not you – they will never care about your financial well-being as much as you do, except to get every penny out of your wallet they possibly can.
Bills can honestly wait. They tend to be long-suffering. And I’m speaking from personal experience.
If you want to maintain a good relationship with billers, then it would be wise to stay in regular communication with all the companies you have an outstanding balance with.
But before you throw the total balance of your paycheck on your credit cards, you should sock away at least 10% of your income into a savings account. Even if you can’t pay all your bills in full.
Face the reality that, at minimum, the government is going to come looking for that 10% next year, anyway.
If push comes to shove, and it will (economic meltdowns seem to happen every decade or so), no one is going to take care of you. So, you take care of you.
Pay off Your Smallest Debt First
There are obviously different schools of thoughts on this, but I find you can get more momentum in your financial life by paying off your smallest debts first.
Since I have had success with this, it stands the test of time as a principle.
Establish a Clear Financial Picture
People tend to fear monitoring their finances, but when you’re trying to pay off debt or work your way out of a trying circumstance, you want to be as clear as you possibly can be on a few things:
- How much money is coming in?
- How much money do you have immediate access to in a crunch (balances owed, tax credits, savings, etc.)?
- How much money are you spending?
- How much money are you owing?
If you aren’t clear on these four things, you will find it challenging to move the needle on your financial life.
Clarity has a way of eliminating fear, which is likely the opposite of what you’d expect.Clarity eliminates fear. Click To Tweet
Leverage Whole Life Insurance Plans as Your Infinite Banking Concept
Since we’re talking about things that are working for me now, this one is worth mentioning.
An Infinite Banking Concept leverages the compound interest associated with whole life insurance plans to help you become your own banker.
My policies have been a lifesaver for me in the preceding months. I’m not sure what I’d do without them.
If you want to get started with your own IBC, though, you’ll want to talk to a qualified expert. As with anything else, there are legitimate service providers and money-hungry shills, and you don’t want to end up with the shills. So, do your due diligence before committing.
At the end of the day, you’ve got to do what works for you. But I honestly can’t see too many situations where the above wouldn’t work, regardless of your financial goals.
Outside of these principles, most things are fair game, whether it’s setting up multiple savings accounts (“buckets” as we used to call them), investing (consider that everything is speculative), or buying a home (can’t make that decision for you, but for me personally a home, car, or boat has never equated an “asset”).
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