Posted February 12, 2021 in Podcast
You Can’t Out Earn Your Bad Financial Habits
Do you have enough money to pay off your debt as fast as you like?
If you take a walk down the street and meet ten people, it is more likely that eight of them are in debt. How about you? Are you a part of about 80% of Americans caught up in some debt, struggling to pay it off as soon as you can?
I had a conversation lately with a friend who has an amazing mindset surrounding money. One of his statements caught my attention so I decided to create a solo episode on the topic. He said, “You can outearn your problems.”
I completely agree with him — he’s simply encouraging people to get bigger than their problems. By figuring out how you can get bigger than the problem and make more money, you will pay off your debt sooner than ever!
But here’s a simple (and sometimes hard) truth. If you can’t manage the money that you have right now, why do you think you will be able to handle more money? It is most likely that you will still end up in debt even if you are given more money unless you break some bad habits.
A lot of people may think that most wealthy people are just lucky to be born rich by inheriting wealth from their billionaire parents. But the facts show otherwise. Most billionaires were not born rich. Accordingly, only 20% of them inherit the money. So, there must be some secrets most billionaires have in accumulating more wealth, and today, I’m happy to share with you two secrets to start your journey towards financial freedom!
Secret #1: Live Below Your Means Through Simple Budgeting
Living below your means may not sound so cool. It’s not a very sexy phrase. But it is not necessarily about saving money and cutting down costs. Instead, it means taking better control of your finances so they won’t control you.
As a rule of thumb, your spendings should stay at least 15% less than the amount of your earnings. This way, you still have enough left for your savings or for the emergency fund. A simple lifestyle change is a good way to start living below your means, and the first few steps are to create a budget plan and consistently keep track of your spendings.
Budgeting is a critical step in getting you out of living paycheck to paycheck. By having a solid understanding of how much money coming in and the total amount of money going out, you will gradually slip out of the never-ending debt cycle. You will also realize the unnecessary expenditures that you can live without and start doing away with them. You will soon appreciate how much money you can save through simple budgeting with just a few minor changes in your lifestyle.
Another way of living below your means is to get rid of credit cards. Instead, pay everything in cash. If you don’t have money, then don’t buy unneeded objects at all, even if these things are on sale with tempting discounts. By putting aside your credit card, you will learn to spend based on the amount of cash that you have on hand. If you want to buy something important, then save some extra money each day until you have enough cash to pay for it.
Some people follow the 50/30/20 budgeting framework rule, which proves to be quite effective! It is a simple budgeting technique that works. From your total monthly income, set aside 50% of the amount for your needs, 30% for your wants, while committing the remaining 20% of your monthly income to debt repayments and savings. This method may be very challenging at first, but you will soon get the hang of it and reap the benefits!
Secret #2: Address Any Destructive Financial Habits
There are some bad habits that are hard to break in many facets of life, including finances. These destructive financial habits keep us trapped in the endless debt cycle. It is crucial to address these destructive habits, and the first step to defeating them is to identify them. Sometimes, you are not aware of some bad habits that affect your financial stability, allowing you to live a lifestyle way beyond your means. The result is accumulating debts.
Impulse buying and going overboard on sales is a common habit that can go out of control, leaving you with empty pockets or debts. When there are sale madness events going on in retail stores or online shops, it’s easy to get overwhelmed by the irresistible marketing hype of these establishments. Most of the time, you end up buying unnecessary products you don’t really need at all or that you seldom use. Check out your drawers or shelves, you might find some items that you bought at a sale event that remained unopened for weeks or months — that’s proof of impulse buying.
Another hard financial habit to break is using credit cards for the points. Do you really think that these credit card companies are giving away money through reward points? — no way. Everything was calculated, and those loyalty rewards are meant to entice cardholders to use the credit card more often so that they can hardly pay the balance in full and settle for the minimum amount due. This is where they go for the kill by charging exorbitant interest fees on the balance. So, don’t get excited about those loyalty points to avoid falling into their debt traps. Better yet, get rid of your credit card, if possible!
Likewise, late payments on bills is another habit that could get you in deep financial trouble. The high-interest fees on late payments will soon accumulate, and the compounding interest will keep adding to the principal amount. So, don’t be surprised if the balance remained the same or even higher despite the many payments you have made. What you can do is plan your payments ahead and keep track of the due dates so you can pay your bill ahead of time to avoid the interest charges. Stick to your budget plan, and interest payments should be the least of your worries.
Another bad financial habit is paying for unnecessary subscriptions. Always make it a habit to go through your statement of account and check if there are billed subscriptions to services that you are no longer using. It could be a cable subscription, and you seldom watch cable programs because you are hooked on Netflix or other streaming services. Or you could still be subscribed to a newsletter that you never read anymore. The same thing applies to membership fees to workout fitness programs or yoga sessions. Do you still need them, or you can already manage them on your own? If you go to the gym for an hour on the treadmill, why not walk instead around your neighborhood or across the park. You will save money while living below your means.
These are just a few of the many bad habits of those living paycheck to paycheck. By addressing the destructive financial habits and consistently showing diligence and restraint to living below your means, you will become wealthy!
Interested in Learning More?
Guys, I hope these two secrets I’ve shared can help you in your journey towards financial freedom. If you’re in debt like I was before, I have another secret to share with you — this is the special third secret.
My wife and I were financially destitute, and we managed to pay off our $380,000 debt in 38 months. But the biggest challenge was how to get my spouse on board with the finances. I have collaborated with the best marriage and relationship psychologists I’ve known, and we’ve put together a comprehensive video training on the three mistakes to avoid when talking about money, the four steps for having successful conversations about money, and how to tell if you have a relationship problem or just a money problem.
I understand that this training is something that requires an investment, but I have decided to give it away for free! To get the link to the video, just text the word “couples” to 1-763-294-8100. This will be a complete game-changer for you and your partner.
If this sounds interesting to you, go ahead and send the text message! You can also find me on Instagram, Facebook, or LinkedIn to learn more about my life-changing programs! If you find this episode of great value to you, please share the episode with your friends. I’d also be so grateful if you took a few seconds to write a five-star review on Apple Podcasts. Also, please tag me,@kyle_depiesse, on Instagram with a screenshot and your greatest takeaways from this financial Friday session! Remember, you can become financially-free by outearning your bad financial habits. I am rooting for you.
To your success — Cheers!