Dannie just accepted a full-time position in the tech field last week. She felt like she wasn’t really being challenged enough lately and honestly, she missed those consistent direct deposits 😂! I know she enjoyed creating her own schedule but she is skilled enough to make waaay more money in a traditional job (it’s a fully remote position so she’ll still have some flexibility built in).

With her new job starting in January and the raises and promotion coming my way in 2019, we’ll be able to reignite our financial journey and begin working towards FI/RE (financial independence/retiring early).

A lot of people have asked us what we do to prepare financially for each new year so we wanted to share our process:

1. Figure out your total income earned in the CURRENT year

We track our individual incomes in our budgeting spreadsheet each month so we can easily calculate this number. If you haven’t been tracking your income anywhere, you can also use your W2s (if they’re already available), add up all of your paystubs or log into your bank account and add up all of your direct deposits.

2. Calculate total expenses paid in the CURRENT year

Again, we use our budgeting spreadsheet for tracking this information. We can see the exact amount we spent on any individual category throughout the year as well as the total amounts for certain categories (fixed expenses, variable expenses, savings, etc.).

3. Estimate NEXT YEAR’S income

To start planning your finances for the new year, you’ll use the income you calculated in step one (total & monthly averages) to project what you’ll potentially make in the following year.

Take that number and add any additional pay you expect to receive:

• Pay Raises
• Bonuses
• Commissions
• Overtime
• Additional jobs/side-hustles

This should give you an idea of what to expect in the new year. Any significant increases will help you decide how you’ll accomplish any financial goals you may have.

Planning it out in advance helps you make smart decisions about how you’ll allocate your money going forward. That way, you won’t find yourself increasing your spending to match your increased income.

4. Estimate NEXT YEAR’S expenses by using the CURRENT year’s expenses as a guide

Use your expenses from the current year to estimate your expenses for the following year. Most things will probably stay the same but this is a good opportunity to figure out if any changes need to be made.

Will you be moving and paying a different amount for rent and utilities?

Did you spend way less on groceries during the year than you budgeted for?

This is the time to make necessary adjustments to see what might work in the new year.

5. Make a plan for your savings goals (vacations, special events, holidays)

We make some type of list with our goals for the following year for two reasons:

1. It helps keep us motivated and gives a way to hold ourselves accountable
2. We enjoy the feeling of crossing things off of our lists when they’re done 🤷🏽‍♂️

You need to incorporate a certain amount of intentionality for your savings goals. Instead of letting things sneak up and surprise you, plan for them in advance.

Want to take a vacation? SAVE FOR IT.

Want to go to special conferences and events during the year? SAVE FOR THEM.

Whatever it is, create some type of line item in your budget and save money towards that goal each month until you’re done.

The rule of thumb to remember is:

The earlier you start…the BETTER!

6. Fill out your January budgeting spreadsheet

You should have noticed that we are huge fans of budgeting spreadsheets. If you don’t already have one, you NEED to get one. We like them because they give you a way of clearly making a plan for your money.

Not only that, but they also serve as documentation you can refer back to for years to come. (We still have spreadsheets going all the way back to 2014!)

Put all of the numbers you’ve calculated during this process into your budgeting spreadsheet and see if there are any further changes to be made. Tweak it until you’re satisfied and then…

7. Step into the New Year with confidence!!!

Once you reach this step, you’re ready to bring in the new year with a renewed sense of confidence because you know your money will be on point!

***

We’ve been going through this process over the years and I can honestly say that it has been crucial for our financial success so far. Doing things this way has helped us escape the paycheck to paycheck cycle and also helped us become debt free.

I sincerely hope that this helps you prepare financially for the new year as well!

$tay Wealthy Friends,

— DJ

We used to watch her show religiously when it was on the air because she always gave great advice to the people that would call in.

Here’s what she had to say to the Breakfast Club crew:

Women & Money

She just released a new revision of her book called “Women & Money” and I really liked some of the things she talked about in regards to this topic:

She mentioned how women aren’t always involved in the finances as much as they should be. In our household, this is definitely not the case, but I’m sure you’ve heard stories of how this typically plays out.

Women are usually the most likely to take a back seat and let the man handle the finances, which leaves them completely in the dark. If something tragic happens to their partner, they suddenly take the reigns but have no idea what to do or where to find the passwords. This leaves them stranded right in the middle of sh*t creek without a paddle.

As if that wasn’t enough, our society is also set up to reinforce this idea that women should feel the need to nurture and take care of everyone. Even when they have nothing for themselves…

Suze said, “…they say yes out of fear of what people will say about them instead of no out of love for themselves...” I thought this was so important because you see women talk about spending their last dime on their kids, their parent, their friend, some special cause, etc etc.

They wear that fact as a badge of honor without considering the full picture. I agree with Suze wholeheartedly, you should never feel like you HAVE to help others if it’s going to come at the expense of your OWN life and well being.

We All Start Somewhere

During the interview, Suze gave the rundown of her personal story:

• She was a waitress for 7 years until the age of 29
• A few customers invested $50,000 into her dream of opening a restaurant
• She invested the money with a broker and lost ALL OF IT in 3 months
• She became a broker herself, sued Merrill Lynch and repaid her investors with the settlement
• The rest, as they say, is history! (Read her full biography)

This was such a clear reminder that, even though she’s a multi-millionaire now, she had very humble beginnings and got a late start in life. Her story reinforces the fact that we shouldn’t compare ourselves to anyone else because we honestly have no idea what it took for them to get to the level they’re currently at.

When you listen to the things she’s been through it helps you understand where her advice comes from. She speaks from experience because she has actually walked the walk and demonstrated the power of frugality, investing and being smart with your money.

It helps us all see that you can literally start from anywhere, but if you make the right choices, you can dramatically change the trajectory of your life.

Get Your Sh*t Together

During the interview, she listed off a few things people need to do in order to get their financial lives in order:

• Pay off your debt and save an 8-month emergency fund
• Invest in your 401k (especially if they match – invest even if you don’t have anything saved because it’s free money)
• Prepare for the worst by completing all of your important paperwork: wills & trusts, medical directives, estate plans, etc.
• You should have some amount of life insurance in place. Term life insurance policies are your best bet because you can get the cheapest coverage sufficient enough to cover you until you have enough money saved/invested to self-insure.

These aren’t the only steps you need to take but they are a great place to start for sure. (Our “Basics series” is also a great starting place!)

Never Forget Where You Come From

Dannie often struggles with the problem of thinking that she is “still” broke, even though she isn’t anymore. Even though this is the case, thinking that way is actually a good thing in some instances because it helps her continue to maintain a frugal lifestyle, even when she has the money to live differently (if she wanted).

Suze mentions in the interview how her early life still shapes the way she views things today. When you start making big changes in your financial life, you will have times where you have flashbacks of your previous life. Those flashbacks can either hold you back or help propel you forward.

“Everyone will tell you that I believe I’m still a waitress. When you’ve lived the life that I’ve lived you don’t take that out of you.” – Suze Orman

No matter how much success or freedom you achieve, never forget where you started.

Let the past serve as a reminder that will help you succeed in the future.

The American Dream Is Dead

Forget about a family, a new car and the house with a picket fence. Suze says that the American dream, as many people have known it, is dead.

The new dream for most Americans is to simply make it through each day.

Many people just want to survive, and that is a sad thing to realize…

We want to thrive and we think everyone else should have the opportunity to do so as well.

We changed our financial lives so that we could move beyond a mindset of survival and into a mindset focused on becoming wealthy and flourishing from the hard work we’ve put in.

“There is a highway into poverty but there’s not even a sidewalk out…” – Suze Orman

Truthfully, we can all be rescued from the poverty cycle, but it involves a complete mindset shift.

She said that people honestly believe that they’ll never be able to retire, raise their credit scores, own a home or reach any type of financial freedom in this lifetime without winning the lottery or receiving some type of inheritance.

That belief definitely holds many people hostage to lives where payday loans are desirable, overdraft charges are expected and crippling debt is just a normal part of life.

Well, we say: “F*ck that!”

We want to see people chase the dream that allows them to take control of their money, build wealth and live the lives they deserve.

Relationships & Money

Suze talked about how one of the leading causes of divorce in America is arguments over money. I loved the fact that the interview delved into this particular subject because it’s something people don’t talk about very often.

This typically stems from the fact that, in our society, money is viewed as a taboo subject that isn’t meant to be discussed. Avoiding the discussion doesn’t make the issues disappear though, and people wind up in relationships where money becomes a problem very early on.

Because, whether you talk about it or not, your relationship with money will find it’s way of showing up in your personal relationship.

I say this because, like most people, Dannie and I didn’t discuss our finances very much before we got married. By the time we realized how bad our financial situation was, we had a huge mess to clean up. Discussing these things in depth beforehand would have helped us avoid this.

“FICO first, then sex.” – Suze Orman

Suze said everyone should be having conversations about money with their partners very early in the relationship. You need to know as much about your partner financially as you know about them intimately.

Suze Wants You To Retire (Kind Of) Smart

It’s becoming apparent that people are living much longer than they used to and they are also working a lot longer as well. Suze says that she believes people should work until they are 70 before they retire in order to maximize their social security withdrawals.

There might be some validity to that argument, but…

WE DON’T WANT TO WORK UNTIL WE’RE 70!

Dannie and I are working towards achieving FIRE (financial independence / retired early). We’re going to achieve this by living well below our means, investing intelligently and increasing our income by any means possible. Suze would probably yell at us for wanting to pursue this goal though.

Recently, she claimed that she absolutely HATES the FIRE movement. She passionately defended this opinion on Paula Pant’s Afford Anything podcast. Not long after that interview, she explained that her view of the FIRE movement was extremely misguided due to some faulty information that was shared with her…

Either way, personal finance is personal so you have to work towards your own goals regardless of what any financial guru says you need to do (more thoughts on this point).

Self-Worth = Net Worth

Perhaps the most important thing she said in the whole interview was the fact that your self-worth is your net worth. Most of us don’t like to admit the fact that our financial lives are often a direct reflection of how we feel about ourselves.

“You have to know who you are before you can create what you deserve to have.” – Suze Orman

Listen, we have all made mistakes so don’t punish yourself for anything that has happened in the past. Start making adjustments to make your future a little brighter.

She said that fear, shame and anger are all internal obstacles to wealth. You have to remove them from your life and remember that you are never a victim to your circumstances. You have the power to change them.

***

We found Suze Orman relatively early on in our financial journey so it was nice to see her interview on the Breakfast Club because that means she got to share some great advice with their diverse audience.

We know a lot of people still haven’t watched the interview yet, so we wanted to give you an idea of what you can expect. You can watch the full interview in the video linked below.

Enjoy!

$tay Wealthy Friends,

— DJ

To be honest with you, since I was little, I’ve believed that if I’m resting or not doing anything that I think is constructive at all times, I will somehow end up in poverty with no way to get out.

I watched people struggle my entire life and once I found myself in debt as an adult without any savings or a job, I went right back to that same toxic way of operating.

I didn’t know it then, but my thinking contributed a lot to my heart palpitations, stress, and depression. There’s a Post-it note on my desk that says “Show yourself some compassion”, yet I rarely do. One of my favorite things to do is to be hard on myself. Now that I’m out of debt and financially stable, that mindset is still alive and well within me.

My temporary amnesia paired with a touch of insanity usually kicks in whenever I’m in a period of transition.

Who am I? Am I a burden to DJ? Am I keeping us from making “real progress”?

These are the actual thoughts that show up during my moments of panic. And during those moments, I immediately attempt to abort all of my plans and goals to become, what I consider, “more realistic” until…

DJ brings true reality to my doorstep.

He literally talked me off the edge of insanity and reminded me of how far we’ve come by pointing out our budget spreadsheet that shows how all of our bills will be paid this month with money leftover. He showed me our checking account with a one month buffer inside of it and showed me our fully funded emergency fund.

Yet, I continued to cry because I just couldn’t see how all of that was what we have fought and worked so hard for.

I didn’t get it until later that night when I randomly logged in to my personal checking account to check my billing info and saw that there was $4,000 in there. A whole $4,000 that hadn’t been set aside for a specific bill or purpose.

It was just silently living in my account while I’m crying to my husband because he won’t let me go work part-time in Amazon’s warehouse…WHAT THE HECK?!

How do you not know that you have an entire $4,000 when you were scraping for pennies so many times in your life? How do you forget about getting paid when a few years ago you didn’t even have a payday to afford to pay your bills?

The answer is simple, once you are financially stable those things don’t consume you anymore and I hadn’t even noticed the money. I’m no longer poor or broke. I’m not a burden to my husband. I do make money even if it is irregular. My future is bright and I have to stop acting like I’m one moment away from being destitute!

Mindset Matters.

The poverty mindset and fear that I’ve carried for 28 years ruined my health, destroyed my faith and knocked me off my destined path multiple times. Not because I truly had something to fear but because I thought I had something to fear.

Getting your finances together is a wonderful adventure, especially if it includes obliterating debt. But, there comes a time when you’ll reach your goal of financial peace and you’ll have to be strong enough to let go of the thinking that sustained you in your prior stage of life.

Will I ever forget the struggle and lack that I’ve experienced? No.

However, I do want to enjoy the peace that comes with having your -ish together and being able to follow your dreams and take risks with no regrets and I hope you’ll do the same when you reach whatever your idea of financial stability is!

$tay Wealthy Friends,

— Dannie

In today’s world, it seems as if everything is a competition. We’re always checking to see how everyone else is doing in life and comparing it against our own (especially in this age of social media). I almost hesitate to say that it’s a bad thing because a healthy dose of comparison can actually be used as motivation.

Where we get things wrong is when we let someone else’s (perceived) progress make us feel bad about our own.

We had that problem, and we know that plenty of other people struggle with the same issue.

STOP comparing yourself to others.

At some point, we have all probably compared ourselves to someone else. It’s a habit that many of us have and don’t even realize. If you aren’t careful, these comparisons can get you into trouble.

Not only do people try to “Keep up with the Joneses” by buying things they don’t need, they also try to “Keep up with the Joneses” by bragging all over the place about their financial progress.

What do I mean by that?

If you scroll through certain money-related #hashtags on Instagram, you’ll see pictures of people touting their latest debt payoffs, monthly savings, and accomplishments.

Most people are genuinely sharing just to share, but some people share just to say “Hey, look at how well I’M doing”. And there’s a big trend of people creating brand-new accounts for the sole purpose of sharing their financial journey and interacting with people.

There is nothing wrong with this in theory, but what typically happens is people create these accounts and then get discouraged by what other people are doing and then they end up abandoning their account and their progress.

Creating a special social media account to share your “progress” will not fix your financial problems, but a budget and a plan will.

Be grateful.

Always remember:

Progress is progress.

Stop focusing so much on what you haven’t done. Who cares if you haven’t paid off $60,000 worth of debt or saved up $100,000.

If you’ve only been able to create a budget and start paying your bills on time, that is STILL an impressive accomplishment. Be proud of your progress and your journey.

Be careful that you’re not comparing your beginning to someone else’s middle or end. You have no idea what they had to do in order to get where they are today.

So, always be grateful for what you’ve been able to accomplish and forget about what other folks are doing!

Make & follow your own plan.

I’m a runner, so I’m going to use this analogy:

When you’re running a race, if you constantly try to keep up with the people in front of you you’ll eventually tire yourself out. Most likely, that will cause you to slow down and quit.

It’s much better if you just focus on running YOUR race at your own pace.

The thing you have to keep in mind is that a slower pace is STILL progress.

When we first started our journey, we quickly realized that we needed to come up with our own plan instead of trying to follow whatever advice was the most popular. You don’t have to follow a certain set of steps or various plans created by some finaicial guru.

You need to do what works for you and your situation.

Once you stop comparing yourself to others and trying to follow the trends, you can start making real progress. If your eyes are always watching what other people are doing, you’ll miss what’s happening in your own life.

***

Sometimes, we just need a reminder of what’s truly important. Keeping up with other people isn’t the goal, making progress is the goal.

So, stay encouraged, stay motivated and keep kicking a** Wealthy Friend.

You’ve got this!

— DJ