11 Steps to Transform Your Finances (For Good This Time!!)

I wish everyone would just wake up tomorrow morning and say to themselves, “You know, I’ve really been spending foolishly. It’s time to make a change…”, but for whatever reason, people just don’t naturally do this…

If you want to transform your finances, you’ve either got to get annoyed about something, or life just needs to scare the hell out of you.

That’s what happened to me.

I distinctly remember sitting at our computer desk, realizing that we were actually going backwards financially. And then it happened…we got the first (of many to come) student loan bills… I knew we couldn’t pay them, and it freaked me out (and honestly, made me a little mad). I knew at that point that something had to change!

If you want something to change in your life, you’re going to have to get mad about something…

• Your crummy job

• The fact that you never have any money left at the end of the month

• No retirement savings

• No college savings for your kids

• And what if you lost your job? What would happen?

If there’s no drive behind your change, it won’t last. Light a fire under your butt (metaphorically of course) and get emotional about your finances!

Are you in credit card debt right now?

• How about car debt?

• Maybe even student loan debt?

• House debt?

It’s time for you to set a big goal. Something like…

“In 2 years, I’m going to be debt free of everything except the house.”

Set a date, write it down, and then put that goal up where you’ll see it every day. If you aren’t overly passionate about that goal now, you will be when it stares you in the face every day and you make no progress toward it… Frankly, that should just infuriate you and drive you into action!

If you set a goal for yourself to, say, run a full marathon (that’s 26.2 miles…which equates to like 4-5 hours of constant running!) by next year, that could be pretty daunting.

• You’d probably start out all excited and go run 1.5 miles on day one.

• Then maybe 2 miles on day two.

• Then you’d struggle your way up to 2.2 miles on day three…

• And then by day 4 you’ll start thinking about how big of a gap there still is between 2 miles and 26 miles… and then you’ll slowly fade away…back to the couch, never to achieve your marathon goal.

The same is true for your finances.

Over the past decade, you’ve been living a certain way and have continually been in debt, probably driving yourself deeper and deeper in the hole over time. And now, you set a goal to pay off something like $60,000 in two years… Those first couple days will be exciting…and then you’ll realize that you miss your friends so you take a night off on your strict budget…and then you get an unexpected bill in the mail….and then you get sick and have some medical bills to pay.

And then guess what?

You fell off the wagon and have little hope of ever reaching your goal.

How do you combat this?

Make smaller goals that will help keep you on track for the bigger goal.

Let’s stick with the example I gave above – you want to pay off $60,000 in two years.

• That’s $2,500 a month (whoa!), or approximately $577 a week ($60,000/104 weeks)

• It’s time to first set those goals so you know where you need to be in a week

• Then, let your mind start figuring out how to do it! (even though it may seem impossible)

And, not only should you set up these mini-goals, but you should also set up mini-rewards for achieving them!

Related: How the Debt Snowball Really Works (with a Debt Snowball Calculator For You!)

Here are the rules of thumb when it comes to the different categories of your budget.

• Your house payment should be no more than 25% of your take-home pay

• Your cars shouldn’t be worth more than 20% of your yearly income

• Groceries shouldn’t cost more than $200/month per person

• And, if you’re in debt, you probably shouldn’t be paying for cable (it’s not time to sit on the couch and relax, it’s time to get to work!)

If any of the above are out of whack, you should correct them immediately. Yes, this might mean moving or selling your car, but if you really want to transform your finances, these are the steps you’ll need to take. In the end, you’ll be glad you did.

Beyond the big categories listed above, there’s lots of other stuff like:

• Phone bills

• Car insurance

• Home insurance

• Internet bills

• Utility bills

• Medical bills

• Student loan payments

List them out for yourself. Start going line by line and ask yourself…

1. How important is this to me (and can I get rid of it altogether)?

2. Could I get this bill lowered?

It’s one thing to identify the bills you need to reduce. It’s a whole other exercise to actually make the long phone calls and negotiate those bills to a lower amount.

Pick what you think is the easiest bill to change and commit to making the phone call before the end of this week.

Tell the agent on the other end of the line that…

• Money is tight and you’re re-evaluating everything you’re spending your money on.

• You saw a better deal with competitor “XYZ” and you’re considering going that route.

• …Unless of course, they can give you a better deal on your monthly bill.

• “Is there anything you can do?”

After you conquer one bill and get it lowered, the experience can actually be quite invigorating! Now, tackle the others and see what you can do! I think you’ll be surprised how quickly you can get a reduction in your monthly bills!

Do you have any idea how much you paid in taxes last year? Do you know what is being taken out of your paycheck?

For many, they know when their paycheck comes in each month…and that’s about it. They really have no clue what gets taken out of it, if it’s the right amount, or if they’re being price gouged for a product that should be half as much!

Here are some of the things you should be asking yourself, and what to look for:

• How much did you earn last year? Could you have shown fewer earnings and therefore paid less taxes?

  • By putting money into a child’s college fund or a Health Savings Account, you could have reduced your taxable income on spending that you were going to make anyway!

  • And, if you’re in a position to do so, you could put money into a 401k and reduce your taxable income as well!

• Do you have insurance payments coming out of your paycheck (via an insurance company through your work)?

  • Are those amounts appropriate?

  • Maybe you should call a couple of other competitors to see if those rates are competitive

• Is anything else being auto-deducted from your paycheck?

  • Is it necessary? Could you cancel it?

  • If you need it, could you reduce the amount?

Here’s a biggie if you truly want to transform your finances. If you want to pay off huge chunks of debt every month, it’s time that you improve your worth at work so you can earn a bigger income.

How can you begin to improve your worth?

First, start with the simple stuff:

• Show up to work 15 minutes early every day to get prepped and ready for all your tasks

• Don’t ever miss a day

• Talk to your boss about what more you can do and what they might need help with

Then, move on to the bigger stuff that will be more challenging, but could land you more money in a short period of time.

• Evaluate your job and the company you work for

  • Will the company offer you better wages if you prove yourself in your role?

  • Is there room for advancement from your role?

  • If there is, work hard and continually think about what needs to get done and what could be improved

  • Perhaps take some classes (for a degree or even certifications) so that you can bring more skills to the table

• If your company likely won’t advance you, start looking for companies that will

  • Update your profile on LinkedIn

  • Start taking note of other companies nearby that might offer you better wages AND an opportunity to move up in the company soon

  • And, if you’re willing to move, keep your eye out for a better job in another area (they might even pay your moving costs!)

According to a survey by BankRate, more than half of the millennials out there have a side hustle. Isn’t that insane?

• They’re mowing grass,

• Starting websites,

• Writing code,

• And some are even making dollhouses…

Basically, millennials have learned to hate debt. They see what it did to their parents in the last recession and so they’re charging hard to get rid of theirs and to start a better life (a no-debt life) for themselves.

And, the best way to do that…is to work yourself ragged until you’ve accomplished your mammoth goals and officially transformed your finances!

It’s one thing to put your head down and charge forward on all your debts (which can be good for a period of time), but if you do that long enough without looking up…chances are that you’re going to pound your head into a wall…

For example, when I was 23 years old and looking for my first job out of college, I was actually offered two at the exact same time.

I had the choice between becoming a:

1. Pricing analyst at Office Depot headquarters for $16 an hour, or a

2. Bag room attendant at a local golf course for roughly $18 an hour (after tips)

If I was focused solely on paying off my debts, I would have taken option #2! It earned more money, it probably would have been more fun, and I probably could have even golfed for free whenever I wanted!

BUT, thankfully I thought about the long term. I knew that getting into Corporate America and climbing the ladder over time would yield me far more money than that golf course job. Sure, those first couple months/years of price proofing weren’t that fun, but that experience helped me get to where I am today – a senior financial analyst!

Take a minute and write down your long term goals:

• When do you want to be out of debt?

• Do you want to be married?

• Have kids?

• Would you rather live somewhere else?

• Do you want to retire extremely early?

• Would you like a completely different career path?

Make sure that, even while you’re putting your head down and tackling your debt, you’re still working toward your long-term goals!

If you truly want to transform your finances (and do it for good this time), you’ve got to be super-intentional about who you’re hanging out with.

Why?

Because what you talk about, think about, and complain about, has a direct correlation to your success in life.

• If you constantly hear about our rubbish political leaders, how employers are screwing you over, and how our entire world is going down the toilet…chances are you’re not going to be excited about learning and growing as a person.

• If, instead, you hear about people winning, about how they’re capitalizing on the many opportunities in the world, and how life could be free and easy if you just take the right steps…then you’d probably believe it and start kicking some tail out there in the game of life!

Want success in your life? Want to transform your finances sooner rather than later? Then surround yourself with others that are either headed in that direction, or that have already arrived at the place you want to end up.

Unfortunately, transformation doesn’t happen all at once. It comes with baby steps – just one small action after another – until, after a period of time, you realize that you actually accomplished something (even though it doesn’t really feel like you’ve moved the needle that much)!

But, with those constant improvements and wins, you’ll be excited to do more, to do it faster, and to succeed to even higher heights than you ever dreamed possible when you first started!

It’s time for you to start. To start today! You’ll never regret that first step.