7 Goodbye Broke Principles
Keep more of your income. Your income is your biggest wealth building tool, so practice keeping more of what you earn. It’s not about how much you make, it’s about how much you keep. Contrary to popular belief–if you work, wealth is well within your reach. Like, right in your hand every pay day. So if 50% or more of your money is going out to creditors each month–then you are removing your first step toward building wealth. Investing and entrepreneurship are NOT the first steps to wealth building. The money in your hand, right now, is. If you keep more, then you have cash to invest. Then, you can start a business that is NOT heavily leveraged (cough–ensnared) with debt. And, this principle applies to people on fixed incomes or living in the projects on welfare. Your ability to get off welfare is based on how smart you leverage yourself by using those government dollars to your future’s advantage.
Live at or below your means. Actions to consider taking are downsizing your lifestyle, selling or downsizing your home, getting roommates, stop financing cars, furniture, cell phones, and other depreciating items. Suspend leisure trips/vacations, paying for entertainment and wardrobe shopping. Choose self-grooming over salons and barbershops. There is a lot to unpack about how we have been propagandize to stay living above our means which reduces our monthly income which is–let’s say it together–“our biggest wealth building tool.” I will unpack my thoughts on this in future posts. So yes, these lifestyle changes are uncomfortable. However, the million dollar question is how bad do you want financial freedom?
Take action to eliminate all debt. Again, for the people in the back, your income is your biggest wealth building tool. When you start making lifestyle choices that help you keep more, the sooner you can start paying down debt. As soon as you are able, one effective strategy to eliminate debt fast is to negotiate with your creditors–where possible. This strategy works best when you receive a settlement offer from a creditor or are severely delinquent (i.e., charged-off). Use any new disposable income to position yourself to have enough cash to make them a final settlement offer. Unless you are in a position to make a final settlement offer, don’t contact the creditor to negotiate. Just prioritize paying those debts last. If you get a settlement letter from them, hold it until you have cash to pay it off the day you call. Know that collection agencies are in the business to collect whatever they can on the debt they purchased at a discount as fast as they can. So, contrary to what they say, they have some wiggle room. Use that to your advantage as they want you off their call list. Oh! Be ready to walkaway when they play hardball. For example, I made a hospital creditor a decent cash offer in April to settle. It was a bill I knew was very over priced. They would not budge. They wanted the original balance. I told them to call me back when they are ready to accept my offer. It’s December. And, I’m not pressed. It’s already ruined my credit score, so they can’t use that tactic to threaten me. I share this to illustrate that it’s to their advantage to work with you and make a deal–at these points. It was their stupidity, greed, and loss. Having paid pennies for the debt, they would have still, likely, made a profit if I offered 30% of the original balance. I offered 50%–which I considered a win-win. So, if I were the owner, I would have fired that agent for not negotiating on an almost three year aging balance–when the debtor, voluntarily, called you with cash in hand ready to pay on site. So, don’t let them intimidate you. Clearly, some of them are not the sharpest pencil in the box.
Think like an investor about student loans and avoid them. If you must finance your education, think like an investor. Ask, what is your $50k African-American Studies or (x) degree worth in the labor market place today? What demand is there for people with this degree and how much do they pay? If the going salary for this degree is less than $50K you made a bad financial investment. You are now upside down on your education loan. While this affinity degree may hold other non-monetary value to you, it has little to no value in the labor market to return the money you invested (i.e., breakeven) or provide you a steady return on your investment (i.e., ROI aka profit). The most valuable college degrees in the labor market are STEM and business related.
Tell your money what to do each month with a budget–as Dave Ramsey says. Use the envelope system to ensure you don’t overspend or create overdrafts. If you don’t take care to account for where your money goes each month, then that’s very poor stewardship and you don’t deserve to be wealthy. You will remain a resident of Brokeonia and borrower.
Start saving. I prefer the Dave Ramsey Total Money Make-Over method. Start saving by, first, creating an emergency fund account of at least $1000 and up to 3 to 6 months living expenses. Murphy’s law loves to show up and harass broke people. But like magic as soon as you stop spending every dime you make and start–habitually–putting some away for rainy days, Murphy leaves you alone.
i Start investing. I have a mouthful on this one. First, I recommend educating yourself on legal and sound investment options—like owning a business, owning real estate, stock market, or investing in other businesses directly, (e.g., start-ups, IPOs). But before you do, take ample time to ensure your sources are credible. For, everyone is a coach with a course, today. So you want to make sure you do your due diligence on whoever is offering you an investment opportunity or a financial info-product. I’m actually working on a post featuring my concerns and observations about the online coaching and info-product industry. While there are some reputable business, finance, life, and fitness coaches, finding them is like looking for a needle in a haystack due to the over-saturation of insta-coaches. It’s natural to want to share what you’ve learned with others. You should, if you were successful. However, it’s obvious some folks see the demand for financial freedom growing and are exploiting the fantasy of financial freedom and offering average to below average info-products at premium prices. The info-product business model is so shared and recycled across industries and top influencers, there is not much originality. You can, often, predict what you will get when you buy a course. Lest I digress. So, be careful and educate yourself. Do your due diligence before you apply this principal.
2 Habits That Cultivate A Rich Spirit
Rich in Spirit Principle: Practice giving. Give your way out of debt. People rich in spirit give regularly. You can practice giving by budgeting it. Budget giving because 1)giving is fun. 2) Being stingy, “tight,”or selfish with your money opens you up to reaping constant money problems (James5:1-3). When you give, you get to change the lives of others which, often, brings an immediate return of joy and blessing back to us (Luke6:38). Giving ensures we don’t store up for ourselves empty treasures hereon earth but in Heaven where our good works of giving from a pure heart actually last. (Matthew19:21). Give your way out of debt.
Rich in Spirit Principle: Practice prayer. Pray your way out of debt. The first step to changing your financial situation–especially when your broke, busted, and disgusted with your back is against the wall is to commit your situation and desire to be debt free to prayer. (Mark11:24) In so doing, you will start to receive spiritual downloads in your spirit on the specific action plan you need to implement in order to achieve this goal. You will be directed to people, information, jobs, and unique opportunities that will guide and expedite your journey into kissing your debt goodbye.