Tag: consumer debt

Why Paying off Debt Feels Good (Even When Life Happens)

Anyone who gets serious about paying off debt knows that starting a debt pay down journey is the most difficult part. It?s brutal to face the music and really assess how buried you are. But once you?ve done that, and have put your debt pay down strategy in play, it?s incredibly liberating. The starting gun has gone off. The race has begun. And you?re out there in front. But it?s a long race, one that can involve many sacrifices and setbacks. It can get tiring. It can get old. It can get downright depressing. We need to learn how to stay motivated and remember that paying off debt feels good – even when life happens.

In the beginning…

When I could no longer avoid the glaring danger of being?over 50, broke, and in debt,?I knew I had to change my relationship with money because, apparently, we weren’t getting along very well. I mean, as soon as I had any, I?d get rid of it. (Pretty cold blooded, eh? If money were a friend, I?d been a pretty shitty friend.)

The fear of seriously looking at my consumer debt and lack of savings kept me paralyzed for far too long. I had to take action. (If not now, when?) I had to either change my lifestyle, or make more money. So I decided to have a go at both.

With newfound determination, I picked up a side gig, isolated expenses that I thought I could eliminate without dying, and most importantly, I used free resources to create a debt pay down strategy that would have me debt free in just a handful of years.

I was excited! No more money shame! It seemed that I was finally turning a corner.

Everything was on track. I could start to see a dent in my balances. It felt good to know I even managed to put some money aside for emergencies. I was excited! No more money shame! It seemed that I was finally turning a corner. And I was. But there was a really long trail around that bend.

Related:? Money Regrets are a Waste of Life:? 3 Steps to Get Out

Fast forward

For a good while I steadied my rhythm, kept my head down, and stuck with my plan. I got good at turning down expensive dinner invites and weekend trips with friends. But I?ll tell ya, it can get old resigning your life to a day-in-day-out grind of work and budget dinners. Before long, if you’re not careful, a nasty mindset-malware can begin to infiltrate your determination. Enter: ?Self-pity.

Feeling sorry for yourself can throw a wrench in your spokes and toss your motivation out the window.

If you dwell in it long enough, it can turn you against yourself because it leads to self-deprecation. You may find yourself blaming and shaming yourself for the past financial mistakes which led you to your current spartan life. And if you?re not careful, you may even feel like blowing off the commitment you made to yourself, splurge on destructive impulse spending, and literally hate yourself for it afterwards. Don’t do this. Just don’t. Trust me, it’s not worth it.?Feeling sorry for yourself can throw a wrench in your spokes and toss your motivation out the window.

The fix for self-pity is self-empathy

If your head starts to spiral into dark places, stop. Don?t make the mistake of thinking that you are all alone on this journey. Remind yourself that consumer debt is a serious national problem. You are not alone in this struggle. In fact, you are in the majority. What may set you apart, however, is that you are actually doing something about it.

So, be kind to yourself. Start a small empathy fund. Give yourself a treat now and then. Just because you can?t do all the things that you want, doesn?t mean you have to hole up in your room and eat Cup Noodles for the rest of your life.

Be kind to yourself. Start a small empathy fund.

Here?s what I did: ?I put a jar in a kitchen cabinet, and every night when I got home from work, I dumped all of the quarters out of my wallet into that jar. On a good day, especially if I’d resisted some urge to splurge, I might even throw in 5 bucks. That money was for me. It was my reward, and I could do whatever I wanted it with it without any guilt whatsoever. And when the jar was filled, I had fun planning how I was gonna spend it.

After awhile, that jar became a symbol of me saving. Yes, saving. I know that having to throw your hard earned money at debt every month doesn?t feel like saving, but don?t get it twisted. Aggressively paying down consumer debt rather than merely making minimum payments will save you thousands of dollars. It is the best investment you can make. You can?t get a return like that in the stock market. And your investment for this return? ?Empathy, perseverance, and patience.

Aggressively paying down consumer debt rather than making minimum payments will save you thousands of dollars. You can?t get an ROI like that in the stock market.

Related:? Why We Can’t Save

What to do when life happens…

You?re gonna hit bumps in the road. It?s inevitable. Sometimes life just doesn?t cooperate, whether we’re doing the right things or not. When I set up my debt pay down strategy, I never expected that I’d have to part ways with my company. That?s right – no full-time job. At first, I thought I?d just find another job in my industry and continue on with my plan. But after a series of disappointing realizations, I discovered that it wasn?t so easy to find employment at my age. (Yes, ageism is a thing.)

Without a full time job, ?lifestyle change? took on a much more profound meaning than merely buying the cheaper coffee beans, or passing up dinners out with colleagues.

To be honest, I was getting scared. My focus was no longer on solely getting a handle on my financial future, now I had to figure out how to survive, like, NOW. The stakes had been raised, and it was terrifying. The initial relief I felt from facing my debt, the excitement I discovered in embracing frugality, the self-confidence I had gained by taking control of my finances ? gone. For without a full-time job, ?lifestyle change? began to take on a much more profound meaning than merely buying the cheaper coffee beans, or passing up dinners out with colleagues. It was then that dangerous mindset-malware #2 reared its ugly head:? Defeat.

…and shit gets real

Even though I was finally taking control, was less in debt, had lowered my expenses, and was recovering from a life of blind consumerism, I felt like a loser. Even though I was eating healthier, living more creatively, more at peace with myself, and free of that underlying stress we all have when we are lying to ourselves, I felt like a failure. And I started to ask, ?What?s the use??

But when I took a step back and looked at the big picture, I realized that if I hadn?t started this journey, if I hadn?t gotten a side gig, saved some emergency funds, and refinanced my debt at a lower interest rate, I would have been in a much worse position. I’d already come so far in a year. Was I just gonna to give up now? Was I just gonna walk away from my dream of being debt free? Was I really going to the let the big banks win and rob me of my wages in interest for the rest of my life? Hell, no!

Related:? 5 Ways to Free Up Cash Without a Side Gig

The antidote to setbacks is perseverance

And this is when perseverance kicked in. I decided I’d come too far to just give up. I had to take it to the next level.

  • I started applying for jobs outside of my industry. (I even considered positions I would have been overqualified for 20 years ago!)
  • I sold everything I could live without on Craigslist.
  • I moved from the high-rent city to the low-rent countryside.
  • I took public transport everywhere it went. (And picked up a used bicycle to access places it didn’t.)

There will be setbacks. It?s inevitable. And while you may feel that you’ve already made all of the lifestyle changes you could, and have adopted the most frugal mindset possible at the time, sometimes you just need to dig deeper. You may surprise yourself when you learn what you can get used to living without. To ward off any uninvited feelings of panic, I stopped focusing on what it was I thought I was losing, and started focusing on what I still had: ?a roof over my head, food, and at least a small amount of steady income from my side gig. My health, the sky, the trees, and most of all, my sense of humor. (Definitely hang onto that last one!)

To ward off my feelings of panic, I stopped focusing on what it was I thought I was losing, and started focusing on what I still had.

I continually reminded myself that, although it felt like I was losing, this was just an illusion. For in reality, I was actually in better shape financially than I?d been before I started my aggressive attack on my consumer debt. Today I owed less money than before. This fact alone made me actually closer to being financially stable, with or without my full time job. (And if you really need to be reminded of how lucky we actually are, think about this for a few minutes: ?30% of the people on our planet don?t have access to a toilet.)

Related:? 7 Ways to Make Your Home a Sustainable Source of Income

When it seems like it will take forever?

Remind yourself that it won?t take forever. Don?t believe me? Play this little game with yourself. What were you doing five years ago? Do you remember what you were feeling every single day? No, of course not. The human brain is amazing. We tend to forget the details of our previous, tedious struggles. But we do remember moments of solace and peace; when we are truly present with ourselves. Remember this when the 3rd evil demon we’ll have to mitigate enters the room:? Impatience.

Impatience attacks us when we refuse to stay in the present.

Impatience attacks us when we refuse to stay in the present. Whenever you start future tripping and panicking, or ruminating on mistakes in the past, try to realize that neither of those places actually exist. You don?t have to freak out about the future, nor feel regret about the past, if you stay right where you are, right now. What are you doing right now? You’re on the internet, reading a blog post. Look up from your screen and look around you. What do you see? This moment, right now, is all you will ever really have.

…stop future tripping

You are on the right path, doing everything you can to make your future brighter, so let it go. Breathe. You can?t do anything about time, so practice learning to ignore it when it bothers you. Try to change the way you feel about the length of time it will take you to become debt free. Think of it instead as an opportunity to practice being that better version of yourself who will know how to manage your money when it’s finally freed up from paying down your debt.

Related:? 4 Ways to Make Good Money with Good Companies

Focus on the good stuff:? Paying down debt feels good

If there’s anything I’ve learned thus far, it’s that I’ve become a different person than when I started this journey one year ago. I’ve learned to forgive myself. I’m stronger and more resilient. I’ve learned that I can’t do jack about when tomorrow comes, but I can do something today to ensure it’s easier. I’m still learning, and totally expect there to be more lessons along the way.

Re-learn to enjoy that which money can?t buy and debt can’t take away.

It?s going to be a long, long road for me, and there isn?t a thing I can do about that, except to keep walking. But I refuse to be miserable while I?m doing it. When I feel sorry for myself, left out, or lonely, I practice empathy. When I feel like I can’t go on any longer, when it seems like I am defeated, I remember the courage it took to begin this journey, and I dig in for perseverance. And when I become impatient, when it feels like this will never end, I draw my attention back to today, back to now. Time will take care of itself. In the meantime, re-learn to enjoy that which money can?t buy and debt can’t take away, that thing you knew as a child before you were ever aware that an inane concept like “consumer debt” even existed:? life itself.

Related:? DIY Credit Card Debt:? A Guide to Permanent Debt Relief

Tags: , ,

Your Money in the News – July

This month: Why do people stay in debt?, Financial milestones for your 60s, Climbing credit card interest will eat tax cuts and wage increases, Beware student loan repayment scams, Mobile banking replacing bank branches…

Keeping it Real: A Short Q&A on Consumer Debt – KNOE

What is one reason people stay in debt?

They want to keep up appearances or try to keep up with the Jones, but end up damaging their financial security in the process.?The fear of feeling broke may be keeping people broke.

Related: ?Over 50 Broke and in Debt: ?Starting from Ground Zero

Does getting out of debt take sacrifice?

Yes, but practicing frugality to get out of debt can lead people to win with money. The lifestyle changes you make when getting out of debt can also be put to use to accumulate wealth.

Related: ?From Frugality to Financial Freedom: ?A Path for All

What is another reason people stay in debt?

People are afraid of change. If you have always charged on credit cards, or had a car loan, then you may have become conditioned to believe that paying tons in interest is normal. People know what to expect and it feels comfortable.

Related: ?Credit Card Payoff Strategies: ?What the Card Companies Don?t Want You to Know

Are some people really addicted to stuff?

Yes. People need to realize that no amount of stuff will make you happy and, at some point, too much stuff can actually cause both financial chaos and stress in your life. (The more stuff you have, the more stuff you have to take care of.)

Related: ?Declutter Your Life and Make Money

What is the main reason people stay in debt?

Some people stay in debt because they don’t know how to get out of debt. Financial literacy is not taught in schools but it needs to be. The first step in taking control is becoming informed.?

Once people get interested in their finances, they will understand for themselves how insane it is to carry consumer debt.

Related: ?DIY Credit Card Debt: ?A Guide to Permanent Debt Relief

In Your 60?s? Focus on These 6 Financial Targets – Motley Fool

We hear a lot about retirement planning when you?re young, but what should you be shooting for when you?re staring retirement in the face? These 6 financial targets may help give you some direction:

1. Have a fully loaded emergency fund

In the years leading up to retirement, having three to six months’ worth of living expenses in the bank will help you avoid debt later in life, and give you a measure of security as you look at letting go of that paycheck.

When you’re at the end of your working career, the last thing you need is for an unplanned bill to disrupt your financial plans.

2. Have 10 times your ending salary in a retirement account

While no one knows how long they will live there is no guarantee that you won?t run out of money. As a general rule, it’s smart to enter your full retirement with a minimum of 10 times your ending salary in an IRA or 401(k).

While Social Security will serve as a steady income source, it’ll only be enough to replace about 40% of the average worker’s pre-retirement earnings.

3. Pay off your mortgage

Once you stop working, you’ll be on a fixed income, so you’re better off not having a mortgage payment around to eat up a substantial chunk of it.

Unfortunately, an estimated 30% of seniors 65 and over continue to carry mortgage debt.

4. Eliminate credit card debt

If you have credit card debt, pay it off before making your retirement official. If you have credit card debt and a mortgage, pay off your credit card first.

Chances are, your credit card is charging at least double the interest rate you’re paying on your mortgage, which means the longer you carry a balance, the more money you stand to throw away.

5. Buy long-term care insurance

We don?t know what is going to happen to our bodies in the future. Medicare won’t cover long-term care. That’s why it pays to secure long-term care insurance during your 60s if you haven’t already. If you wait too long you can risk getting denied, or paying higher premiums.

While most Americans don?t believe they?ll need long term care, in reality, 70% of those turning age 65 can expect to use some form of long-term care during their lives. – AARP

6. Learn how Social Security works

It?s critical to understand how Social Security works so that you can plan a filing strategy ahead of time. The age you choose to file for Social Security could cause your payments change. You need to understand how and why.

Don?t ever file for Social Security before you?ve done your research.

How your Credit Card Interest Will Pay for the Next Recession – The New York Times

The Current Stats

National credit card debt has reached 1 trillion.

  • 70% of Americans carry a credit card balance from month to month.
  • The current average APR is 16.8%.
  • The average credit card balance is $5,700.

Credit card debt is growing at a rate of 4.7% while wages are growing at only 3%.

  • More families than ever have zero or negative wealth, excluding their homes.
  • Household net worth has decreased for all income groups since 2007 ? except the top 10%.
  • Net worth for the richest Americans is up 27%.
  • Net worth of the middle class has decreased 20-30%.

The wealthiest 10% now own about 75% of the nation?s total household wealth – up from less than 35% in the 1970s.

  • The nation?s richest 0.1% now own as much wealth as the bottom 90% .
  • For the bottom 90% – the ability to build wealth depends on the ability to save (which is impossible when interest rates are rising and eating into their earnings.)
  • The personal savings rate, at only 2.8 %, is heading in the wrong direction.

The Future Prediction

Ok, keeping the above statistics in mind, consider this – The Fed?s prediction is that the federal interest rate is on target to reach 3.4 percent by the end of 2020 from the current 1.9 percent. This means you?ll be paying more to get a mortgage, a new-car loan, or to carry a balance on your credit card. How much more? Possibly enough to absorb whatever extra income you might be enjoying from lower tax rates or higher wages.

Those who benefited the least from the recent tax cut ? wage workers, farmers and anyone else not in the top 10% of earners ? will have to pay the most ?in interest to mitigate the damage that the tax cuts caused to the economy. This could result in hundreds of dollars in additional interest every year per household for those carrying credit card debt.

Raising rates now, perversely, gives the Fed a monetary tool with which they would be able to fight the next recession ? by cutting those rates.

Student Loan Repayment Scams to Watch For – BBB

Massive student loan debt can make you feel desperate. But don’t get scammed. The Federal Trade Commission and Better Business Bureau are warning consumers about an increase in student loan repayment scams.

The FTC recently reached two multimillion dollar settlements with a shady student debt relief company and a law firm that preyed on desperate consumers with student loan debt. They both falsely promised to lower payments through alleged enrollment in student loan forgiveness or other programs – for a fee. They also lied about being able to improve credit scores – for a fee. Some scammers might also claim that they can save you money by consolidating your loans for you – for a fee.

Here?s the thing: ?
If you are eligible for loan deferments, forbearance, repayment forgiveness or loan discharges, you can do it yourself without a fee. Same with loan consolidation. ?

The FTC and BBB offer some tips to give these scammers a miss:

  • Go to bbb.org to check out companies before working with them. ?If you have been a victim of a scam, report it at bbb.org/ScamTracker
  • Go to the FTC page to check out student loan debt relief scams on record as well as tips to avoid them.
  • Never pay a fee upfront for help
  • Never share sensitive information, such as your FSA ID.
  • Scammers often have official-looking names and claim they have special access to certain repayment plans. They don?t.
  • Scammers will rush you saying you could miss qualifying for repayment plans, loan consolidation, or loan forgiveness programs if you don?t sign up right away. You won?t.
  • Legitimate repayment programs such as loan deferments, forbearance, repayment and forgiveness or loan discharges are FREE to access through U.S. Department of Education or your loan servicer at no cost.
  • Check out the Federal Student Loan site for federal student loan repayment options.?

If it seems too good to be true, it probably is. Any company that claims it can erase your student loan debt in minutes is lying. ??

These fraudsters commonly promise student debt forgiveness and lower payments. They often demand upfront fees up to thousands of dollars for this “service,” which is illegal. – CNBC

Related:? Know the Wolf:? Credit Card Counseling vs Debt Settlement

Branches Shrink as Banks Embrace Fintech – CNN

The rapid adoption of mobile banking has allowed big banks to shrink the number of expensive branches they operate. Traditional banks are being forced to innovate due to?competitive pressure from Silicon Valley as tech pushes into finance.?Amazon (AMZN), Apple (AAPL) and Facebook (FB) are all moving into financial technology.

Big banks are even working together on mobile payment systems. Bank of America teamed up with Wells Fargo (CBEAX), JPMorgan Chase, and other big banks to build Zelle, a digital payment service that rivals PayPal(PYPL) and Venmo. More than $25 billion moved through Zelle during the first quarter of 2018.

Big banks have sunk hundreds of millions of dollars into new technology aimed at luring customers online.?Bank of America?(BAC)?stated that deposits made on mobile devices are outpacing those made at branches for the first time. Some day branches may be a thing of the past.

Editor’s Note:? Mobile and online banking are convenient and can help you stay on schedule with set and forget recurring payments. But don’t let this make you lazy. Find out what can happen if you don’t check up on your payment system periodically -??Is Technology Making You Lazy? The Dark Side of Set and Forget Payments.

Tags: , , , , , , , , , ,

From Frugality to Financial Freedom: A Path for All

A Growing Shift in the Way Americans Think About Money and Life

When Kristin Hanes decided to move into her boyfriend?s car to pay off her debt, she said she felt a lot of negative emotions. ?I often felt ashamed and scared, not wanting to tell people I lived in a car and camped in the mountains.? But she didn’t let that dissuade her.?And when she later lost her job at a radio station and was unable to find employment, she moved into her boyfriend?s sailboat and began writing about experiences. Today her blog, The Wayward Home, which chronicles her lifestyle change, is a huge success and allows her to live anywhere. Though her initial goal was debtless financial freedom, the continuation of her lifestyle change resulted in much more. Complete Financial Independence (aka FI).

Escaping the Hamster Wheel

It may be an uncomfortable truth, but Americans are becoming increasingly aware that the days of working for a company for 40 years and retiring with a fat pension, or 401K, and a gin and tonic on the porch of your paid-for house are long gone. Dreams of retiring in debtless financial freedom seem further away. Millennials in particular are woke to this and many are taking matters into their own hands. There’s a growing movement of people who are seeking to completely disrupt the status quo and do things differently. They gather online to share their ideas, successes, and failures. Their goal? Complete financial independence.

More and more people are seeking creative ways to escape the hamster wheel. They are learning that they can do with less and not notice. And they are discovering an unexpected freedom in living more authentically. Add to this the DIY spirit of the internet and the gig economy, and you have a complete disruption of the lifeplan?story taught by the Traditionalists – the generation on the way out. Put simply, the idea of settling down, working for 40+ years, buying a bunch of stuff that sits in storage, then dying, doesn?t sit well with today?s generation. And they are actively seeking a different way to live.

Okay, by a show of hands, who loves working a stressful, hateful job for 30-40 years, to pay off a massive mortgage, only to die of a heart-attack?at your desk or be laid off without a pension??Anyone? Anyone? – Millennial Revolution

On FIRE

FI/FIRE stands for Financially Independent/Financially Independent Retire Early and is a movement of people who are focused on spending as little as possible, and hence needing as little as possible, while investing wisely so that they can quit working as soon as possible.

The birth and spread of the online FIRE community is especially reflected in the Reddit thread ?r/financialindependence. But it is also seen in popular blogs such as Mr. Money Mustache – Financial Freedom Through Badassity which explores ways to live a frugal lifestyle in exchange for freedom. He retired at 30 after saving most of his engineering income.

Remember this ? money is not for showing off or spending on consumer shit, it is for making you more money to buy freedom and happiness. – The Escape Artist

Who are these Trailblazers?

FI/FIRE enthusiasts come in all colors. Some are working high paying jobs, investing carefully, and have set an actual timeline for retirement. Others are more interested in working less, living more, and learning how to live below the material expectations of our consumerist culture. Highly focused spreadsheet geeks share how they are maximizing their retirement accounts. Families share how they cut their cable bills by negotiating. FI groups and blogs have a wealth of information on ways to maximize dollars.? ?

In the winter we wore sweaters around the house instead of jacking up the thermostat. We used bikes to get around town whenever possible and tried to use public transportation for our commutes. All of these little things added up and we were well on our way to saving for our goal! – Freedom With Bruno

FIRE and ALICE: Why it Matters (and why it doesn’t)

Meanwhile, there is another acronym popping up in the news – ALICE. This United Way acronym stands for Asset Limited, Income Constrained, Employed. According to the United Way ALICE project, 43% of American households, though employed, can?t cover a basic monthly budget for housing, food, transportation, child care, health care and a monthly smartphone bill. When we truly break down all of the expenses required in our country simply to retain a job that pays less than $20 per hour, it?s not impossible to understand how this can happen.?

It really doesn?t matter that the unemployment rate is low if employment doesn?t cover basic life expenses.

For the ALICE group, the old system doesn?t fit anymore, either. College grads are shocked to find out that their degree isn?t worth the student loan they owe. Middle-aged, experienced professionals who find themselves priced out of the market are working 2-3 part time jobs to make ends meet and be able to cover their health insurance. The ?American lifestyle? has become too expensive, too confusing, and too demanding. People who are struggling to find financial balance and get out from under consumer debt are looking at creative changes they can make in their life to simplify everything, just as Kristen Hanes did when she moved into her car. This, too, is reflected in social media groups such as Living in a Van where people from all economic levels share ideas on how to live rent, mortgage, or location free.

Same Approach, Different Purpose

So we are seeing an interesting parallel across the board. Whether you are a 25 year old engineer, living in a box truck in the Google parking lot and trying to estimate when you can retire, or a 65 year old retiree, living in an RV and supplementing your Social Security with seasonal jobs across the country, your lifestyle adjustments have similarities, though your purpose is different. Lifestyle shifts are helping people realize they no longer need what they used to believe were necessities. And today, more than one type of person is looking for change for more than one reason.

This cross section between millennials focusing on financial independence and those merely trying to keep their head above water is unearthing a plethora of ideas that anyone can implement to help achieve personal financial goals. The?minimalism, sustainable living, and zero-waste movements are increasingly being interwoven into lifestyles in different ways by people from all walks of life who are searching for less stress, less waste, more time, and more freedom.

C?Mon, Isn?t Frugal Living a Wealthy Privilege?

But there is a difference in mindset between a person who chooses to elect a particular lifestyle choice (FIRE), and a person who feels forced to adopt a lifestyle change (ALICE). And that difference can make or break a person’s success. While there are plenty of reasons why clearing the clutter and materialistic focus out of your life can bring you both personal and financial freedom, adopting a more frugal lifestyle is best done out of choice than necessity. For many, it has become a fun game: ?how little can I get by on? ?But if you already feel deprived, the idea of having to go with even less isn?t inviting.

It doesn?t matter how much money you make if you spend it all. This is why we always hear about bankrupt NBA players and musicians. – Retire by 40

For example, if you’ve been struggling already and someone tells you that you now have to get down to $2 per meal, it may not sound like a fun game. Yet the $2 meal topic was so hot in one Facebook FIRE group that within one hour of the initial post, 138 responses popped up addressing this question: ??One of the hardest things to get on board with is $2 per person per meal. What is the community doing and how can we get better??

Of course, the realities of layoffs, healthcare emergencies and student loan bankruptcies are front and center for many.? But there are things that can be controlled and others that cannot be. So we might as well focus on what we can control. Spending is one of those things. People who are focused on the idea of financial independence experience excitement rather than deprivation when they discover ways to slice their overhead. And they are sharing their discoveries.?

Money Stories: How to Unlock Your Joy

Those who elect to adopt a more frugal lifestyle and make it fun have a better chance of making it work than those who do so grudgingly.?For those in ALICE, the $2 meal may feel more like a mandate than a choice, and this lays at the crux of the issue. The actual activity of shopping for, cooking, and eating the $2 per meal is generally the same.

Your mindset is one of the most powerful forces behind your decision-making process. – Think Save Retire

1. The Money Stories We Adopt Are Powerful

Part of this enigma lies in the stories we tell ourselves. Our ideas about money and possessions are integrated with our self-perceived value. It may feel pretty cool living in a van, eating a can of tuna, while socking away tens of thousands a year in 401(k)s, IRAs and other investment vehicles.

But in the van parked next to?you, you may find someone who’s lost his job and is in transition,?eating the same can of tuna, and feeling like a failure. While the former is finding joy in how much she’s saving, the latter is perhaps ruminating about how low he’s fallen. She feels free, he feels trapped. We empathize with him. They are both presently?eating, sleeping, and showering?in a similar fashion.

2. Our Cultural Money Stories Might Just Be… Marketing

If part of your story is that successful people drive expensive cars, you will equate older, cheaper cars with unsuccessful people. So, if you happen to be behind the wheel of an older, cheaper car, you’re going to feel like a loser. Meanwhile, another camp looks at expensive cars and wonders why anyone would spend tens of thousands on a machine that will depreciate as soon as they purchase it. According to their narrative, buying an expensive car, especially if you have to finance it, is the loser move.?

I?ve always been a bit disturbed by the American consumerist mentality. We live in a disposable society. Some people will trade in a perfectly good car just because they want a new one. – 1500 Days

3. Which Money Narrative Do You Choose?

Everyone?s got their own money narrative. Mr. Money Mustache?s narrative incorporates a bit of?stoicism when he says that overcoming one?s own insatiability will lead to a good life. He makes a clear distinction between happiness and pleasure. He says that by??focusing on happiness itself, you can lead a much better life than those who focus on convenience?(and) luxury.? But to do this, you can?t follow the ?lead of the financially illiterate herd that is the TV-ad-absorbing Middle Class of the United States (and other rich countries) today.?

Happiness comes from many sources, but none of these sources involve car or purse upgrades.?MMM

Whether you are trying to escape ALICE or going for FI/FIRE, the practical application of frugality and minimalism is the same. If people who are struggling can learn to look at frugality as a lifestyle choice rather than a necessity due to perceived lack, it could be a game changer.

The Even Bigger Benefits of a Simpler Life

The benefits of simpler living go way beyond financial freedom. People from all demographics and for all different reasons are learning to shed their super-consumer lifestyle for a simpler, easier road, regardless of where their particular road is going. And many are finding solace in realizing that, by needing less, they are rewarded with more than a sense of financial freedom.?

With frugality, there?s often a double or triple benefit. It?s not just saving the money. You?re going to reap an advantage in some other way. – Mr. Frugalwoods

1. How Not Giving a F**k Brings us More Joy

So, how do we get from always thinking we need more to learning to need less? For Mr. Money Mustache, the key to this transformation is a technique called Negative Visualization. By imagining that you have less than you already do, and that your life is more difficult than it actually is, you can train yourself to be grateful for what you already have. By practicing voluntary discomfort, such as experimenting with how long we can last on a hot day without the AC, we can work on “broadening our comfort zone while eliminating our fear of discomfort.”

The other tip: learn to stop worrying about things that are out of our control, and focus instead on those that we have a direct effect on.? For example, instead of stressing out about potential health problems you may run into in the future, throw that nervous energy into taking better care of the body you are in today.

2. The Other Weight Loss:? Having Less Stuff

Those who have given themselves permission to withdraw from the ?new shiny thing? addiction of the status quo are experiencing levity across the board.?Instead of “I can’t afford it,”? they say “what can I do differently?” For example, many save thousands because they no longer consider a high-end cell phone upgrade every year a given and have opted for a used model and a budget sim.?For FIRE, these thousands may go into their retirement fund. For ALICE, these thousands could free them from the slavery of consumer debt.?

When you stop caring about whether or not you appear to be in poverty, and cleanse your brain of the notion that your value is reflected in your possessions, you find more freedom, more time, more money, and more joy.?

3. Bonus:? Creating a World that Doesn’t Suck

Our motivation in buying as little stuff as possible this year has less to do with money than it does with wanting to be environmentally responsible …?and with recognizing that we already have everything we need. – Our Next Life

And, as it turns out, needing less also helps to create a world that we would actually want to leave to our children. For another uncomfortable truth is that our addiction to products and services is hurting our planet. And we really can’t afford to ignore this fact anymore when it comes to our daily habits. It’s not someone else’s backyard, it’s ours.

So think about the stories we tell ourselves. How can we do things differently? It’s not about depriving you of what you need, it’s about learning to need less. In the long game, our personal, financial, and planetary health all depend on us changing our stories from ?he who dies with the most toys wins? to something more like:

Can anything be so elegant as to have few wants, and to serve them one?s self? -?Ralph Waldo Emerson

Photo: Tommy Lisbon

Tags: , , , , , , , , , , , , , ,