Somewhere around the second month or so of this blog, I’d written a few posts on finances-saving money and putting money into retirement accounts and wasn’t sure what people wanted to hear about next financially. I asked Jane, my co-blogger, what financial advice she might want to hear next.
Jane said to me, “I’m wondering what advice we can give to people who feel like they can’t follow any of the retirement account advice or the savings account advice. What about the people who are barely making ends meet? What about people who are just like ‘I’m broke and can’t do any of this?”
She told me about this teacher of hers who didn’t really want to save money and didn’t want to start a retirement account. He basically wanted to “live in the now” and said he didn’t have enough money to put away for any retirement account or savings account anyway. “All this money advice is BS for people who don’t have enough money,” he said.
At the time I was completely stumped. The topic filled me with fear. I was pretty new at following this financial growth advice myself and I told myself I’d simply get back to the ‘not enough money’ topic.
Then a few days ago I was talking to a coworker about how I put 10 percent of my money into savings, 10 percent into retirement, and 10 percent into additional student loan payoff.
In turn, he told me how he divided his money. He had a pretty sophisticated system. He put aside 20 percent right off the bat for taxes (he’s self employed like me.) He had a separate account to hold that tax money. He also had multiple accounts reserved for different things- one for investments, one for savings, a special account just for spending money, another for classes (investment in learning.) It was a quite complicated and well laid out system and I felt mildly overwhelmed for a bit. He asked me what I might be investing in, and I was stumped. I wasn’t investing in anything in particular- not in a separate account anyway. I was ‘only’ investing in my Roth IRA…I hadn’t ‘gotten to the investment step yet.’ I’m still killing off my student loan that was originally over $100,000 but is now finally less than half of that.
I started to feel like I might not be as well-prepared financially as I thought I was, and I felt intimidated by how far ahead of me some people seemed to be. There was still so much investment research I wanted to do- so much more money I still wanted to make and save. But then I started to feel proud of myself once again for all that I financially accomplished so far in just the last two of my thirty years. I was perhaps not as financially ahead of the game as I’d like to be at thirty, but I had made a major dent.
And I flashed back to a time when I felt absolutely overwhelmed by the killer student loan in my life. A time where I cried at the thought of just getting by monetarily from month to month. Where I would have laughed at the thought of retirement or savings accounts, and could barely pay for a dinner out. Where just paying rent every month put true fear in my heart.
They say that money doesn’t buy happiness, but I’ll say very honestly that it can take away a huge amount of fear.
So if you’re feeling afraid and maybe even embarrassed that you don’t have enough money in your thirties to follow the retirement plan or savings account steps laid out for you by certain financial sites or advisors, let’s start with a simple first step:
1. You’re not alone. And it’s okay.
It’s really okay. The fear is real, but so is the truth. And the truth is that everyone moves at their own pace. Not everyone starts at the same point. Perhaps you have multiple student loans or have gotten yourself into some bad credit card debt. Or you’re making no money or are in school or have just declared bankruptcy. The most important thing is that you will change and want to change and grow your wealth.
2. You recognize that you want to change your finances and are ready to take small steps.
Dave Ramsey says this best with his talk of Baby Steps. Take things little by little. If you’re not making enough money to follow any financial advice, then your focus should be on hustling to make more money. It’s that simple. Dave Ramsey will sometimes tell people to ‘deliver pizzas for extra money’ when they call into his show and tell him they’re broke. That may seem below your sense of dignity, but sometimes you may truly have to hustle.
I’ve worked outside in the snow in the dead of winter, taught SAT prep in my spare time, sold insurance, traveled two hours to Staten Island to work gigs and much more in the past in order to meet the quota for money I needed to make that month. Hustling for money can be hard and grueling, but it can be done.
3. Do what you can. It does get better. Really.
I recently paid off a student loan that I wasn’t supposed to pay off until 2022. It was quite a feat, and I’m very proud of myself. Did I get it paid off early because I’m rich? Not at all- I got it paid off 7 years early because I got angry at the loan and I set my mind to getting it out of my life. My other big loan is still ahead, but you better believe I plan to attack it with all I’ve got. I don’t make a ton of money, but I try my best to take baby steps to get rid of my student loan debt and save as much money as I can. Right now I have a mini retirement account started and a small savings account. It can be done. It’s just little by little.
Times can be hard and finances can be scary. Please know that I understand and I’ve been there. Im still there sometimes. But I believe that I things can get better and they’ve been slowly getting there. And I know you can do it too. I believe in you.
I suggest that you change your mindset. Think of yourself as a small service business. You are getting paid for the services that you are providing. Subtract all your expenses and what is left over is your profits. (savings) Your balance sheet (net worth statement) is improving because you have paid down debt (student loans) with your profits.(savings)
Using your profits to pay down debt gives you an investment return based on the interest on the loan. So paying down a 6% interest rate on a student loan is much better then investing in a ten year bond with a 1.8% yield. Your cash flow has improved because the total interest on your student loans has been reduced.
If you were a penny stock, I would be checking your debt to asset ratio, earnings growth and bottom line growth.
By changing your mindset, you are actually investing!
LikeLiked by 1 person
Hi Laura, I am not a writer, so sometimes my comments don’t express my true thoughts. My comment was meant as a complement to your financial success.
I regret comparing you to a penny stock. It was intend as an investing example and not personal.
Just to be clear, many young companies issue shares below a dollar to raise venture capital to get enough money to get their product or service to market. Imagine that “Apple” started because an investor loaned Steve Jobs money in exchange for shares in his new company.
LikeLiked by 1 person
Rico, I’m so sorry it’s taken me awhile to reply! My computer has been messed up from liquid damage (remember that keyboard problem I talked about in a post a few days ago- https://omgimthirty.com/2015/02/03/the-things-were-attached-to-in-our-thirties-or-paste-the-space/). So I received your comment but my computer was at the Apple store being worked on.) Anyway, I wasn’t insulted by your comment- I was inspired! I really love the idea of looking at investments in a different way, and investing in my net worth.
You’re totally right that paying off a student loan at 7% is better than investing in bonds or a money market account at 2%…or even equities that vary! The 7% loan decrease is definite!
Anyway, thanks for making me feel better about my ‘lack’ of investments 🙂
LikeLiked by 1 person
So glad to have helped, I am working on improving the transfer of my thoughts into my writing. Sometimes, I just need to an editor.
LikeLiked by 1 person
Pingback: How To Move In Your Thirties- Part 1 «