A New Year is around the corner. The New Year is a time when we all build up the courage to face our fears and challenge ourselves. Many of you are creating a list of New Year’s resolutions and goals that you want to finally achieve. In this post, I want to convince you to make achieving financial freedom one of your resolutions.
The Intersection of Financial Health and Mental Health
Multiples studies have shown that people suffering from a mental illness are more likely to be in debt. To be specific this study found that those in debt are 3x more likely to have a mental illness. Why does this matter? This matters because suicide was also strongly linked to having debt. A person that completed suicide was almost 8x more likely to be in debt. This is so extremely important say because no amount of debt is worth a precious life.
How Mental Illness Impacts Achieving Financial Freedom
I can speak from personal experience, that being depressed can make it extremely hard to manage all your financial obligations. If you are suffering from any form of mental illness you may lack the mental energy to sit and manage all your financial obligations. You may experience memory difficulties as a symptom of mental illness, which may cause you to pay bills late and rack up late fees. Another side of it all, may be overspending to fill an emotional void.
How Lack of Financial Freedom Impacts Mental Health
This lack of financial freedom only makes mental illness worse. Over time your finances will become an out of control monster that makes you feel even more helpless about life. Constant calls from debt collectors and past due notices may leave you completely overwhelmed. You may begin to have negative intrusive thoughts that you are worthless or that you will never get out of debt or worse that you wish you were dead so you didn’t have to deal with it all. DO NOT believe these lies. You can regain control one step at a time. Your debt does not determine the value of your life.
5 Steps for Achieving Financial Freedom
Thankfully, debt never determined the value of my life. However, debt used to leave me completely overwhelmed, so I would just ignore it. Clearly, this was not a healthy approach. If you are a millennial you know that our largest source of debt is student loans. This is true for me, with student loans being my #1 financial burden. If you have large student loan debt you know this beast feels like an impossible burden to bear. For me, student loans made achieving financial freedom seem impossible. This led me to never really trying to understand it, avoid looking at how much I owed and believe that I would just defer paying it for as long as possible.
Then I read Total Money Makeover by Dave Ramsey and started following the debt-free community on social media. This has created an intense shift and sense of determination within me to achieve financial freedom. In Dave’s book, he highlighted using an approach of simple, small victories’ for tackling debt. This approach had me sold because it made debt about attacking a small piece of the pie not the entire monster.
For a sneak peek of Total Money Makeover click the image below.
5 Easy Steps to Achieving Financial Freedom
It’s only been a month and a half, but I’ve already been able to create a simple budget, pay off my tiniest student loan, pay-off over 50% of my car loan, and stop using credit cards. Now I want to share with you some simple tips for gaining financial freedom in the New Year.
- Make a Budget: Create a simple fixed and variable expenses paycheck budget. This will help you know where your money has to go each month, maximize debt repayment and help you set aside money for fun tasks without racking up debt.
- Plan for Emergencies: Have you ever been completely overwhelmed by an unexpected expense? Before you attack your debt, Dave recommends starting an emergency fund. Any money that isn’t for a minimum bill or required payment, use it to create a $1000 starter emergency fund.
- Attack Your Smallest Debt: The Dave Ramsey Method is to attack your smallest debt first. With this method, you must first get caught up with any past due bills. Then you will budget to pay the minimum on all debt, except your smallest debt. Any money that isn’t for a minimum bill or required payment, use it to pay extra towards your smallest debt. Once that small debt is paid off move onto the next smallest debt. And remember to celebrate each small victory.
- Save on Fun: Always remember to include the things that make you happy in your budget. To maximize your fun money, use website like Ebates and Groupon. Groupon allows you to save money eating out, traveling, and pampering yourself. Ebates gives you cash back for shopping online, this includes on websites like Groupon and Amazon.
- Prepare for Future Expenses: Another important thing is to think about is what expenses are coming up in the next few months. This could be an upcoming trip, home or car maintenance or your annual doctor’s visit. Whether big or small, write this expense down and budget to set aside/save a small amount each month for the expense. This will give you a sense of power and control over your money and life’s expenses, instead of feeling overwhelmed and defeated.
Bonus: Tips for Successfully Achieving Financial Freedom
- Report Debt Collectors: If your debt collector is harassing you or threatening you, report them. For more information click here to read more on the Federal Trade Commission website.These abusive tactics can drain your motivation and make you feel helpless. No amount of debt is worth this abuse.
- Set Notifications: Set phone notifications 1 week and 1 day before each fixed-bill is due. This will help you avoid late fees, and hopefully one of the notifications will fall on a good day so you will have the energy to schedule a payment.
- Automate Bills: An even better option is to automate your fixed bills. Automated bill pay takes the stress out of remembering. To avoid overdrafts, set a reminder to remember when the money will be taken out and how much so you will have sufficient funds available.
- Automatically Save: If you are paid via direct deposit set up for 10-20% of each paycheck to be direct deposited into your savings account. Also try using apps like Acorns, which rounds-up by spare change on any purchases you make and automatically investss your spare charge into Exchange-Traded Funds (ETFs). Click here to join Acorns, if you use my link you earn $5 that to be invested!
As always, everyone’s experience with mental illness is different. But I truly believe there is hope for every unique situation. If you suffer from severe mental illness or thoughts of suicide I want to encourage you to seek help today. Find a local therapist or contact the National Suicide Lifeline by calling 1-800-273-8255 or texting “START” to 741-741.