Toxic Money Habits And Actionable Steps To Reverse Them NOW
We all have ways we can be better, especially where money is concerned. Below, I’ve listed 5 toxic habits and how you can take steps to fix them now!
Toxic Habit: Not Having A ‘Rainy Day Fund’
Actionable Fix: Get An Emergency Fund. Now.
According to Bankrate, more than 1/3 of Americans would need to borrow money in some way to cover a $1,000 emergency. If you think stacking away $1k is hard, think about how hard it’s going to be when *something* happens and you don’t have the cash to remediate the crisis. Saving money isn’t easy, and I’ll be the first one to admit to that; however, being SOL isn’t easy either. If I were you, I’d choose the path that’ll make life more manageable during storms.
Saving an initial emergency fund is crucial to taking the first step towards being financially responsible. Taking ownership and some minor control over a future situation is powerful, resourceful, and responsible.
Emergencies already suck major ass, but by being prepared you give yourself the opportunity to focus on the issue at hand instead of the money issue.
No matter what your financial situation looks like - SAVE MONEY.
I do not care if you make less than $20k a year.
I do not care if you’re paying off debt.
I do not care if you’re a bajillionare.
Save. Money.
Save. Something.
Life happens to everyone. Events take place that you can’t even dream up. You are only helping yourself when you prepare for your future self.
Toxic Habit: Putting Money In A Savings Account With .010% Interest
Actionable Fix: Put That Money In A High Yield Savings Account. Now.
I used to think that saving money meant set up a standard savings account at my Wells Fargo and calling it a day.
DO NOT DO THIS.
If you decide to go that route, you’re losing money. High Yield Savings Accounts are the bee’s knees and are easy to open up.
With the markets as competitive as they are in this industry, banks are offering sky-rocketed APY (Annual Percentage yield) rates.
That means that you stick your money in an account with a high APY, and your money earns money.
Cha Ching!
I personally bank with Ally and I have recommended them before.
As of the date of this blog post, their APY on a high yield savings account is 1.80%. This has dropped significantly from their highest APY of 2.20%
Since markets tend to fluctuate, so do interest rates on these savings account.
There are MANY options for high yield savings accounts.
You can check this resource out to find out where the best APY rate is in your area.
Toxic Habit: Paying ONLY Minimum Payments With NO Debt Payment Plan
Actionable Fix: Stop Paying The Minimums. Now.
Minimum payments are killing you. Don’t believe me? Check out the debt.com calculator I have on all of my blog posts. The other day, Joe and I plugged in our information and discovered it would take 23 YEARS to pay off our credit card with a balance of $5,000 if we made just the minimum payments.
No wonder people are still in debt!
You HAVE to make extra payments, or the interest will eat you alive for years to come.
I often hear people say, “I can only make $x worth of extra payments… is it even worth my time?”
The answer? YES! Any extra payment is worth it to combat the principle and interest amount on a loan.
My advice would be to attack your debts in 1 of 2 ways:
Paying on the smallest debt first - so you get a quick win and move up the ladder of debts. This is called the snowball method of paying off debt.
Paying on the debt with the highest interest rate - so you can save some money. This is called the avalanche method of paying off debt.
I don’t care what way you use, as long as you put ALL OF YOUR POWER on one debt at a time, while paying the minimums on everything else.
You will see drastic differences when you put all of your intention and focus on paying off debt.
Toxic Habit: Thinking: “I’ll always be in debt.’
Actionable Fix: Realize That Living Debt Free IS possible. Now.
How many times have you heard the phrases:
‘Debt is the American Way.”
“No one can live without debt.”
“It’s okay if I do x,y,and z. It’s totally normal.”
“Sure, you can work to get out of debt, but you’ll go back into it. That’s life.”
Listen - is living in debt “normal” in our culture? Yes. Absolutely.
Is it the only way for SOME people to live and get by? Yes. Absolutely.
Can you get out of it? Yes. Absolutely.
My point is, that living in debt is not the end-all-be-all of everyone’s financial situation.
I didn’t even realize you could live a ‘debt free’ life because, in my family, that is the way you live. No other way existed. No one even questioned it.
You CAN live a debt free life, but it takes work. It takes intention, discipline, and motivation.
It takes sacrifice and working hard to get above the minimum payments, and monthly bill lifestyle.
It’s not easy and it’s not for everyone, but if you’re just starting out - no matter WHAT your financial situation looks like, you CAN live a debt free lifestyle.
For some people, it takes 2 years. For others it takes 10. The important thing is that you’re working towards bettering yourself and bettering your life. You can do that through being intentional with your money and debt payoff plan.
Toxic Habit: Blaming Your Upbringing For Your Financial Ignorance
Actionable Fix: Get Free Resources Now.
Your parent’s financial situation is not an excuse for you to be shitty with money.
I repeat:
Your parent’s financial situation is not an excuse for you to be shitty with money.
If you have a want to learn more, if you have a need to learn more, there are resources all around you.
You know what I did when I realized that I was up shit creek and if I didn’t change, I’d be completely screwed?
I went on Pinterest and typed in ‘budget.’ An entire WORLD opened up to me - just.like.that
That’s all it takes.
There are hundreds of people like me, running blogs like this. The information is out there, and it is accessible to EVERYONE!
That’s the great thing about social media and the internet, information is at our fingertips.
Here are a few of my favorite resources:
You can find EVERYTHING you will ever need on Pinterest in regards to budgeting, frugality, and financial freedom
Merliee (the Owner and Founder of Easy Budget) created a spreadsheet that helps with finding your target ‘Debt Free Date'.’ She also has meal plan templates and other resources to keep you on track!
Sarah Wilson - One of the first people I ever followed on a social media platform, and (I’m convinced) the sweetest human being on the planet. She paid off a significant amount of debt on a small income and is my go-to YouTuber!
Nika - My favorite content creator in the space
A great resource to learn about investing
A great resource for financial information
My favorite budgeting app with a kick ass blog
It’s never too late to turn your money habits around - just a few simple changes can really make a difference in your wallet and in your mindset. I hope that this blog gives you some ‘to dos’ so that you can like a more financially free life! Let me know if this helped you in the comments below!