You’ve heard about it before. That horrible thing that we all live with but run from in the same breath. That thing that brings us so much shame and guilt and that we could never imagine talking about with our friends and family. You know what I’m talking about – debt. Despite is treating it like a dirty word, millions of us are drowning in it. We may not talk about it over brunch, but at least one person we know is behind on credit card payments, student loan payments, rent, mortgages and more. Having the pandemic in play over the last year hasn’t helped either, and even more people than ever before are living with debt.
While it can feel daunting to even think about how to deal with your debt, please know that you’re not alone. We’ve all had debt, are in debt or just have a long, complicated relationship with money in general – even Tika and Thai. This week on The Suga podcast the ladies talk about their personal relationship with money and rip the Band-Aid off financial shame in a chat with America’s favorite personal financial educator, Tiffany the Budgetnista Aliche. Tiffany shares with the ladies and listeners how they can Get Good With Money, which also happens to be the name of her new book.
“What’s missing is this wholistic view of finances. That just getting your credit straight is not enough. Just learning how to budget is not enough. So I started to craft something that I call ‘Financial wholeness,” which looked at this wholistic view of your finances. It’s ten components: Budget, Savings, Credit, Learning how to earn, Digging out of debt, Learning how to invest, Insurance, Net worth, Having a money team and Estate planning. These ten components work together for your greatest good, your biggest benefit and your richest life.”
If you’re dealing with debt and need a few basic tips on how you can start your journey towards financial wholeness, these Budgetnista approved tips will help you get started on the path to catching and living your dreams.
Tip 1: Forgiveness is Key
It’s easy to be hard on ourselves once we realize the magnitude of our debt. We can spend days, even years, beating ourselves up for buying that car, taking that trip or missing that payment. However, Tiffany says that if we constantly focused on all the mistakes, that means we’re not focusing on all the possible solutions.
“You have to forgive yourself, because if you’re carrying around the shame that means you’re shielding yourself from the solution,” she says. “It’s OK. You’re not a terrible person. You don’t kick puppies; you used your credit card. It happens.”
The first step to overcoming your debt is to forgive yourself for getting into debt in the first place. Once you free yourself from that guilt, you’ll see the light at the end of the tunnel more clearly.
Tip 2: Line Them Up and Knock Them Down
When you’re drowning it can be difficult to decide which debts to pay off first, especially when you have essentials that need to be covered first. After you’ve covered your basic needs, line up all your bills and decide how to start knocking them down and paying them off.
“You will save the most money if you pay off your highest-interest debt first — usually on credit cards, or any other double-digit interest rate. Or, if you have many different types of debt, you can pay it off smallest to biggest and keep knocking them out one by one. This option might be better if you have a couple of credit cards to pay off, and a big, low-interest debt, like a student loan.”
Tip 3: Divide the Funds
The easiest way to understand your budget and how money flows in and out is to separate your funds. Tiffany recommends having two checking accounts and two savings accounts, each with a specific task so you can better see how your money works.
“One of the checking accounts is for spending and should be attached to your debit card; the other is for bills and should not be attached to your debit card. One of the savings accounts is long-term savings — maybe to buy a car or to invest one day. The other is short-term — your emergency savings account.”
Tip 4: Automate Your Mindset
Now that you’ve upgraded your mindset around money and financial wholeness, you need to put it into practice. By automating your finances, you can set it and forget it, without sacrificing the discipline that is going to set you free.
“Automation is only as good as the instructions you give it. This is where mindset and a clear understanding of your financial goals come in. One simple exercise is to automate your paycheck. Ask the human resources department at work if it can split your wages before you get them. Ideally, you’d have each paycheck divided among four accounts: one for bills, one for everyday spending, one for an emergency fund and one for long-term savings.”
Automation is the new discipline and it’s important to appreciate how it’s all connected.
Tip 5: Find Your Tribe
They say it takes a village to raise a child, well, it takes a village to get rid of debt. Surrounding yourself with people in similar situations who have also committed to improving their financial wellness can be empowering and help you build better habits. In Tiffany’s Dream Catchers Facebook group, there are over 465,000 members in over 100 countries supporting each other daily towards the same goal – financial wholeness. The group provides a natural starting place for members to relate to each other and it also provides built in accountability.
“Tell them your goals. Ask them to help you stay the course when it gets tough. And don’t forget to share the (eventual) wealth.”