Financial Reflections: 2006

Prepare yourself for a long post.

I have been a good shopper all of my life. Learning to shop for clothing on an allowance as a youth made me become like a bloodhound for good deals. From 8th grade on, I purchased about 70% of my wardrobe on an allowance of about $25-30 a month. The rest was filled in by Mom. I chose to do this because I *loved* fashion. I started working when I was sixteen, and I blew all of that money on clothes and other various things as well, but you would be astonished at how much I got for my money.

I was never taught anything about money, budgeting, or finance. I didn't know that you were supposed to tithe 10% until I was a teen. I was okay with knowing nothing about money until last year when my spending had begun to spiral out of control. No, I did not have credit card debt. I have only carried CC debt for brief periods in between receiving loan or grant checks from school, and now I don't even do that. At that time, I found that I was wanting more and more expensive items to fit my "professional" image. I reasoned that within a few years I would be working as a psychologist, and I wanted to look the part (nevermind that most psychologists are, shall we say, not the best dressers!). Suddenly $400 handbags did not seem extravagant. I had forgotten my roots and how to get a good bargain. I felt out of control and I resolved to do something about it.

I felt that there must be a better and cheaper way to live. Looking back, I truly feel it was God's prompting that led me to a life where I feel so much more fulfilled. I feel so much more freedom now that I involve God in my finances. In June of 2006, I began by doing internet searches on frugal living. I found message boards, blogs, and informational websites that amazed me. I learned how to live on very little and the importance of doing so. Reading all of this information led me to read finance and frugal living books. In the last six months of last year I read: Your Money or Your Life, The Millionaire Next Door, Rich Dad Poor Dad, The Complete Tightwad Gazette, Living Well on a Shoestring, and several others. I began to modify my behavior in the following ways:

1) I kept track of spending to see where it went.
2) I began using coupons on products that I normally purchase.
3) I began looking for printable or regular coupons every time I knew I was going to eat out or visit certain retailers.
4) I tracked how much money I had earned in my lifetime. This was *very* depressing since I had nothing to show for it.
5) I began to go for weeks without needing to shop. Or wanting to shop.
6) I found cheaper resources for things I normally purchased (e.g. the library bookstore, using Staples ink coupons for school supplies and ink cartridge purchases, J.C. Penney end of season clearance sales )
7) I saved $1000 for a baby emergency fund. I still haven't read Dave Ramsey's Total Money Makeover since I'm too cheap to buy it, but I follow many of his principles and visit a messageboard about his steps regularly.
8) I began using rebates to get free products.
9) I learned to view frugality as a game or competition rather than as something hideous that I had to do. It truly is fun to me.

I have done well in the six months of last year, but I also need to do some improvements. The reality of my schooling is that I will have about $130,000 in debt when I graduate. Thankfully, that will be my ONLY debt. I have plans to pay it off in under ten years, and this is not a negotiable thing for me. I will not have that much debt (plus compound interest!) hanging over my head for thirty years. There are loan repayment programs that give you $20,000-$25,000 a year towards loan payments if you work in "underserved" areas. I plan on enrolling in such a program if they are still funded when I graduate. However, I am confident that with the skills I am learning that I will be able to get out of this debt completely on my own if need be. On one messageboard that I read, a couple got out of $70,000 in debt in three years by working as much as possible and throwing all their extra money at it. This is very encouraging to me!

I also wrote down some financial goals for 2007. If you are not in the habit of writing down your goals, whatever they may be, I encourage you to do so. Studies have shown that people who write down their goals are far more likely to achieve them. I won't bore you with all of them, but here are a few:

1) Establish a budget when I begin internship and have steady income. There is a great online calculator for this at Crown Financial Ministries.
2) Save all windfalls rather than frittering them away on stupid stuff (rebate money, consignment shop checks, anything extra).
3) Shop less. Shop secondhand when possible.
4) Make do with what you have rather than buying new.
5) Pay off car early (in April) and continue to save car payment amount so that I can purchase my next car with cash.
6) When I begin internship, pay whatever I can on my student loans even though I am not yet in repayment.
7) Live below your means!
8) Continue to thank God for His provision and learn to see His hand in everything. He provides me with everything, both financial and "things"-wise. All that I have is His.

Happy New Financial Year. :P