Beating Broke

Personal Finance from the Broke Perspective

Financial Intentionality

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Financial bloggers, myself included, speak rather frequently about setting goals for your financial life.  Goals are super important.  If you don’t have a goal, you have no direction.  Further, if you don’t have a goal, you have not intention for your money.  You are intention-less.

What is your intention for your money?  What purpose should your money serve?
Pay-offA typical goal for money is to pay off this or that.  To save for this date, or this item.  But, deep down, there is an intention there.  If your goal is to pay off a debt, the intention is for your money to make you debt free.  If you’re saving up for something, the intention is to buy what you want without adding debt.  If you’re saving up for a date, the intention is to reach that date with some amount of money to pay for things without adding debt, or having to live in a trailer.

Financial Intentionality, in my mind, is more important than financial goals.  If the intention is all wrong, it just won’t help you out.  I don’t think that it’s black and white.  Call it karma, or morality, or whatever, but having a good intention will always get you farther than a bad one.  Not only that, but I think that intentionally guiding your money is a better way.

My intention with my money is to facilitate a debt free lifestyle where I can enjoy what I do, and not have to worry about where the next payment is going to come from.  There are sub-intentions.  Or, rather, intentions that lead towards that grander intention.  I intend to use my money to pay off my debt.  I intend to use my money to provide for my family in a way that allows us our necessities and a few luxuries without causing us to go further into debt or life extravagantly.

What are your intentions with your money?  Are the goals that you’ve set in line with those intentions?

Study what you do with your money.  Are your spending habits in line with your intentions?  How about your goals?  Perhaps your intention is to become debt free, but, one of your short-term goals is to save up for a new HDTV.  If you don’t really need that TV, your goal is way out of line with your intention.

Spend your money with intention.  Keep your intentions in mind as you set your goals and spend your money.

photo credit: Truthout.org

Beating Broke Rules: Bonuses

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Beating Broke Rule: Spend your Bonuses wisely.

Every year, many of us are lucky enough to receive some sort of bonus from our employer.  (If you’re self employed, that’s bonus enough. 😉 )  And when we do, the inevitable question arises.  What do I do with the money?  And then, how to budget for it?

The simple answer is to spend it wisely.  In a more complex answer, it depends on what your goals are for your financial life.  Using your bonus to buy Christmas presents may make you feel good for a month or two, but will you feel guilty afterward?  You’ll feel much better, in the long run, if you spend the money wisely towards your goals.

198/365 - paydayHere’s the downside to that, though.  You’ll also feel guilty if you use it all for debt repayment.  Each of you will have a different situation, but here’s how we usually use our bonus here in Beating Broke.

Consider taking 10% of the bonus and blowing it.  Buy some presents.  Take your family out to dinner and a movie.  Whatever you want.  Give yourself 10% in cash and free rein to do whatever you want with it. You’ll feel better when you do.

With the remaining, take a look at your situation.  Do you have a purchase that you’ve been saving up for, or putting off until you could afford it?  I’m not talking about those gifts, or the television upgrade, but things that you really need.  Maybe some costco eyeglasses? For example, a portion of my bonus (if I get it) will go towards buying new tires for one of our cars and paying for a repair that one of them needs.  It won’t take the whole bonus, but a good portion of it.  And it will be extremely relieving to not have to come up with that money out of my normal paycheck.  If the bonus doesn’t come, I’ll still have to pay for those things, but it might take a little longer to pay for them.

Maybe your situation doesn’t have a purchase like that that you need to pay for.  But, maybe you’ve got some debt that it could help retire.  What we don’t spend on tires and repairs, will likely go towards paying off a debt.  It won’t pay off any of them all by itself, but it will cut the payoff by several months.  And, while that doesn’t give me the same feeling that just blowing the money on stuff does, it will leave me feeling much better for a far longer time.

The bottom line is this.  Think about how you spend your bonus and spend it wisely.  You’ll feel much better for it.

photo credit: jypsygen

The Debt Free Treadmill

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Treadmill WorkoutWhen you’ve got bills and debt to pay off, you are constantly feeling like you’re running a personal finance marathon.  Each month is a sprint to the finish to see how much debt you can pay off.  We do it to get to that finish line.  To send that last check (or bill pay payment) and then run into the streets screaming.  Some of us may even follow that up with a call to a certain Mr. Ramsey.  With any luck, most of us will reach that point sooner rather than later.

But, then what?  We’re done paying off debt.  We don’t need this silly budget thing anymore right?  And we certainly don’t need to be worried about how much we’re spending.  And so what if we leave a balance on our credit cards now and again.  Wrong.  Oh so wrong.  If your years of debt repayment hasn’t conditioned you to it already, you’ll soon find out that you still have to do all of that.  You might be able to loosen the strings a little, but keeping those habits is what will keep you from ever going back there again.

Just like any physical trainer will tell you; if you want to keep in marathon shape, you’ve got to keep maintaining your fitness. You can’t expect to stop and then still be able to run another marathon. In short, you’ve got to keep on the treadmill.

With all of your debt paid off and only your monthly expenses to worry about, you’ve got to get on “the Debt Free Treadmill”. You’ve got to use it to keep your self in financial shape. However, in this case, it is so you never have to run that marathon again. Debt is an easy trap to fall into. It only takes one lazy month to leave a little balance on a credit card and start the cycle all over.

Get on “the Debt Free Treadmill”!  Keep yourself in financial shape by continuing the same habits of saving, budgeting, investing, and frugality that you used to finish that marathon.  Use it to your advantage.  Unlike a large majority of the people in this world, you aren’t running that marathon.  Best of all, you get to use that financial fitness to benefit others.  Share your knowledge, and help people reach the marathon finish line so that they can jump on “the Debt Free Treadmill”!

Image Credit: Treadmill Workout by sirwiseowl, on Flickr