Finances aren’t something we typically discuss here – it’s even often considered unspiritual to talk about or worry about money – but let’s face it: financial security makes it a whole lot easier to achieve the life you want to live, whether that means buying an RV and traveling to all 50 U.S. states, or trading in your job for one that is more fulfilling but pays less. My husband recently did exactly that: quit his mind-numbing desk job to go into nursing. But as with all career transitions, he has to start at the bottom, which means his salary has been cut in half. Fortunately, we’ve made a number of smart financial decisions over the past several years that make this transition possible. Here’s how we’ve done it.
Buy life insurance, especially if you are the primary breadwinner. This became my number-one priority when we decided that Ryan would switch jobs. Life insurance policies can be surprisingly affordable – as little as $10 a month for a $100,000 plan. Now, if something should happen to me, I know my family won’t be left destitute or in danger of losing our home.
Have a retirement plan. If your company doesn’t offer one or you are self employed, open your own retirement account. Some companies will offer matching contributions – take advantage of them to the fullest extent that you can.
Use your employer -sponsored flex spending account (FSA). Flex spending accounts allow you to deduct pre-tax funds from your paycheck to be used for medical expenses, like co-pays, prescriptions, and medical services that aren’t covered by your insurance, like LASIK surgery. If you have kids, you can also use your FSA funds for daycare expenses. Just make sure you understand what’s covered by your plan so you aren’t left footing the bill for a non-reimbursable expense. FSA funds are “use them or lose them,” so before you sign up to have a huge chunk taken out of your paycheck, make sure you will have enough medical expenses the following year to use up the money in your account.
Know your debt. If you have credit card debt, hiding your head in the sand isn’t going to make it go away any faster. Keep a spreadsheet of all your accounts, your balances, and your interest rates. Keep an eye on your account and look for any changes. By keeping your accounts in good shape, you may be able to …
Negotiate lower interest rates. Contact your creditors and see if they can reduce your rates. If you have significant interest rates on any of your accounts and can’t get them lowered, consider transferring them to an account with a lower rate. You’ll probably have to pay a transfer fee, so make sure you’ll be saving enough over the long run to make it worth it. You can sometimes negotiate lower rates for utilities and others services as well – I recently got our internet bill cut from $45.95 a month back down to our original rate with our provider of $29.95 a month.
Pay your bills first. When you get your paycheck, pay all of your bills, hold back enough to live on, and then put the rest towards your debt. I keep another spreadsheet so I always know what I have to pay with each check. Make sure you pay all your bills on time so you aren’t hit with late fees that not only add on to your balance, but can also hurt your credit score.
Focus on one credit card at a time. Pick a card that has the lowest balance and/or the highest interest rate, and throw as much extra money towards it as possible every month. Make smaller payments on your other accounts. Then once you’ve paid off the first card, funnel all that money towards the next one. Being able to cross those accounts off your spreadsheet is extremely gratifying and motivating. Between the two of us, Ryan and I had seven credit cards at one point. Now, we’re down to three. It’s much more manageable and it has really allowed us to see the light at the end of the tunnel.
Know your credit score. Credit Karma is a great tool that helps you manage your accounts and allows you to monitor your credit for free.
Use a credit card with a rewards system. This one takes some discipline, so don’t do it if you don’t think you can control your spending. I put most of my purchases on a Discover card that gives me cash back. Then I can apply my cash back bonus to my balance when it reaches $50. Or, I can apply my cash back rewards directly to purchases on Amazon.com . Frequently, your card may offer a special promotion for a limited time, like additional cash back for gas or grocery purchases, but you may have to sign up for these extra promotion, so watch for them and be sure to sign up.
Finally – and maybe most importantly – be grateful for what you have. Be thankful now for your financial abundance, before you even have it, and the universe will send more abundance your way. If you are constantly sending feelings of lack into the universe, then that is what the universe will send back to you. If you constantly tell yourself that you’re poor or unable to afford something, that will continue to be your reality. Rhonda Byrne, author of The Secret, recommends not opening bills until you can convince yourself that they are actually income, and feeling grateful for them. As always, don’t worry about how the universe will provide, just trust that it will. You may be surprised by what the universe sends your way.