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Minimalism: A lifestyle for us all

Do you remember the apartment I mentioned in my last article? The one I moved in to, to pay $200 dollars less a month for rent? Well since signing in September, my monthly payment isn’t the only thing that has decreased significantly.

Back in August, at the peak of our desperation to find an apartment, my roommate urgently called me from an open house showing. I could hear the smile in her voice on the other end of the phone. “I think this is our place. It’s small, don’t get me wrong. The rooms are tiny. But the location is perfect and rent is unbeatable!” Before I had a chance to respond, my phone started buzzing in my ear as pictures of the place popped up on my screen. I put her on speaker and zoomed in on the images. The place looked livable from what I was seeing, but pictures had previously deceived us. I decided to leave work early and head over to catch the tail end of the showing.

She wasn’t lying, the apartment was very small. Standing with the realtor in the kitchen, the most spacious room in the entire place, I brought up the questions he didn’t want to answer. “So what exactly are the dimensions of these rooms? I need to make sure my bed will fit.” He lead the way to the smallest bedroom without a closet, folded open the crooked, shutter style doors and let me walk in. “The room you are in now is 7×7 feet.” I pulled out my phone and Googled the dimensions of a queen size bed. “Okay, it looks like it will just barely fit. Queen beds measure about 5×6.” We both giggle sighed and shrugged our shoulders.

When I made the decision to live in this apartment, I knew I was going to have to get rid of over half of my belongings. I knew I did not have room for all of the clothes, furniture, decorations and other STUFF I had been living with for years. What I didn’t understand at the time was that the terms of this commitment would change my life for the better. Now even though I only have a bed in my room, a wardrobe consisting of only the clothes I feel good in and a fridge with only the food I will eat within three days, I am more satisfied than before.

Over the holiday break, I watched the documentary Minimalism on Netflix. It was amazing hearing neuroscientists and other striving minimalists describe what I have been experiencing for months. One minimalist explained, “every possession serves a purpose that brings me joy…when I look around I have to justify to myself, does this add value to my life, and if it doesn’t I have to be willing to let go.” Letting go of things that do not have utility can be difficult, especially if we have an emotional attachment for whatever reason. Speaking from experience however, the letting go is the hardest part. Living life with less has not only helped me save money, but has allowed me to shift my focus toward my relationships and my personal goals.

So this year I challenge you to first watch the documentary, and then begin taking small steps to become more of a minimalist. No, you do not need to move into a smaller space to start living this lifestyle. I do however, encourage you to choose quality over quantity. Let go of anything in your life that isn’t serving you right now and begin valuing and caring for those things that do. Needing less will not only make you richer in the bank, but richer at heart.

Mind Over Money

When I graduated in the spring of 2015, I thought I had it all figured out. I had some money saved, a job lined up and an apartment to move in to. College had been a blast, but I felt mature and ready begin my life as a real adult. I was going to succeed and it was going to be a breeze.  

Now, a year and a half later, I sit here writing my first post for my brother’s finance blog. See, I used to think this blog was dumb. I didn’t understand what BeatingBreakEven really meant and always thought my brother was wasting his time talking about money so much. But after switching jobs in June for a salary raise and signing a new lease, for rent that was $200 dollars less a month, I realize I am exactly where he was. I am broke, have no concrete plans for my future and am extremely unsure of myself.

In the past few months I have been thinking a lot about my life and who I want to be. I’ve thought about what to do next in my career, thought about what city I want to move to and thought about how to save more money. I’ve also spent a lot of time contemplating my inner motives, my deepest fears and my varying levels of self esteem. In this process of psychological discovery, I have begun to understand just how powerful our minds really are. They can be our biggest tool for success and the biggest obstacle.

I have started to experience first hand how becoming more aware of my thoughts and psychology can really help me achieve my goals. I mean don’t they say that you can achieve anything you put your mind to? Mastering your mind will not only make you a happier person, but will keep you on track to reaching your long term goals. Since many of my goals are financially based at the moment, I went through last month’s credit card statement to recount my recent purchases. Besides food, almost everything I bought was unnecessary. Nails, makeup, new shoes, drinks at the bar, etc. Practically everything on there were things I bought to feel better about myself. For many of us millennials, our credit card statements are a long list of our deepest insecurities resurfacing as impulsive spending habits. It’s actually pretty scary. Working through my insecurities and understanding the motives behind my purchases has started to help me say no to a lot of things I normally would have swiped for without thinking twice.

If we want to change our spending habits, we first have to change our thoughts. Seems simple and intuitive on the surface, but our minds are really unexplored territory for many young adults. We millennials do not spend enough time understanding our needs, wants and desires and instead, act on impulse as a way to band aid our immediate emotional challenges. We are impulsive because we do not take enough time to think and we spend because we don’t want to feel. We really need to learn how to understand our thoughts and be okay with our emotions, so we can make healthy, logical financial decisions.

FOUR Financial Lessons from the Homeless

New York is one of the biggest financial capitals of the world. Finance is everywhere in this city, whether in the billion dollar hedge funds that are making million dollar deals or the restaurant owners calculating bar tabs, brunch receipts or tenants saving for the unruly rent they owe their landlords at the start of each month. 

One lesson I have learned from observing the homeless on my street, is that being a pure minimalist has its benefits. These people carry with them only what they need and nothing more. It would be inefficient to carry around dead, excess weight. We as millennials need to understand why excess is bad and recognize how our spending habits are based on desire instead of necessity. If we all became more aware of the things that we buy and their ability to clutter our lives, we might start to realize that material goods do not help us meet our goals or delay the process.

The second lesson we can learn from the homeless is how we can market ourselves well to attract the attention of others. I regularly encounter homeless individuals on the subways and in the streets. They are holding signs that tell their story or are yelling at passengers about their specific misfortunes. Many of them have had a lot of practice doing this, so they know what works and what doesn’t. They are forced to put their best foot forward and try and try again to sell the bystanders on a few dollars of investment into them. They are essentially pitching themselves to an audience of investors, like you see startups do on Shark Tank. When you want money for an investment or business, or are trying to land the perfect job, you need to market yourself to your best ability. This means looking the part and connecting with the given audience on a personal and real level. The homeless live it everyday. Their survival depends on it.  Since yours doesn’t, if you were to apply the same sincerity and passion into improving your current state, you would likely get very far.

The third lesson is utilizing the resources around you to the best of your best ability. I was in the train station one time and a homeless man was cleaning all of his clothes in the bathroom sink. Since the station is a public facility, this was free to him. He was being resourceful. I also see many homeless people using public places for shelter or the public library for entertainment to pass the time and read or subway seats as beds. We as millennials also have boundless resources around us that will cost us little to no money to utilize things such as books, mentors, the internet, newspapers, other people in our field willing to help us if only we just ask. Many of us do not use these resources to our advantage as we should.

The fourth lesson is that homeless people ask for what they want. If asking doesn’t work with one person, they try and try again. They are relentless because they need to survive. They will badger so many people and most of the time it works. I know because I see so many people fall prey to their tactics and reach into their pockets to grab money. Its human nature to feel empathetic towards other people and want to help them out. Ask for what you want and if you get denied ask someone else.

The final lesson to consider is that homeless people use a cash based accounting model. These days everyone is in debt. Debt is a tool, but most of the time people, especially people our age, abuse this tool. Homeless people collect cash, use that cash and simply go and try to get more when they run out. They don’t just put their purchases on a credit card. People need to realize that we should only spend what we have available. Try carrying around a specific amount of cash each day, spending only what you need and nothing more. Don’t always be putting the little things in life on a credit card because it creates bad habits that are hard to stop.

 

Take Control of Your Financial Future By Paying Yourself First

One of my most memorable lessons from my childhood was when I learned the importance of “paying yourself first.” Many of my peers and friends have complained about their money problems; bills weigh on their mind and they become stressed living paycheck to paycheck. While it is important to stay cognizant of costs and expenditures, too many people make paying their bills their number one priority.This leaves them treading water just to keep their nose out of the water. This is definitely not detrimental, but it will not leave you on top or help you reach your more long term financial goals. I’m here to tell you why it is more important to pay yourself first before paying any bills.

The common routine for many millennials is to set aside money every month for costs, such as rent, transportation, etc. and then treat the leftover money as free spending to blow. Instead, I am suggesting that you first set aside an amount, “personal bill” and then using the rest to supplement bills and other costs. Creating this kind of system will change your mindset about your money. First and foremost you will be saving and secondly, you will be more calculated and thoughtful about how you spend your earrnings. Putting your money in a personal account will prevent you from spending carelessy.

An easy way to start this spending transformation is to go to the bank and open up an account specifically for your savings goal, whether it be a car a house, business or your future. These accounts can be set up so a percentage of your weekly paycheck is directly deposited. This can also be accomplished by setting up a a pre-tax or Roth 401K account. With these types of programs, some of your “extra” money will go directly towards yoru retirement fund that you will be able to acess around the age of 65. As I’ve written about in previous blog posts, a 401k adds a percentage of your paycheck and in many situations your employer will also match your contribution up to as high as 5%.

By focusing on long term financial goals and redesigning your spending/ saving schedule, you can really improve your financial standing. Having a personal account can also bring more security and allow you agency to act on larger investment opportunities that could present themselves in the future. With this mindset, budgeting becomes a crucial component to your life. You should always be adding your savings or “profit” into your weekly and monthly budgets. You want your personal account to be a guaranteed resource you can draw on, so maintenance and continual deposits are crucial. Your other finances will naturally accommodate and adjust for this extra profit and you will in-turn become more intune and financially savvy.

A further benefit to “paying yourself first” is the secondary psychological effects from having saved money. It can be a great feeling to know that you are now controlling your own financial security and this can in-turn guide even more smart choices for how to save and invest money that comes your way in the future.

How The “Little Things” Can Control Your Financial Health As A Millennial

The other day I was in my apartment after a long workday and the Internet was down. Seeing as though I didn’t have much else to do without our beloved muse, I decided to re-watch one of my favorite movies: “Vanilla Sky.” For those of you who have not seen the film (shame on you), Tom Cruise gets in a horrible accident and is left with a deformed face. He must then go through life wearing a mask, reinventing his identity and hiding himself from his former life. The movie ends with a quote that I will never forget, “the little things in life…there’s nothing bigger, is there? In the context of the movie, Cruise’s character was referring to all the little moments in life that add up and can bring you happiness. While this is definitely true, I also think it can be applied in other areas of life, such as your finances! 

It’s the little things expenditures in life that add up and can lead to the biggest sum of debt. It’s the Starbucks, the fast food, the taxi rides, the drinks, the hair products, toothpaste, the gum or the dates that you pay for and buy every week that add up. Compared to more serious investments like your monthly rent, these expenses don’t seem very damaging to your wallet, but over time these costs combined can be very detrimental. 

What’s a couple bucks here and there? A couple of bucks here and there is $3,000, 5,000 or 10,000 dollars worth of small instant gratifications spent over a year. One thing you can do to prevent these small costs from getting out of hand is to plan ahead and budget exactly how much you have spent in the past, over a certain time frame. I’m predicting the results will blow your mind. Just the other day I was looking at some of my daily spending habits. Every day I get breakfast for about $4.50. Multiplied by 261 workdays in a year, I am spending $1,174.50 on a breakfast that could cost me $0.75 if I prepared it for myself at home. Lunch was even more costly, at a daily rate of around $9, meaning I have been spending $2,349 a year. If I cut that down to $3 a day, I could save $1,566 a year. Taking this out of your yearly salary on an annual basis makes that delicious lunch much less tasty. 

Every day I see some of my co-workers take their twice-daily trips to Starbucks. If we are saying on average a Starbucks order costs $3- $4, so x2 can be as much as $7-8. This then equates to $2,088 a year. Is it really the coffee they want? Especially when we have a Kurig machine right in our break room providing the office with FREE COFFEE in over 15 different flavors. Now some of this can be justified with needing a break from work and a friendly ritual with co-workers, but the point I am trying to emphasize is that you should really consider just how necessary these small purchases are in your life or if there are ways you can cut down on your spending with cheaper alternatives. If you want to be financially successful throughout your life you need to always be analyzing your wants over your needs. Do I really need this or do I just want it? 

A good way to counter this mentality is to focus on the why you are spending so much money on these things and if you can do without them in your life. Try to find substitutes if possible with smaller unit prices. If you’re out of college, maybe you want to buy your first car, a trip or a house in the near future. Setting larger goals will help detract from spending so much on the smaller stuff, especially after you have realized just how much every dollar counts. Staying away from instant gratification purchases will make you happier and more successful in the long run. Just remember that its the little things you buy that can be the biggest threat to you’re financial health, so always be aware!