When My Money Got Out of Whack
I’ve talked a little about how I lost track of my dream and then came back to it (to read the full story, I’ve written a 2-part blog you can get here).
What I haven’t talked about is that over the past couple of years my numbers were no longer working. What do I mean by that? Well, my percentages had drifted, and I was barely covering my basic needs and savings.
Those of you who have followed my writing know that I recommend 60% or less of your after-tax income go to basic needs (housing, food, transportation, medical), 20 to 30% to savings, and the rest is fun money.
So when I first worked out my percentages, I had a full counseling and money coaching practice 4 days a week and I was working in the ER 1 to 2 nights a week.
But over the past 2 years I had stopped working in the ER and was slowing down my therapy practice in Denver. My plan was for the money coaching business to make up the difference.
As I started to look for my new home in the country, I realized that my money coaching business would have to transition to being fully online because I was going to move farther away than first planned. And as those of you who have online businesses know, this can take a while to build.
So here I was, a money coach, with my numbers out of whack and a plan that was falling apart. Yikes! You can imagine my shame about this.
I realized I needed to take a hard look at my plan, and then make some serious adjustments. So I brainstormed . . . and brainstormed some more. Here are some of the things I considered:
- Buy a smaller house
- Buy 10 acres of land instead of the 40 I’d planned
- Do ER evaluations in my new rural area
- Delay my move and increase the number of clients in therapy
- Charge more for my services
- Take on a temporary boarder
- Keep my old truck for longer than planned
- Buy another fixer-upper home for less than I had planned to spend
I didn’t have to do all of these things – I chose a few and moved forward. (As you can see from the photo, one was to buy another fixer-upper. Not too hard a decision, since almost all the houses are fixer-uppers out here, and that’s my hobby anyway!)
The point in telling you this: When our numbers aren’t working, we need to make adjustments, the sooner the better.
So here’s my challenge to you. Take a good look at your numbers. Are they working and sustainable? Are they providing the safety and security your family needs?
Here are some specific questions you can ask: (If you have records from all of 2015, use those; if not just look at last month.)
- How much did you earn?
- How much did you save? What percent of your after-tax income went to savings?
- How much did you spend?
- Did you spend less than you earned or did you rely on credit cards to make up the difference?
- If the answer to #4 is yes, how much credit card debt did you take on?
- What percentage of your after-tax income did you spend on basic needs (housing, food, transportation, medical)?
- In 2016, do you want to have similar numbers at the end of the year, or do you need to make a change?
- What do you need to change now so that your numbers are on track? Brainstorm 10 ideas of things you can change. Do this with your partner if your finances are combined.
Once you’ve looked at your numbers this way, you can set your goals for 2016 – how much you need/want to earn, how much to save, what you’ll save for, what do you want to learn about money this year, how do you want to feel about money this year?
If your money is on track, congratulations! You can keep doing what you’re doing and know that you’re managing your money in a way that is sustainable and safe.
But the only way to know this, and get the peace of mind that comes with it, is to take a truthful look.
The process I went through was painful. I didn’t like my numbers for a while there! But with the changes I made I’m on track to live sustainably in my new country home, and that feels really good!
I want you to be able to feel that same sense of calm and safety with your money. I hope you’ll take the time to have that little talk with your money!