To this day, I still won’t eat peanut butter — all because of that horrible feeling you get from being financially out of control.
Let me explain. When I was in elementary school, there were days I couldn’t afford a normal school lunch. So the lunch ladies would begrudgingly hand me this sad-looking, cellophane-wrapped peanut butter and jelly sandwich. The other kids gave looks that varied from pity to disgust.
My parents weren’t great at managing money. But with every mouthful of dry sandwich, I vowed that when I was an adult I would seize control of my own financial situation so that I never had to eat peanut butter again.
These are the five key lessons I learned on that journey.
1. Being in Control Means Knowing Where You Stand
Two things I always have: a detailed budget showing my spending and a copy of my credit report.
Don’t let the thought of a budget scare you though. When people hear the word budget, they automatically think of a “money diet”: no Oreos, no cheeseburger — just boring salads.
But it doesn’t have to be that way when you’re just getting started. My first budget was a pretty simple Excel file that showed how much I made, how much my bills were, and the average amounts I spend each pay period on food and shopping.
A budget simply needs to show where your money is going. (The flip side is just paying your bills when they come up and hoping for the best.) Are you spending more than you think on entertainment? Eating out? Happy hour? This is important information as we move into the next step.
Meanwhile, think of your credit score as a sort of grade measuring how effective your current budget has been.
2. Being in Control Means Knowing What Your Priorities Are
For me, one of the biggest things to get me through the workweek is knowing that on Friday a big group of us go out to lunch together. Every other day, I pack lunch, but on Friday we go out and have a great time.
But, when I did my last budget update, I realized just how much money I was spending a month on these beloved Friday lunches and it shocked me: It was around $80 dollars a month. And let’s just say that compared to my income, this was really high.
So I considered cutting it,. But I realized that it was money I truly wanted to spend: It was a priority. I valued this experience because it helped motivate me to be good at my job, which in turn earns me more money.
But to make something a priority, you have to give something up. For me, it was some of my television subscriptions. I was spending $40 a month on subscriptions, but most days I came home and just surfed the Internet.
It’s your life though. Your priorities will be different. The important thing isn’t which calls you make — it’s making sure you’re choosing them instead of going on autopilot.
Use your budget information and your values — and then knowingly make a choice to spend where you get the most happiness. When you prioritize your spending based on your terms, you’ll find you can make $80 go further in happiness than you think.
3. Being in Control Means Managing Debt Wisely
It’s hard to be in control of anything when your health goes bad. And it turns out, a study out of Northwestern University shows that being out of control of your debt can have a huge impact on your health.
“We now live in a debt-fueled economy,” said Elizabeth Sweet, lead author of the study titled The High Price of Debt. “Since the 1980s American household debt has tripled. It’s important to understand the health consequences associated with debt.”
What are those consequences? Those who had the highest debt to asset ratios had the poorest measures of self-reported health standing and the highest diastolic blood pressure.
I’ve been both sick and in debt and it’s no fun. Having uncontrolled debt can mean having uncontrolled health: a double whammy no one should have to deal with. You can’t be unwell and live life on your own terms, because it’s fairly safe to say that everyone’s terms include being as healthy as they can be.
So okay, you should include within your budget a way to pay down your debt. You don’t have to go crazy, but your body and mind will feel better because of it.
4. Being in Control Means Having Meaningful Conversations About Money
Managing money is tough. Marriage is tough. Together they can be a recipe for disaster. And I can speak from experience that divorces are expensive and messy.
If you’re managing money with someone else, you both need to be on the same page or else you could be working against each other and the relationship without knowing it.
“Arguments about money is by far the top predictor of divorce,” Sonya Britt, assistant professor of family studies and human services and program director of personal financial planning said in a release detailing a study from Kansas State University. “It’s not children, sex, in-laws or anything else. It’s money — for both men and women.”
But when it comes to talking about shared finances, a dangerous cycle emerges. The negative memories from fights about money lead to the couple avoiding conversations about money — which leads to more money problems to fight about.
The solutions? Britt recommends sitting down and talking to a financial counselor to find out how you can compromise in a health way.
If hiring help isn’t within your budget, another option is having bi-weekly meetings going over your financial situation together — paired with an activity you enjoy. The happy activity will reinforce in your brain that talking about money can be constructive and positive rather than just damaging.
5. Being in Control Means Being Nice to Yourself
There will be times that you fail. There have been times I made choices that left my bank account in shambles.
You always have a choice in these moments of failure: You can shame yourself, or you can help yourself. It’s important to recognize mistakes when they happen. However, it’s destructive to let that send you into a downward spiral.
I took these bad choices and learned from them — and you should do the same.
Overdraft your account? Look at your budget to see why, and make a decision that will help you prevent it from happening again.
Credit score takes a dive? Look at your report to see why, and make a decision that will help you prevent it from happening again.
The key thing is to not beat yourself up. Learn from it and move forward or else you’ll be too downtrodden to make the important decisions you need to make. In life, there’s so much you can’t control. But by taking the bad as opportunities to learn and gain the control — you can put yourself in the driver’s seat to live your life on your terms.
My greatest trills came from lack of employment for a period of seven years. I worked for a company that killed people when they ran out of funds in a nursing home. I was accused of abuse to cover up the truth. So I wasn’t able to get work in the health care industry in Minnesota. Then I went to Über who did the background and found me innocent and hired me as a 1099 employee. I made that work for two years then the police department were writing folones charges against me and I never was heard in court I was made to pay the fines and removed from the system. When I was able to get into the courts I was told by the prosecutor that I was grossly miss represented and it will cost me $1500 to correct the problem. Any time outside of these two business I was told I am over qualified so no one would hire me.
I work afternoons and nights, finding time to work on my fiscal problems is hard to come by .
I’m sorry to hear that. Have you considered using a credit repair company to help you out? We personally prefer CreditPros (855-980-4898) but there are others out there that can help you out so you can save your time.
How do I get the creditor to reduce the Interest rate on a loan falsely advertised
at 5 to 7%.but charged me 32%. This was either missed or not disclosed on line
when the contract was submitted. Thank you. Ruby
So sorry to hear what you’re going through. We have an article on how to lower your interest rate, listed here. I hope that helps!
Excellent articles. Very helpful. Skeptical regarding companies can fix or reoair your credit for a large fee. I or you are the only one who can do that. Thanks for the great articles.
I have very low provable income.my debt to income ratio is very high.A debt consolidation loan would help me tremendously but I cannot qualify.I have tried with the lenders you have recommended.A loan would free up between $1500-$2000 dollars a month!but lenders won’t look at my credit report which shows all my payments on time and all of my outstanding debt.there is know way I could pay this debt each month with the income I can prove but lenders need provable income.I understand that.bankruptcy is not something I want to do.Is there any other option for someone in my position?