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10 Things Learnt From The Two Roommates Who Saved More Than $55,000 A Year

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10 Things Learnt From The Two Roommates Who Saved More Than $55,000 A Year

Reading the story of Geoffrey Szuszkiewicz and Julie Phillips, who saved $55,000 dollars in one year by choosing to buy nothing, brings back memories of when my wife and I first got married back in August of 2010.

Coming out of college was rough for both of us. Like most new college graduates, we were broke and had no money.

However, on the night of our honeymoon, we decided to make a savings goal. Our plan was have twenty thousand dollars in cash saved by August 2011. Sarah was still in school at the time, so we were going to have to accomplish this intimidating goal on the salary of an assistant manager in the retail industry.

As you can imagine, this wasn’t easy. Saving money is a lifestyle change; one that is more than anything, mentally and emotionally draining. Like Geoffrey and Julie, Sarah and I also lost friends. We also had doubts and many times wanted to quit.

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However we stuck it out and reached our goal just a few days shy of the one year mark. The decision we made to save gave us a sense of security and peace of mind.

Hopefully you too will find these ten tips I learned useful as you plan to save money.  They are simple and very actionable.

 1. Check your pride; you will need to live minimally.

If you want to save money, you cannot be sold out to the cultural expectation of having nice things. This is because you will need to adopt a minimalist mindset if you are to be successful. Do not confuse minimalism for self-denial. I mean you don’t need a fancy car with a monthly payment. You may have to drive a beat up clunker for a while.  Keep your clothing simple, no buying fancy designer outfits.  Like Geoffrey, you will have to delay the pleasures of travel and consumerism.

2. Decide how much you want to save

You must have a tangible goal set.  Look at your income and decide how much of it you want left your bank account at the end of the year.  Geoffrey decided to save 65% of his take home pay while I decided to save 50% of mine. There is no magic number, just decide how much of your hard earned money you would like to keep. There is an alternative to being a consumer, and it is being a saver.

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3. Whatever is left is your take home pay/ Allocate wisely

Say you make $3,800 after taxes a month and you want to save twenty thousand in one year like Sarah and I did, you will need to save $1,670 every month. This means that you only make $2,130 a month.

That is all you have for rent, gas, groceries, gym memberships, fun money etc. Make sure you allocate wisely.

4. Keep your rent or mortgage no more than 25% of your net income, or get a room mate

This means that your rent or house payment cannot be more than 532.50 if you use my example.

Sarah and I moved into a 350 square foot apartment for 315 a month that year. Geoffrey moved in with Julie to save money on the rent.

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5. The quickest way to get a fifty percent raise is to cut your bills in half

I eliminated my gym membership fee ($60 a month) by working part time as a personal trainer at my local gym. I also cancelled my cable service ($180 a month) for Netflix ($8 a month). We also cut our grocery bill in half by sticking to simple diet foods (rice, chicken, potatoes etc.) I also biked to work, while Sarah walked to class ($200 in gas). All in all by cutting our bills in half, it was as if I received an extra $500 a month. Julie quit going out to eat all together and Geoffrey went as far as to quit getting haircuts.

6. Designate an accountability partner

Every month end, I would show my good friend Jeffery my account balance. Knowing that he was going to see my deposits was enough motivation to deter me from dipping into my savings. If my account was at $1,670 on January 31st, it had to be at $3,340 on February 28th.  Geoffrey and Julie created a website and blog to let the world in on what they were doing and used this medium to keep themselves accountable

7. Save first, pay bills latter.

Saving money is all about priorities. It was my priority to pay myself first. Nothing else mattered.

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8. You may lose some friends

Remember that we are social creatures and as such, your friends may not understand the commitment you are making to secure your financial future. Don’t take it personal. The same people who are now asking you why you are doing it, will eventually ask you how you did it.

9. Don’t try to “keep up with the Joneses”

Don’t try to keep up with the Joneses. For all you know, they may be broke or living pay check to paycheck. Be careful about being pressured to spend especially when you are around friends who make more than you do.

10. Reward your self

Every couple of months, reward yourself. Set aside up to $200 for something you may want to splurge on. This is more of a necessary mental break.

Good luck! May you be able to put away exactly the amount of money you hoped for!

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Featured photo credit: Julie Phillips and Geoffrey Szuszkiewicz via finance.yahoo.com

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Last Updated on July 20, 2021

Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

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Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

Have you ever considered your life now, and how it would be if you had more time to spend with your family and less worries about money?

Nowadays, financial stress is one of the most troublesome weights in life. If you’ve ever encountered financial stress, you know the difficulty of not having enough income to pay your obligations or bills.

Many people say that money is not the ultimate goal of life. While that’s true, money certainly plays a very significant role. The meaning of financial freedom changes with the different phases of our life, but ultimately, it is something that many people strive for.

In this article, we’ll explain how to capture that financial freedom you’ve been looking for. Read on to learn the secrets to financial freedom.

Break Free of Your Finances

Financial freedom is about having a constant flow of cash from your assets to cover all your regular needs.

When you are not worried about your income, or living paycheck to paycheck, you gain a great sense of freedom. It’s the freedom to be obtain and do what you truly need to make your way through everyday life.

Gaining financial freedom, though, is a process of growth, making small improvements and gaining emotional strength.

Though it seems hard to believe, it is really very simple to get financial freedom.

To do so, you simply need to make sure that your assets exceed your liabilities. In other words, you’ll need to find the sweet-spot where your residuals meet or surpass your expenses. This is something that you can achieve with the proper plan.

While not every person will accomplish financial freedom, the potential for anyone to do so is certainly there. Anyone can achieve this success, regardless of their income level.

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Outlined below are 9 secrets that will help you in your goals of achieving financial freedom.

1. Stop Unnecessary Spending

We often spend money inwardly, instead of objectively.

For example, you may spend when you’re anxious, depressed, restless, exhausted, from fear of missing out, or to please others. This is a very unhealthy way to handle your finances.

To stop this habitual spending, log down all your spending over the course of a month.

Just as some people keep a food diary, keep an expense diary. Remember not to just write down how much and what you spent the money on, also include the circumstances of why you spent the money. Was it an impulse buy at the checkout line or was it something you planned to purchase?

This increased self-awareness could enable you to avoid triggering situations in the future when you are considering an impulse buy.

2. Plan a Monthly Budget

This is a great opportunity to get serious.

Take a seat with your spouse or partner and make a monthly budget based on your income, not your expenses. You are never again going to spend more cash then you have on hand.

Overspending is the thing that led you to more financial obligations. Make sure you decide every month what is coming in and what will be going out and stick to that budget… no matter what.

3. Cut-up Credit Cards

Perhaps you are the type of person who always pays your credit card balance in full before the end of your billing cycle, and enjoys the reward points you gain. If this is the case, then you’re already way ahead of the game.

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If not, you may want to consider ridding your life of the burden that credit cards bring.

Many cards have strategies set up so that if you make a certain number of late payments, they will raise your interest rate much higher. This can really add up in the long run and you won’t be doing your financial situation any favors. If you’re prone to late payments or have a large balance due on your cards, cut them up!

Without proper self control on credit card spending and payments, you are basically throwing your money away. To ensure that you have better control over your spending, use only cash or debit for all future purchases (and don’t forget to pay at least your minimum payment on your cut-up cards each month!).

4. Increase Savings

There is no doubt that for a comfortable retirement you must accumulate satisfactory savings throughout your working life.

It’s good practice to save up to 15% of your income.

Start with your workplace 401(k), if you have one. If not, a Roth IRA (if you are eligible) or a traditional IRA (if you are not eligible for the Roth) are the next logical steps.

Increase in longevity means you might be able to look forward to 25 to 30 years in retirement, or possibly even significantly more. Investing now in good retirement plans will ensure that you have a guaranteed a stable monthly income when the time comes to stop working. [1]

5. Invest Wisely

Consider investing in funds.

Specifically, you will gain higher returns if you invest in different types of mutual funds such as Debt funds, Equity funds and Hybrid funds with a proper balance, although it absolutely relies on your personal preferences and sense of risk taking.

To get the most of these benefits, make sure you are investing in a variety of assets. Another resource of investing in mutual funds is SIP (Systematic Investment Plan) where you invest some money every month in funds. SIP works by averaging the per unit price of the stock.

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Mutual fund investors are aware of the benefits of an SIP (Systematic Investment Plan). For one, it is the most secure way to invest in equity mutual plans so that wealth is created over a long period of time. This plan also helps you to gain a better sense of financial discipline, which will come in handy in all your financial endeavors.

6. Invest in Gold

There isn’t really a better way to invest in gold than to have the physical gold itself in your possession.

You can purchase gold coins and bars from mints as well as from coin dealers and other private sellers.

Another way to invest in gold is through ETFs (Exchange Traded Funds).

These are is similar to mutual funds but they are exclusively investments of gold. ETFs are great because they offer more liquidity; the ETF owns the actual physical gold, stores it, and retains the value of the shares. These shares can then be bought and sold in the stock market, and one big benefit is that the transaction costs of gold ETFs are much lower than the that of physical gold.

With its consistently-increasing demand, investment in gold can be very wise long-term investment to make.

7. Stash Emergency Funds

Whether it’s a cash gift or a work bonus, always try to save any extra money that comes your way rather than making unneeded purchases.

If you get paid every other week, you’ll get an “extra” paycheck (three rather than the usual two) twice a year. Either save those paychecks towards your emergency funds or utilize the money to pay down other obligations, such as loans, credit cards or other debts.

Make it hard to get your cash.

Put your savings in an alternate bank, maybe an online bank that forces you to delay for several business days before transferred money hits your regular bank account.

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8. Find Fabulous Mentors

Find a mentor, such as a friend or family member, who has exceptional control over their finances and pay attention to everything they do.

If you do not have any friends or family that are enjoying financial freedom, then find a mentor online! There are numerous blogs and guru websites featuring the advice of many people who have reached financial freedom, and they exist primarily to let you in on how to achieve it for yourself.

There are also plentiful forums available that share tips and tricks on how to best achieve financial freedom. Read as much as you can and start changing your habits for the better.

9. Be Extra Patient

Patience is the key of financial success.

Being patient can be quite tough, especially when you’re struggling with your finances, but having faith is worth it. You’ll continuously be on the right track if you are taking the proper steps above.

So don’t be discouraged, even if you are only saving a few dollars a month; it all adds up. Within just a few years you’ll look back proudly at your accomplishments and be glad that you had the patience to get there.

Financial Freedom for All

Anyone can achieve financial freedom, regardless of their financial circumstance.

Use the tips provided above to get yourself on the track to financial freedom and toss your monetary concerns out the window. If you wish to achieve a life with financial freedom for yourself and your family then you must adopt a disciplined approach towards your finances.

Following the simple secrets above is a great start to making your money work for you, so you can work less and live more!

Featured photo credit: rawpixel via unsplash.com

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Reference

[1] Hartford Gold Group: IRA Retirement Accounts

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