Live Frugally or Die Broke

It’s All About Barriers



I really enjoy preaching the concept of creating barriers. If it’s the one trick that has helped me reduce debt like never before, preventing myself from the temptation to spend was key. This afternoon I was talking with a co-worker who was excited about our upcoming payday. She was curious about the exact time bank ACH (accounts clearing house) transfers were actually deposited into customer accounts. I know from experience the precise timing is usually between 4:00 and 4:15 A.M. for U.S. Bancorp accounts. Wells Fargo is usually a little earlier than that. When asked how I knew this, my answer was simple, “I can’t wait for that money to get there, so I wait.” My co-workers think I am nuts for even caring about what time my money is deposited.

The truth is that incoming money only sits in my checking account for about fifteen minutes. There is simply no reason to keep it there with such easy access. I am quick to set up a barrier by sending it out of reach, either to an investment account or a high yield savings account. For instance, this coming paycheck will be the first one I get this month, so it goes to debt reduction. The next one I get falls at the end of the month, so that goes into savings, rent, and utility bills. I get other snow flaking income that I plan out for as well.

Avoiding Wasteful Spending

I receive tips at my job. It can be a little awkward when I know the next dollar I get from a customer is going towards my student loan payment or electric bill. It makes each tip contribution that much more important. I can visually see my wants and needs depend on each individual’s gratuity. Working a job such as this, is vital to keeping the economy going. Most often times the money I get has a direct impact on, not only the local economy but the individuals themselves. I specifically shop at businesses and stores that tip me better and boycott altogether the ones that don’t. I try to keep that in my mind while I go shopping. Furthermore it can be a little bit awkward visualizing money in this way. I was surprised when I found out, most individuals don’t view money like this. I suppose it could be a different phenomenon for my specific profession.

A majority of people I fear don’t think forward when it comes to income. They may actually be weeks behind and still attempting to pay off a couch, computer, or some other junk they can’t even remember buying. I’ve personally witnessed and blogged about the junk coworkers purchase. Subsequently they are forced to apply for welfare and food stamps to make ends meet. It angers me when I know that they make just as much as I do and still can’t get their finances in order. While they can’t figure out why they aren’t making any money, I am saving and investing mine. This kind of discipline comes from forcing barriers and marking your money.

A Lesson To Be Learned

You should know where your income is going to go, before you even have it in your pocket. Those who spend without thinking are always broke and never have money. We know who those people are. I’ve never seen anyone who thinks like I do (visualizing their money), ever experience major financial problems. They know exactly where their money should be going and put it there. They don’t make excuses for themselves and aren’t turned on by junk they don’t need.

If you are disciplined enough to ignore the wants such as; an X-Box, T.V., car, furniture, and other junk, as well as know where your income is going to go, you are well set. People like this retire young, live enjoyable lives, and have healthy families. I muttered to my girlfriend the other day, how much I was craving a Dairy Queen blizzard. I felt a little guilty when I scolded myself for the thought, because I knew I needed to get out of debt first and foremost so I skipped. Everything else in life feels on hold as I race through this traumatic debt. Obviously being in debt isn’t supposed to be fun. Hopefully we all learn an important lesson from it.

You Are Your First Priority

When I first began saving money, I saved passively. I would put money into my savings account after all of my bills were paid. The money at the end is what I would keep. I may have gone out and watched a movie or went bar hopping with friends, in lieu of paying myself. I never had a savings plan, I just saved the leftovers from these activities. Once my next paycheck was upon me, the remainder of the previous paycheck went into savings. I was putting away money diligently every few weeks. Eventually I realized that this was an incredibly inefficient way for me to save money. By paying myself in this way, I was saying that I came last in line. I would pay my creditors first, my bills next, and after hanging out with my friends, I would pay myself.

I involve a little more mathematics to my budget now. As soon as my paycheck comes, I appropriate a large percentage of my discretionary money to my emergency savings account. This insures that I am getting the most of my money. I force myself to live more frugally, by creating barriers which prevent me from blowing my money on wants. Utilizing this new method of paying myself first, I am watching my savings grow at an incredible rate. The trick is to prevent yourself access to this money, by moving it into a savings account you don’t have easy access to. This is why my online savings account through HSBC has been a great tool.

A Change In Psychology

By paying yourself first, you are declaring that you are the most important object in your financial goals. You will feel a psychological change that increases your happiness. As a result of your increased savings contributions, you will start to feel in control of your financial life. Suddenly you will start to realize you have full control of your finances, rather then them controlling you. Financial problems are one of the leading causes of depression. These people don’t need to see doctors or psychologists. Simply creating a budget and saving money can work wonders on your mood. I noticed I fall asleep easier at night. I used to have trouble getting rest knowing I was spinning my wheels by not saving.

Next Stop, Financial Independence

After you have learned how to reach your savings goal more quickly, financial independence is within reach. Even with debt, bills, and payments, you are learning the importance of saving. You will be maximizing what your money can do for you. After some snipping and cutting of some of your budget items, the amount you pay yourself will grow. Soon you will watch your money multiply under compound interest.

You could certainly appropriate this money to future goals like a house, a car, or a wedding. Instead a better idea, is to split these up into separate accounts. You can start funding these separately from your main account. This is the account that you continue to pay first above all other bills. Before you know it, money becomes a simple tool that you wield like an expert. Not much different than the way cavemen eventually learned to master fire. I am sure they were deathly afraid of it at first to.