Well it's almost 3 full months into 2022, can you believe it?! We're 1/4th through the year which means we still have plenty of time to get on track (if we feel like we're starting behind), or to get our goals accomplished well before the end of the year!
But, let's not waste any more time!
So as you are thinking about what you want to accomplish in the last 3/4ths of the year, here are some money hacks for 2022...
1) Pay off high-interest debts
Interest rates are rising and the Federal Reserve said they expect to raise rates 6 more times in 2022. Credit card debt, one of the highest interest rates people have, are often tied to interest rates and are variable. So right now, if credit card interest rates are 20% and the Fed raises rates 2%, you can expect your credit card rate to at least increase by 2%. That's more money you're paying someone else and not yourself.
So what can you do?
A few things:
One, we can look at doing a balance transfer to a 0% APR card. There are many that have 0% rates for 15-20 months. If you have the cash flow to pay it off during that time, or at least most of it, that can be a great way to lock in a fixed rate (and very low rate), and tackle credit card debt.
Two, we can also look at doing a personal loan or debt consolidation loan. These rates tend to be higher, maybe around 10-12%, but that's half of what the rate would be if kept with credit cards, and it also becomes a fixed rate. So if rates rise, your rate stays fixed.
Three, it's no secret that housing prices have gone bonkers. Do you have enough equity to do a Home Equity Line of Credit (HELOC) or do a cash-out-refinance? There's a little more nuance to those ideas, so it is something we may want to talk about first, however, it can be a very valuable option as well.
2) What's your Burn Rate?
You burn through money every month - we all do! That's the cost of living, and right now, the costs of living are up. In fact, Federal Reserve Chair, Jerome Powell, today said "inflation is much too high". Unfortunately, it seems like these folks are constantly playing catch up and they let inflation get ahead of them after saying for months last year that it was just "transitory". I'm not here to beat up on the Fed, however we all need to prepare for inflation to be here for a bit. And quite frankly, that means being more intentional on how we spend and use our dollars. Like I've always said, we just need to find balance.
So, do you know how much money it takes to live life and pay bills each month?
Don't feel bad if you don't. Very rarely do people actually know what that true number is, and most of those are retirees who need to know so they can determine how much income their assets need to provide each year. As the rest of us are going through our careers, because we have income coming in each month from our businesses and jobs, it masks over the inefficiencies that we don't realize until we get to retirement.
Go through your expenses, do the scary experiment - yes, you are probably spending more than you think, however let's figure out that number and then we can make adjustments where necessary. It's all about understanding the habits we have for spending money and making slight changes. It's not going to be just one expense.
3) Expect the unexpected
Life has all gone according to plan for everyone and there has never been the proverbial "wrench" that's been thrown into anyone's plans, right? My life has been like that. I've never had anything unexpected come up, ever!
Obviously, I'm just kidding. Unexpected things come up all the time. And I mean all the time. It's almost like most of life consists of unexpected events stringing together rather than everything we have planned stringing together. There's probably a philosophical quote about that somewhere, however I'm sure almost everyone can relate.
Start saving an extra hundred dollars a pay period, an extra thousand dollars a month, or some dollar figure more than what you are currently. Just start saving. Yes you can always start saving next month, but just like tomorrow, next month never comes. More philosophy, I know.
Prepare now, so you don't have to prepare after the fact, because then it's going to be too late. Protect against the downside so that if life ends up going according to plan, you're ok, but if life ends up not going according to plan, well, you're also ok. It just makes sense.
4) Start investing in your future
"But, Blake, the market is crashing because"...COVID, Russia, Interest rates, Inflation, etc!!! The market is always moving - fluctuating up and down on a daily basis. That's how it works and that's what makes it a "market". Different parties engaging in purchasing and selling decisions every day, every week, every month, every year.
There's a "future you" that we need to prepare for, and that "future you" will need money in 10, 20, and 30 years. Start investing in yourself now. That can be done in a number of different ways.
Start a business or a side hustle. There's inefficiencies everywhere in life, solve one of those and start a business around it. Of course that will take time, drive, and passion for the project, but that's how the world goes around. People solving problems to help make life for others easier.
Open an investment account. Don't want to start your own business? No problem! You can piggy-back off other people's businesses and invest in those companies, industries, and markets. As those companies grow, produce profits, and solve the world's problems, your money can be growing along side that. Or, you may have friends or acquaintances start businesses too, and they may be looking for capital to help them grow. Keep your eyes out for opportunities like that. They're all around us.
Learn. We live in a digital age where information is all around us. Now there's good information and bad information. There's people making money off both of those, and sometimes it's hard to figure out someone's angle. But you can watch videos, read books, subscribe to blogs (like this one), listen to podcasts, and so much more. Feed your mind and invest in yourself!
5) Get off social media
I got rid of my personal Facebook page and deleted the app from my phone years ago. I did the same for just about everything else shortly thereafter. Right now, all I have is a LinkedIn and Facebook page for my business. You don't have to go to those extremes, however you're never going to find happiness scrolling everyone's social media for hours every day. It's a great tool to keep in touch with people and get updates about what's going on in other people's lives, however social media has grown into much more than what it was initially designed.
There's a great book that I try to read in January each year called "Think and Grow Rich" by Napoleon Hill. It's about your mindset, and feeding your mind (conscious and subconscious) the things you want to become. If all we do is "doom-scroll" every day, that's how we're going to view the world. All of a sudden we feel like "we can't get ahead", "if only 'this' would happen to me", "I wish I could do that", "they're always so lucky", on and on. That's no way to live.
If we see "everyone else doing it" and then find ourselves to wanting to do the same thing (i.e. keeping up with the Jetsons - it's 2022, the Jones' are now the Jetsons), maybe it's time to unplug for a bit. Everyone puts their best life on social media, so you only see one side. You don't see the financial reality of most people who have gone all in on their social media life at the detriment of their personal financial life. It's a dopamine drip, it's not a lifetime of happiness.
Your personal finances being on point, knocking out debts, saving a healthy amount, providing for your family, protecting against the downside, planning for the upside; that's where you develop confidence and the start of finding sustainable happiness.
Again, you don't have to delete social media, but disconnect a little more often. When you have that moment where you are waiting for someone, or something, feed your mind something other than your social media feed. Just try it. And let me know how it goes!
These next few years are going to present opportunities that will change the course of your family's trajectory. There's so much greatness that we all can accomplish, we just have to hack our mindset, create good habits, and start getting our money to work for us so that we're in the right position when the time is eventually right.
Let's make it happen!