Financial Freedom…

It’s been said that money is one of the top 10 reasons that can cause a marriage or relationship to fall apart.  Yes, this is a touchy subject to talk about, especially during your marriage/relationship.  It feels awkward, uncomfortable, and intrusive…but you need to TALK, TALK, TALK about it.  Before marriage this Mama didn’t have to talk with anyone about her money, well maybe with herself when she wanted an approval for splurging on a $1000 handbag.  Before meeting my Prince Charming, I did manage to run up some credit card debt.  I guess because I didn’t have to check with anyone regarding my spending habits.

Since being with my husband, I’ve learned so much from him.  My hubby is a raging “BAD Debt-No-No” kind of person.  He has always had financial goals.  As a family with twin boys, financial security is a MUST.  We have come a long way and have finally reached financial freedom!  With fully paid homes (and NO…we did not get any help from mom & dad) and no debt, and several passive income streams, this has allowed us to have more time to enjoy with the family.   How did we do it….no we did not hire a Financial Advisor (they are costly and useless btw).  The tools are out there.  You just have to be willing to spare a couple hours a week.  Here are some basic examples that we live by:

1. Know your REAL net worth.  No, not your car or your jewelry but the real deal…ASSETS (i.e real estate, stocks bonds, commodities, cash).  Don’t be afraid to look at it.  A small net worth does not mean you are worth less than another person, nor does a large net worth indicate greater personal value.  The key is to focus on your net worth to avoid making costly financial choices.  I will provide a sample of a REAL net worth spreadsheet {the file will be coming soon}.

2. Live on a Budget…NOT! My husband and I hate the word Budget.  It‘s so restraint and confined to what you can and cannot do with your money.  As long as you know where you stand within your financial schedule, you will find the right place and time to enjoy stress free indulgences that you and your family love.

3. Bad Debt-free Lifestyle.  Know the difference between good and bad debt.  Debt isn’t necessarily a bad thing but you just need to know how to manage it.

4. Financial Independence.  We have joint savings, checking and investment accounts.  We also keep our individual bank, credit card, and retirement accounts.  In case things head south (I’m just saying!), especially for women, having your own accounts will allow you to have established good credit records of your own.

5. A Spending Prenup Agreement.  There is an unspoken agreement within our household that any purchases below a certain amount are discretionary.  However, if we need to spend on a big ticket item, say more than $400, then we need to discuss about it.  This provides a sense of accountability within the relationship.  Trust me, you don’t want any big-ticket items to be a surprise….this may create stress and resentment on the relationship in the long run.

6. Live within or below your Means.  I’m not talking about living on mac and cheese and canned tuna.  I’m talking about living comfortably with what you NEED not what the marketers, or family and friends tell you what you need.  When the boys were born we decided to trade my gas guzzler SUV for a gas efficient sedan. After we made the purchase and told our families about it, my parents were disappointed and wanted to know why we didn’t buy a bigger car instead, like a mini-van or a newer SUV.  Umm…that made no sense to us.  Besides, I’m too short to lug the boys around in an SUV.  There are only four of us and the stroller (we hardly use the stroller now) fits in the sedan with plenty room to spare.  On top of that the car will save us $300 a month in gasoline, $200 a month in maintenance, and $100 in insurance, freeing up our cash flow to save up for a bigger vehicle at a later time IF needed.  Remember, a car is a depreciating asset.  Just get what you need for the moment you need it.

7. Financial Goals.  Always have a financial goal, whether purchasing a home, car, a boat, or a 30 day Mediterranean cruise for the family.  Remember to always re-visit (we do it a few times a week) where you are financially and how and when you will get to your goal.

Our #1 rule in this household is that for every dollar that we make it either reduces our expenses or increasing our income.  This in turn will generate a higher level of cash flow which gives us more freedom to enjoy life with our family.  I know it sounds simple, but if you follow me I will fill you in on the details.

Don’t be afraid to look at the truth.  Know what you have.  Know what you don’t have.  Know what you need.  Know what you don’t need.  Know what you want and know how to get there.