This is the second time I’ve written this piece, and the 83506823rd time I’ve had to brace for publication impact from one of my blogs. And it’s all because of my mum! Presented with her chin pressed up against the reverse camera on FaceTime, mum plucks up the courage to make a small request. She says, “Honey, I’m so proud of you and what you’re accomplishing with Fearless Female Traders, but do you think you could find another example that doesn’t include my three marriages and past money blunders?” Sorry mum! *Hangs up phone, deletes entire blog and starts again*
The thing is, I didn’t really need to throw mum into the blog ring again after all. A few wines with friends over the weekend and it turns out, we’ve all been in a financial rut at one time or another. Your crappy rut might be different to mine, and personal perspective will dictate the significance of these ruts, but the point is, any rut to anyone sucks. What’s most scary is when the rut becomes part of your everyday life, spreading its toxic tentacles across your savings, your budget, your debt and even your sleep habits without you knowing how it started or how to stop it. Sound familiar?
So today I’m putting myself in the spotlight and keeping the privacy light on mum’s story. My financial rut, as most of you already know was a horrific mess. Think credit card debt well beyond my means, no assets and one very unhealthy obsession with needing all the ‘things’, especially pretty things that cost a lot of money. I’ve talked a lot about my debt and my terrible habits (Related Blog: ‘Ditching the Debt Devil and how you can too!”), but I haven’t really divulged the signs which lead to my ‘ah-ha’ moment. Want to know what they are? Here are the 10 signs which told me I was in a financial rut:
1. You think you have a budget, but you’re lying to yourself – I used to track my budget to within an inch of its life but never actually maintained any resemblance of it in real life. I thought my fancy spreadsheet meant I was on top of things but what I was doing day-to-day was a completely different story. Critically ask yourself, are you sticking to yours?
2. You’re living month to month – It doesn’t get more obvious than this, a classic case of a financial rut!
3. You barely have any savings – if you’re not saving at least 10% of your income per month or attempt to put it aside at the beginning of the month, only to spend it at the end, you’re in a financial rut. Savings are incredibly important for a number of reasons, but most of all they represent your intent and understanding to prepare for the future.
4. You rely on your credit cards to get you through – are you drowning in credit card debt? Maybe you have 2 – 3 cards? Personal loans and car loans too? If you’re contributing more than 20% of your income each month towards paying off bad debt whilst continuing to add 10-20% of additional spending to survive every day expenses, it’s time to make some changes.
5. Your spending habits resemble that of a millionaire, not you – we all ‘want’ things, nice things, expensive things, but the more we continue to live outside of our means, the worse off our generation will be in the future. Don’t fall into the trap of societal expectations and addictive purchasing behaviours. Spend within your means.
6. You think about money all the time – like when you went on that ridiculous diet and all you could think of was your hunger and the next cheat meal. Well this is the same. All you can think about is money. Good planning, budgets and investing should mean your money is self-sufficient. It doesn’t need your 500 touch points each month.
7. You lose sleep over your money situation – big red flag! If you’re losing sleep over your financial situation, perhaps your debt or lack of savings, you’re in the depths of a financial rut. Immediate action needed!
8. You never pay your bills on time – generally this indicates you aren’t managing your cash flow appropriately to ensure your bill cycles are in flow. If your bills reflect money you owe within your living means, you should always have the cash available when the bill is due. If you’re paying bills on credit card, (tough love ahead) you’re in trouble.
9. You feel ashamed and embarrassed about your current financial position – the first step to overcoming your financial rut is admitting – out loud – that you’re in a financial rut. This doesn’t have to be on a speakerphone at the end of your street but having the courage to discuss it with your friends and family, people you’re comfortable with, may actually end up in additional support you needed to start your rut recovery.
10. You can’t afford to be sick or have any kind of emergency requiring fast access to cash – no savings, no cash, maxed credit cards, and other draining financial obligations is a dangerous place to be. If you don’t have an emergency fund for the unexpected moments in life, you’re doing yourself a disservice. An emergency fund should be at least 3 months of living expenses. At least. Don’t have this? Better get started!
Fearless Female Traders