FINDING WAYS TO BE HAPPY IS NOT ALWAYS AN EASY TASK ESPECIALLY WHEN YOU ARE IN THE DUMPS ABOUT YOUR MONEY SITUATION.
Building wealth from nothing is the path many of us will take but along the mystical route of debt reduction and increasing net worth motivation is a crucial tool for success.
The only way to start building wealth is to explore debt reduction strategies for ways that will help with debt problems that may be causing you stress. I understand why someone might classify having debt under the good debt category and the bad debt category however managing debt means your debt to income ratio is all that matters.
If you are serious about getting help with debt don’t start making excuses as to why your personal debt is more important than the debt you incurred by getting an education. Debt is Debt and if you change your financial mindset to that of a successful business owner you’ll soon see how critical debt reduction is for all of your liabilities.
I remember a time where I got to the point that I had no intentions of creating more debt unless it was to increase wealth. In a way I’m still that same guy just a bit older and with grey hair. Unless you’ve got vast amounts of money to play with debt is like a wasp that won’t go away. It just keeps buzzing in your ear and circling waiting for to go in for the sting. (Yes, I hate wasps as much as I do debt) Having debt is a pain in the butt too and although we can’t swat it away we can crush it, which in my mind seems far better than the risk of getting stung.
Don’t give up and Don’t give in
Today most people own a car, a house and rely on credit cards to get them through tough times. Personal or not it’s still debt and if your name is attached you have to pay for it. Debt reduction seems to be one of the hardest financial plans for people to stick to aside from using a budget.
It’s like being on a diet to lose weight but every so often you sneak in a donut or two. What happens is you start to see debt reduction and get excited that you’re managing debt so you splurge a little. For many that splurge leads to continued bad money habits and the ability to fall off track to reach financial goals.
You’re best form of action is to forget about rewarding yourself with stuff every time you reach a debt reduction milestone and focus on how it makes you feel. I’m almost certain that if you take the time to explore and document your trail of success that will be reward enough.
You don’t need to rush out and buy a new outfit or camera just because you’ve paid off your credit card. That’s not how a successful business runs. If you are going to use the camera to increase your wealth or debt reduction as a photographer then that’s a different story.
Risks you may be willing to take
Have you ever heard the saying, “If you want to build wealth you must take risks” and surely each time we spend our money we’re taking a risk whether it’s buying a coffee, new vehicle or investing in a house or business. If you want to learn how to get wealthy without worrying about if you are doing it right the first thing you must address is debt reduction.
Don’t even think about the riches over the rainbow unless you post motivational sticky notes to help you along. Too often the focus is not on learning how to tackle debt reduction like a bull rather how it will feel to be debt free. You can’t get to the bottom of the chocolate sundae where the hot caramel fudge is unless you dig through the hard ice-cream. The same goes for debt reduction except the awesome feeling of having little to no debt doesn’t go away as instantly as the delight of a spoonful of ice-cream would.
Anyone want ice-cream now? I sure do. Maple Walnut, Pralines n Cream with a heavy dose of caramel sauce and nuts topped with whipped cream. Smiling yet? I hope so because being in a debt crisis can really take shots at happiness and pull on the heart-strings. Debt affects so many aspects of our lives that getting rid of is the only way to uncover the black cloud cast upon us. Waking up to a brand new day with little to no debt seems like a great plan. You can do it.
5 Benefits of Debt Reduction
- Increase in happiness – I have yet to meet someone who has conquered debt and been sad about it. Get rid of it and watch your mood come back to that of a child with no responsibility (even though we know that’s never going to happen). My point is that knowing you can walk out the door every day without owing money to someone for good or bad reasons makes even a cloudy day a sunny day.
- Increase in Options– When you kill debt you start to open up more options for yourself whether it be to save more for retirement or save up for a holiday. You can do things today without added financial stress even if it is taking a holiday with debt. When you return the debt will still be there but if you fly debt free you will come home debt free.
- Increase in Wealth– Now that you are working on debt reduction or whether you are already there the fun part is increasing wealth. The best ways to build wealth is to have money to put towards wealth building ideas rather than paying back debt with nothing to show for it. The first thing I did once we became debt free was start to pay more into my retirement savings than I was when we did have a mortgage and car payments years ago.
- Increase in Financial knowledge– This is a big one because for most people who start their debt reduction plan by hunting online for personal debt stories or ways to reduce debt invest in themselves. When you’re motivated to pay off debt and see the results you crave learning more about other ways to kill debt. Compare this to starting off walking on the treadmill and in a few months you start to see weight-loss results so you decide to take up running instead. Running helps you to feel amazing and your weight drops further. From there you start lifting weights and so on because you see how the change is impacting your mind and body. The same thing happens when you become a wealth builder and debt killer. Build strength by taking control of the situation.
- Increase in Motivating Others– This happened to us and it will happen to you. Take the scenario above where you’re losing weight and people notice. They start to ask you questions about your journey so you take the time to educate them so they too can work harder and smarter. You might get the ambition to help a parent, sibling, relative or friend by sharing your story and the financial tools you used to plan your debt reduction.
Not everyone talks about money and debt but for those you are comfortable talking with you’ll do it because you’re so damn happy that you’ve found a way that will lead you to debt freedom. Motivating others with your success is one of the best feelings in the world.
<<<< Yes I want to be that guy right now.
Every step you take even if they are small steps and take you a bit longer than anticipated means you’ve reached a point where you want out.
You’ve been blessed with motivation to succeed and I hope that whichever route you choose to take that one day you give back and do the same for others who are feeling the financial crunch of having too much debt.
Are you still thinking about that ice-cream? Damn, I am and it’s 4 am as I type this and I’m smiling at the screen hoping that someone is smiling back at me.
Have a great day everyone.
Discussion Question: What or who motivates you to jump into debt reduction mode?
Our Net Worth January 2017
RESP Contribution 2016: $208.33 a month.
Changes to our Net Worth Calculation in January
Another year and another goal to achieve. According to our growth trend, we should hit the million this year, but that’s only if things go our way. There’s no guarantees that this will happen so I won’t be disappointed if it doesn’t happen this year.
For the start of this year we’ve already lost some of our assets due to depreciation. I’ve dropped the value of the vehicles again, so now they are worth $4,000 in total. Obviously if we sold them and we got more than $4,000 for them it would be a bonus. Do I want to get a new car? No, there’s nothing wrong with the ones we’ve got.
For the rest of the net worth, we could do with some improvement. The investments didn’t do very well at all. Can I blame this on Donald Trump? Probably not, but it’s a good excuse.
The only reason our net worth actually went up was due to our income, but even that wasn’t brilliant due to illness and lost time.
Good news on the house front though. The exact same model house as ours sold recently for over $500,000. Will I reflect it in our net worth? No, as I believe the housing market can’t be sustainable at this rate.
Understanding Net Worth
What Does Individual Net Worth Mean?
Net Worth is a snap shot of your financial health sort of like a picture or debt to net assets. In simple terms it’s a total of the value of your assets minus your liabilities.
We credit the growth of our net worth due to patience, perseverance, using a monthly budget and not giving up. Your numbers may go up and down but don’t let the numbers scare you rather understand why and move on.
If you would like to use our budget I offer a FREE downloadable budget which I created and that you can use at home just like we do. I don’t charge for it because I want you to save money not spend more!
There are tonnes of other free printable lists offered at Canadian Budget Binder to help you achieve some of those financial goals and build your net worth. Now determine just how much net worth you actually have and go from there.
Enjoy and let me know what you think.
Determining net worth
Figuring out net worth is fairly easy as long as you know your personal numbers or monthly finances which means you need to do your homework. Net Worth is simply adding up all your assets (what you own) then taking away your liabilities (what you owe) which will give you a net worth number.
Understanding your net worth will help you determine if you are on track to meeting or beating your personal financial goals. It doesn’t get any easier than that.
Net Worth = Assets – Liabilities
Calculate net worth
Do you know how to calculate your own Net Worth?
Now you can stop asking yourself the question, how do you find out your net worth? Why? It’s easy to determine. We like to calculate our net worth every month so we know if we are still on track. Some people calculate it yearly or quarterly. It’s really up to you and how informed you want to stay when it comes to your financial health.
Net Worth is essentially an estimate and not everyone uses the same type of figures. Some people don’t include vehicles like we do or they may leave out the assets inside the home like we have. It depends on what you want to calculate or what you can sell today and make money on.
Why not go ahead and calculate your own using our Free Money saving Tool Net worth Calculator (Canadian Budget Binder 2012)
Why you should set financial goals
Below is our progression chart towards our goal of a million dollars net worth which should happen according to our net worth calculations by Mid August 2017 (this year).
Setting goals are the only way we work towards achieving what we want to get done as a couple around the house and in our financial life. I know that without them we would be flying by the seat of our pants which wouldn’t work for us.
I find it’s much easier being held accountable when I share what we need to do with all of you. Yes, my wife refers to the list when she asks what I plan to do next. I’m not sure if that’s a good thing for me or not.
In the graphical representation above, I have used excel to provide a trend line prediction based on the past years monthly net worth figures.
Using figures from our actual net worth gains over the past 12 months (the solid blue line) it has suggested that by the end of this year (2016) we should be around $900,000.00. We fell short of this goal by $9000 which is perfectly fine as it was only an estimated goal based on current financial trends. This can change over the course of the year and is only a prediction based on known historical figures from our finances.
According to the chart, we should hit the million mark in or around August to September 2017.
This is nice to know but anything can happen over the next year. Hopefully with some careful planning we can achieve this goal and go beyond it.
Do you set financial goals for the year?
Our financial numbers
When budgeting anything is possible, we are proof of that although we still have a long way to go in our journey. These are our numbers and our goals, not a means of comparison towards your own goals to others target goals.
We don’t care how much money others make or if they have a high net worth or if it is lower than ours as it’s not a competition. I hope our experiences perhaps will help guide you along your financial path working towards debt freedom.
Different financial paths
Not everyone has the same path in life. Some of you may have had to start over like I did or go to school a second time and now have OSAP loans to pay back.
Others may have divorced, lost money in the stock market or other investments, suffered job loss, fell ill or was injured on the job etc. but you can’t let that stop you from achieving your financial goals.
Some of you may have been given trust funds, paid-for homes, paid educations or perks in life that give you a financial kick-start and that’s OK too. Remember what I said, “It’s not about how much money you make, it’s how you save it”.
Focus on you and don’t let the evil eye of money jealousy or keeping up with the Kardashians cloud your vision. No one cares about your money as much as you do so don’t waste your energy trying.
The only reason people accumulate wealth is because they know how to save or invest it wisely even if they did inherit money or win the lottery. The smallest improvements should mean big strides in working towards reaching your goals.
Sometimes we have to fail in order to learn and we’ve all been there. Money can be an evil force for some people especially those who have a negative attitude towards their own financial situation.
I urge you to be optimistic and little by little with determination you too should see improvements, if you want that to happen.
Net worth updates 2017
Below you can click the links to read previous months net worth updates 2016 to see how we made out following our own financial rules.
In the last year since January 2016 our net worth according to our figure has grown $118,920.69
January 2017 $894,357.51 – January 2016 $775,436.82 = +$118,920.69
- November/December 2015
- January 2016
- February 2016
- March 2016
- April 2016
- May 2016
- June 2016
- July 2016- Oops looks as if I missed this month.
- August 2016
- September 2016
- October 2016
- November 2016
- December 2016
That’s all for this months net worth update but please check in at the beginning of March 2017 to see how we made out in February 2017 and what has happened to our finances since.
Remember: “It’s Not About How Much Money You Make It’s How You Save It“
Check out our past actual Monthly Budget Updates to see how much money we earned and where our money was spent.
- Image courtesy of rakratchada torsap at FreeDigitalPhotos.net
- Image courtesy of stockimages at FreeDigitalPhotos.net