RESET AND REGENERATE YOUR MONEY MINDSET WITH A FINANCIAL FAST
A financial fast sounds as though you are being deprived of all things that bring happiness but it’s not as bad as it sounds.
Lately, in our house, Mrs. CBB has been embarking on intermittent fasting and extended fasting for her keto lifestyle.
The goal is to reset and cell regeneration and that had me think about how we could apply the same concepts to our finances.
Resetting and regenerating the way we spend money, think about money and ultimately paying off debt is what a financial fast has to offer.
Are you in?
What is a financial fast?
You might have heard the terms spending fast, financial freeze or money freeze all of which are a financial fast.
Like fasting for your body, a financial fast is staying away from spending money that you can’t afford to spend.
This means you do NOT spend money on anything other than NEEDS when you embark on a financial fast.
Breaking bad habits and turning them into money-making and savings is a financial fast in high-gear.
Canadians and Debt
It’s no surprise that Canadians are drowning in debt with the cost of living skyrocketing and employment raises nowhere to be found.
Average debt per Canadian consumer (including mortgages) reached $71,300 in the first quarter of 2019, an increase of 2.6 per cent over the same period last year. – Equifax Canada
In fact, many people are taking second jobs or even starting a side-hustle just to make ends meet.
The good news is since June of 2019 the Canadian consumer debt to income ratio has decreased but not by much. We need to do better.
The household-debt-to-income ratio edged down to 177.1 per cent in the second quarter of the year, from 177.5 per cent between January and March. The numbers mean Canadian owe $1.77 in debt — including mortgages and consumer debt like credit cards — for every dollar of disposable income.- Globe and Mail
Although working from home or starting your own small business is a great way to earn side-money it takes time.
It took me 7 years to finally earn a yearly 5-figure income from this blog that I started as a hobby.
I will admit that I could have earned it even faster had I known what I know today and I’m still learning.
How A Financial Fast Helped Us To Become Debt Free
Come to think about it, a financial fast is how we became debt-free and understandably we didn’t realize it at the time.
I took a few moments to think about all of the ways our financial fast helped us to knock debt on the head so we could pay cash for everything else.
We gave up things during our financial fast which we still do in part but since we are debt free we allow a bit more room for wants.
After all, we deserve it.
The key is to not go hog-wild with your money after you become debt-free which is why we continue to budget.
Two years ago we funded a 3 week holiday overseas to the UK, Spain, and Iceland and paid cash for the entire trip.
Although, I will have to say we were practicing a financial fast throughout some parts of our holiday.
There are some things you just have to say no to because they are overpriced, out of your budget range or simply not needed.
- Saved to pay for a 25% downpayment on our house
- Helped to pay off our mortgage in 5 years
- Supported us paying cash for our brand new truck
- Stopped me from getting an OSAP loan
- Increased our Savings Power
- Cured any need to create credit card debt
- Assisted in building our retirement savings
- Improved our money mindset
- Relieved money stress
- Contributed to our son’s RESP
After reviewing my list above I was amazed at how far we had come just by being mindful of the way we spend our money.
In fact, most people who embark on a financial fast will learn something valuable about themselves, they can do with far less than they thought they needed.
How A Spending Fast Can Improve Your Financial Health
We put too much emphasis on wanting the latest gadgets, clothing, new home, and car and all the little things we spend our money on that add up.
Spending too much money and not taking advantage of savings that are offered is like leaving money on the table.
Either way, the retailer is going to grab it so you might as well make it be you taking back the control you freely offer.
The thing is, we all know that we are doing this and causing ourselves money stress that often leads to mental illnesses such as depression and addictions.
Excess Spending Causes Debt
Having the weight of debt on your shoulders, living paycheque to paycheque and people wanting money from you literally can send you into a downward spiral.
In fact, this is why some people continue to spend because it’s the only thing that brings them happiness, in the moment.
Ask yourself why you keep spending money you don’t have?
It’s a personal answer you should deal with on your own.
- Coffee from the shops
- Eating Out too often
- Snacks from the corner store or vending machines
- Booze and Drugs
- Overspending at stores on things we don’t need or think we need
- Not being smart with savings, coupons, rewards points, credit card perks
- Holidays on credit
Those are only the basics as there are TONNES of other things people waste money on especially if they are prone to smart salespeople.
If you want to improve your money situation a financial fast is the best way to go paired with a monthly budget.
You might not want to hear about it because you think it won’t work and that’s your problem.
The people who want help are the ones who will benefit from being optimistic about getting rid of debt once and for all.
Like fasting it’s tough to give up food just as it is a struggle for some people to stop spending money.
Ultimately the key is self-control and if you can master that you can take on the world.
Do you want to be debt-free or not?
The choice is yours.
How To Start A Financial Fast
Generally, I would say to start with a one month financial fast and work your way up to a year.
The idea is to continually change the way you spend your money and flip your mindset to saver.
This will take some time and practice but don’t give up on your financial fast challenge.
If you succeed after one month try a two month financial fast and see how far it takes you.
Once you start to see your debt to income ratio reduce you know you are doing something right.
Create A Budget
Yes, you need a budget and I don’t’ care what budget you choose as long as it incorporates everything that fits your lifestyle.
It’s important to think about all of the steps involved when creating your budget so you aren’t missing one-off expenses.
We call these projected expenses or something you might pay for once, twice or even three times a year.
Many people tend to forget about budgeting for these pop-up bills and that’s where they run into trouble.
Check out my 10 Step Mini-Budgeting Series for all of my fantastic budgeting tips.
Document Your Debts
However, you choose to document your debts make sure that you include the amount and interest rates.
The idea is to pay off the smallest debt first and put the minimum on the largest.
This is called the snowball method of paying off debt.
In the meantime you can call your creditors and ask or even beg them to reduce your credit card or loan rate to help you pay it off.
You may find they might work with you because you show a genuine interest in paying it off rather than letting it go to collections.
List Your Needs
Make a list of everything you NEED to pay for every month.
So, for example (I like to use paper and pencil when I do this).
- Car Payment/ Transportation
- Loan Payment
- Credit Card Payment
- Life Insurance
- Renters Insurance
- House Insurance
Carefully consider everything you are writing down as a need and see if there is any way to lower the expense.
For instance, can you do without VIP cable and reduce your expense to basic cable?
Have you called to negotiate with your cable company any promotions they might have?
Anything else not on your NEEDS list means you spend no money on it during your financial fasting month.
Make coffee and lunches at home, no window shopping, no online shopping just a bare-bones budget.
Define Financial Goals
Ask yourself, what do I want from this financial fast?
Write down your financial goals and put them on the refrigerator so you can read them every day.
Motivation is a BIG factor whenever you do something that is out of the norm or a challenge.
A few examples might be;
- I want to become mortgage-free
- Save for a downpayment on a house
- Lower my OSAP loan
- Pay off my PC Mastercard
- Reduce the loan payment to parents, friends, banks
- Saving to buy my first car
Hide Credit Cards
It may seem ridiculous to hide your credit cards but think about how tempting it would be if you were fasting and a chocolate bar was sitting in front of you.
The idea of a financial fast is to get rid of all the triggers that push you to spend money you don’t have.
Simply put your credit cards in a drawer and forget about them for the month.
All you need to concentrate on is paying your credit card debt off and not incur any more in the process.
Increase Savings Power
Finally, once you master the one-month financial fast challenge you will go on to realize that you can save money for emergencies.
I know it can be tough to set aside even a few dollars each month but an emergency savings account is critical.
You may even want to add this to your needs list so you do save for it if the budget allows for it.
Ultimately, the way you fireproof your finances is how well your money stress will pass.
Financial Fast Recap
Don’t make this challenge any tougher than it really is because it’s not.
The things you are spending money on right now that are putting you into debt can be eliminated or lessened.
So, create a budget, log your debts, set goals, determine your needs and increase your savings power.
Consider the financial fast a train ride that releases a train car at every stop until you’re left with the locomotive driver, YOU.
Most of all, be proud of your accomplishment.
Discussion: Have you ever experimented with a financial fast and what were your results? Please leave your comments below and I will be sure to respond to them.