Budgeting really does work!
Apr 19, 2020
I got a message this week from someone called Joe. Now, I’ve never heard from Joe before but he had nice things to say about my latest podcast, which was very kind but he also thought that putting out a podcast about investing during a time when many people are hurting financially might be hard for some to hear.
He said that he is after some “relevant situational budgeting help” and would like to see me help out and offer thoughts on “the most basic of budgeting for the families in severe need now”. He himself is fortunately not in severe financial need right now, but he knows of some who are and wonders how they can be supported.
Fair point I guess so I’ve put aside the blog post I had been thinking about for this week (a deep dive into how an index fund actually works) and have put a bit of thought into this one instead. I also let Joe know that I have made a lot of mention of budgeting over the years on my blog so if YOU are new to my blog, you might want to go back and find some of those older posts which I have listed at the bottom of this blog post. To be fair to myself, I purposefully try not to talk about budgeting too much because my tag line since I began this blog has always been:
“Finding financial freedom in New Zealand. Sharing how I save and invest money.”
But the fact remains that we are in the financial position we are today because we spent many years paying close attention to our dollars and cents, also known as budgeting.
Over these weeks of lockdown I have been speaking to a variety of people whom I’ve met via my blog and each of them have such a lot of information worth sharing, so I thought I would reach out to someone else to help me write the blog post this week, someone who I consider to be a bit of a Budgeting Queen herself. It’s none other than Bradie, who I had on my podcast not once, but twice (01. The Tipping Point: A Buddha and a Movie - 14. Is it mission complete?) because her own journey out of a financial hardship, admittedly all of her own making, was a swift and often painful one but she clearly shows that it is possible. I thought if anyone can hit us with a few useful budgeting tips at a time like this it would be her! Bradie has posted daily on her Instagram account @kiwigirlonabudget (954 posts and counting) the entire way through her debt paydown journey and during this COVID-19 lockdown she has been offering a daily budgeting tip to her followers.
So, together we have worked on this blog post for you this week. Now, over to Bradie who will tell you a bit about her journey and then give some tips for yours...
Firstly I’d like to say thank you to Ruth for the opportunity to provide some tips for her audience (no worries Bradie!) Before this lockdown started, I came up with the idea of posting a daily budgeting tip on my Instagram page @kiwigirlonabudget . I did this with the hope that I could provide some insight into what we have been through on our debt-free journey and also in the hope that people throughout New Zealand could treat this time as a bit of a ‘RESET’ with their finances.
The truth of the matter is that my husband Paul and I were in a self-imposed lockdown for 39 months, long before “lockdown” became a thing. For us, it started in January 2016 and ended in April 2019. During that time we paid off $566,000 of debt. So you see, this current lockdown of 28 days is nothing new for us. We are ‘old hats’ so to speak. The only difference is now we don’t have to make any excuses for staying at home!
During those 39 months:
We stayed home
We found the simple life
We worked hard at our jobs
Until we finally paid off all of our debt, including our house on the 17th April 2019, one year ago this very week.
It wasn’t easy and some days were damn hard, but we were preparing for a harder time. Little did we know it was just around the corner in the form of a global pandemic. I can imagine there are people that are facing mountains of stress right now, especially if they are loaded with debt, have been living pay cheque to pay cheque, and god forbid, lost their jobs. It would be so very devastating.
The good news is that “If I can do it, anyone can do it!”. There is a quote by the debt-free advocate Dave Ramsey saying:
“The bad news is you are the problem, the GREAT news is YOU are the solution! You’ve got this!”
This is so true. Once you come to the realisation that you got yourself into this situation, so you too can then get yourself out of it, you will be able to make some change. It takes time and won’t happen overnight, but with a plan and some ‘razor-sharp’ focus, you can do this, just like we did.
A big thing to help you get through this is to be authentic, stand in your truth and “don’t keep up with Joneses”.
My personal tried and true Top 10 tips are as follows:
Have a budget meeting - Add up ALL of your debt and put a ring fence around it. Now you know how much you owe.
Make a monthly zero based budget and stick to it!
Sell your stuff - Go through your stuff and hold a garage sale. Set up Trade Me or Facebook Buy + Sell page and sell everything you can! Put that cash on debt fast! We can’t sell during lockdown, but we can prepare for when we are free to move about again.
Work Extra - Find a side hustle. Do some extra shifts. Get another job. Ask for a pay rise. Do whatever you can to increase the size of your shovel so you can move that debt.
Minimise your expenses - SCRUTINISE every payment, can you cut back anywhere?
Shop out of your pantry - MEAL PLAN. Write a list and only buy what you need!
Save $1,000 EMERGENCY FUND fast! - Always have this available in case Murphy strikes (or COVID-19). If you don’t, emergencies will strike!
Pay off ALL YOUR DEBT except your mortgage (you will get to that) - If you can’t pay with CASH you can’t afford it!
Invest in KiwiSaver to get the government contribution.
FINANCIAL FREEDOM! - You’ve made it when you’re debt-free, have a fully funded emergency fund and start investing 15%.
Plus a few more tips that I’ve shared over the past couple of weeks have been these:
Day 3 - Stack Cash! - Once you have your budget in place, the next step is to STACK CASH. $1,000 for starters! First off pay for food, rent or mortgage, power and petrol (these are the four basics to survive called “the four walls”). Pay those and if you have NO EMERGENCY FUND, don’t pay anything else until you have $1,000 in savings. If you have $1,000 then keep paying your normal payments and then STACK CASH during this lockdown time. We can’t go out so it’s a good time to save. If you have lost your job, just concentrate on the four walls. There are jobs around (Supermarkets, fruit picking etc), try and get one of these and then just breathe...
This will pass. It’s going to be okay. Love to you all.
Day 11 - Exercise at home - It can save you so much money. I have for years and thoroughly enjoy it. I’ve invested in decent walking shoes, a yoga mat, hand weights, and a swiss ball. I found ‘Yoga with Adriene’ years ago and I tune in regularly to complete one of her free workouts. I also enjoy long walks and head off early to see the sunrise. This is an instant “feels good to be alive” moment right there! I have the free meditation app ‘InsightTimer’ on my phone for morning meditation. Daily exercise for me is important and I will be doing something most days. Have you got your weekly plan sorted to stay healthy, fit and strong?
Day 18 - Do what makes you happy - Sounds easy right? But have you ever sat down and written a list of the top 10 things that make you happy and fill your soul? I watched the documentary Playing with F.I.R.E and this is their suggestion. Spend your money on what makes you happy, truly happy and save the rest. Some of my top ten things are family dinners, a beautiful candle, coffee out with my husband, walks in nature or on the beach. What are some of your top ten?
These are just three of my daily tips that I’m sharing at the moment, you can follow me to find more!
So moving forward, my advice to any of you reading this right now is if you want to get better with your finances, NOW is exactly the right time!
Enough is enough.
Don’t go back to ‘normal’ once we are out of lockdown.
By normal, I mean living pay cheque to pay cheque, living beyond your means, keeping up with the Joneses, loading your credit card, buying new cars with car loans or buying that rental investment property by gearing and borrowing against your own home.
Now is your chance to create your own path to financial freedom and I can promise you, from someone who has experienced overwhelming debt and is now debt-free, you won’t ever regret it.
Warm regards,
Bradie x
LOVE IT! Thanks so much Bradie for sharing your wisdom and please do follow those links that she has mentioned, you will learn more about her really interesting story. For Bradie, despite a rough patch in her financial and personal life she and her husband turned it around with hard work and determination to reach the pinnacle of what is referred to as “Baby step 7” which is owning their own home, investing 20% of their income and having a fully funded emergency fund for a rainy day. Now that’s what they call financial peace! It took tremendous work and referring back to her mention of Dave Ramsey again, he says “you can wander your way into debt, but you can’t wander your way back out”. You have to get intentional and a massive part of that is to budget your income, so those Top 10 Tips she has just shared do indeed work.
I’m just going to add a few thoughts of my own right here at the end. When Jonny and I first learned that our income was about to drop, the very first thing I did was turn to our budget and cut spending and reallocate money so we could position ourselves to cope with the unknown weeks and months ahead because I know from past drama that in times of crisis, having money available is damn handy.
We have used a paid budgeting tool called PocketSmith for years now which has helped me not only work out where our money went, but what we can expect to spend going forward. Over the last fortnight PocketSmith have been working to put together a FREE resource, using a lot of the elements of the paid plan, for those who are seeking to get a grip on their money at the moment due to a change in their financial situation and it’s well worth checking out.
First read each of the “Plan Ahead Guides” as they show you pretty clearly what PocketSmith will allow you to do, then, if you think it will be a useful tool for you, go ahead and SIGN UP FOR FREE to their Free Basic Plan and go BACK to “Plan Ahead Guides” to help walk you through the steps.
Here are some blog posts I’ve written that focus on the theme of budgeting and a podcast episode:
My PocketSmith analysis: We buy a lot of eggs!
36. Divorced and Determined Budgeting Queen
There are more, but I don’t want to bore you, so just search “budget” on my site and have a look around. If all that you have at your disposal is a pencil and a piece of paper, then you have the tools to start a budget, so our advice is to just get started.
And finally, I feel extremely fortunate to have the opportunity to speak with so many people who are successful with money and all of them would say that paying close attention to where your money is going is one of the key ways to win with money. So, PLEASE, like Bradie says, use this time to do a stock take of your money and fight any financial fires that are currently burning plus plan for how to put any out should they crop up in the future. If the things you were doing with your money prior to COVID-19 were not working, then don’t go back to ‘normal’ when this crisis passes, take this time to make some changes and do a RESET that will set you up well for the years ahead.
