The top 3 New Years resolutions (according to statisticbrain.com) are:
Spend less, save more
In my experience, when you get serious about #3, the other two often improve also. I'll share with you how this worked for me.
My Financial Story
Neither of my parents went to college, but they both did well in their careers. (My dad worked for Exxon-Mobil. My mom stayed home when I was young, and she later became a real estate agent.) We were by no means wealthy, but we always had what we needed.
My parents are skilled in the art of doing more with less. They taught us kids the values of working hard, living below our means, taking care of what you have, and not needing lots of "stuff" to be happy.
I am not a financial expert, but I had always considered myself decent with money. I managed to get myself through college without any student loan debt (thanks to scholarships and working). After college my husband and I had very little debt (just our mortgage and a couple small loans).
Then I decided to go to PA school. Because it was a master's program and very competitive, I did not have any scholarships or assistantships. I also could not work during that time due to the intense, full-time demands of the program.
Long story short, I quickly racked up over $100,000 in student loans. My student loan payments ate up a big chunk of my paychecks once I became a PA. In fact, my student loan payments were more than our mortgage!
A couple of my work colleagues were going through Dave Ramsey's Financial Peace University, which was offered through their church. I had heard good things about Dave Ramsey. I had read through his baby steps, which made sense. However, I had a couple concerns with Dave's plan...
Concern #1. My thinking at the time differed from Dave's in that I felt it was better to use extra money to invest (considering the dramatic effect of compound interest over time), rather than focusing too much on paying off debt early. (I later realized that Dave's plan focuses on debt reduction due to the incredible sense of freedom you enjoy when you don't have a lot of debt hanging over your head.)
Concern #2. While I liked his debt snowball approach to paying off debt, the part about paying off the smallest loans first (instead of the highest-interest loans first) didn't make mathematical sense to me. (I later realized that Dave's approach purposely focuses on the psychological advantages of quickly getting rid of various debts, which keeps motivation high and improves success rate.)
Having these concerns, I kept doing my thing, focusing on retirement savings, and putting some extra money toward student loans. Unfortunately, it seemed like the debt wasn't going anywhere. And I couldn't help but notice the sense of hope, the motivation, and the progress of my colleagues with Dave Ramsey's program.
One morning on my way to work, I was flipping through radio stations, and I came across the Dave Ramsey Show. Dave tells it like it is, and I recall cracking up at a response he gave to a caller on the show. It was quite entertaining. I took note of the radio station, and I continued to listen to it on my way to work each day.
Eventually I decided that this Dave Ramsey guy seemed to know what he was talking about. After all, there were lots of excited folks who would eagerly travel to see him and give their "debt-free screams" on air. I thought, Hmm... Maybe it's time to go all-in and give his method a try. (In case you couldn’t tell, I can be a little skeptical and hesitant, lol.)
I bought the audio version of Dave's book, Total Money Makeover. It's not expensive and not long (the audio version is 3 hours and 40 minutes). My husband and I listened to it in the car while traveling to see family.
Total Money Makeover was a game-changer for us. My husband and I got on the same page. We got organized. We set some high goals. We decided to "live like no one else, so you can live like no one else."
We worked extra, we followed a strict budget, we used coupons and shopped sales at the grocery store, we sold stuff (including a vehicle), and we temporarily backed off on retirement savings (contributing only the amount that was employer-matched).
The results? In one year's time we reached our goal of paying off $90,000 in debt. This allowed us to say goodbye to $1,600/month in debt payments.
I share this with you not to brag but to highlight how drastically and how quickly your financial situation can change when you get serious, change your spending habits, and attack debt with what Dave calls "gazelle-like intensity."
Interestingly, when my husband and I look back on this year of our lives (which was in 2014), we remember it as a year of challenge, resourcefulness, and excitement (NOT deprivation).
What does this have to do with health?
There are many aspects of good health, and each affects the others:
Physical Health – optimizing nutrition and exercise, improving physical condition
Mental/Emotional Health – improving mood, emotions, and outlook on life
Social Health – connecting with others, building strong relationships
Intellectual Health – continually learning, improving, growing
Spiritual Health – exploring meaning and purpose in life, finding peace and harmony
Financial Health – having sufficient income and security, doing more with less
Environmental health - being surrounded by a health-promoting environment
Financial health is extremely important because it directly impacts our most basic needs: food, shelter, and safety (recall the bottom level of Maslow's Hierarchy of Needs).
If a person cannot pay the rent, put food on the table, or afford medications, it's kind of hard to focus on other things. However, once the finances are squared away, more attention can be paid to other areas, and this creates a positive ripple effect (or as Dave calls it, a "cycle of excellence"), with multiple areas improved.
In our case, the experience of getting out of debt improved much more than our financial situation. My husband and I learned greater discipline, which carried over into other areas, such as exercising regularly and eating healthier (improved physical health). We worked together as a team toward an important goal for our family (healthy relationship-building). We no longer have the same stress over money (improved mental/emotional well-being). We can afford to give more (social/spiritual). We have become more intentional, thinking critically about the kind of life we want to lead and the legacy we want to leave (intellectual/emotional/social/spiritual).
How about you?
Is your financial situation in need of improvement? Why not make this YOUR year for big changes?! Success is all about having clear, specific goals and an actionable plan to achieve them. As your financial situation improves, observe how many other areas of your health/life also improve.
This post was originally published on December 7, 2016.