There are so many examples of financial trash. Some people have a lot of it. Others might have little, but it might stink a lot more. Some people have their trash strewn all about, while others have it hidden. Some people are accumulating trash faster than they are able to get rid of it.
Common examples of financial trash
The majority of people with student loans could pay them off way faster than they actually do. Most people stick to the 10 or 25 year plan, shelling out only the specified payment amount and essentially pushing that trash into the background and making it part of the family.
Eating out – let’s do the quick math
The average family spends almost $3,000 annually on dining outside the home. That’s almost $250 per month. That could be any combination of going out to lunch for work and going out to dinner with family or friends.
It is not difficult to spend $50 on a dinner for 2. Does that seem like a lot? It should. And here’s why.
My family spends about $700 each month on food to feed the 5 and a half of us. Say we have 90 meals during the month. That gives us a rough average cost of $7.80 per meal. Theoretically, the $50 spent on eating out could have paid for 6 meals at home. $50 = 7% of our total grocery spending for the month whereas a typical meal at home accounts for only 1% of the grocery budget.
When you think about it logically, it doesn’t make much sense at all. But then again, just because something isn’t logical doesn’t mean you should never do it. Is it logical to have 4 kids, to eat a whole plate of cookies, or to move to Nicaragua for a year? Nope. But that isn’t stopping us.
Don’t get me wrong, I love dining out. It’s just good to keep the numbers in perspective so we don’t go overboard. Going overboard on restaurants is trash that you might consider to getting rid of!
Creidt cards are the source of a lot more trash than anything else. I wholeheartedly recommend them for people who want to play the game of reaping sign-up bonuses, but I don’t advocate using them for much else.
Credit card companies are notorious for their aggressive marketing to college students and young adults who often sign up without realizing that they will soon be paying 23% on the balance they didn’t know they should pay off. It is just way too easy to find yourself drowning in a sea of trash if you don’t stay on top of your credit card usage.
Take out yo’ trash!
In other words, get your financial life in order. How?
Write down goals
The simplest way to establish financial goals is to simply ask yourself – “What are my financial goals?” Do you want to pay for college? Do you need to pay off debt? Do you want to buy a home or a car? Do you need to put away more money for retirement?
Even if you don’t yet know how to get there, writing down your financial goals is an essential first step in reaching them. Don’t be shy. Write all of them down. Don’t just assume they are unreachable before even writing them down and creating an action plan.
Create a budget
Part of that action plan is preparing a budget. A budget isn’t just intended to track where your money is going. The purpose of a budget is to tell your money where to go. After a few months of budgeting, you’ll have a pretty good idea of where all your money goes, and you can start to challenge yourself to spend less money in some of the more discretionary categories such as entertainment or eating out.
Get to know yourself
Money affects virtually every aspect of our lives—relationships, education, career, where we live, etc. Having too little or too much money can cause us to make emotional or rash decisions that can make a situation worse. If we can identify our emotional triggers, we can create a plan to help us avoid making poor financial choices.
Control and freedom beyond finance
I recently wrote an article for Rockstar Finance about net worth and why so many bloggers publicly share theirs. After gathering thoughts from several personal finance bloggers, I boiled it down to a few core reasons, control and freedom being among the most prominent. Sharing, tracking, and building their net worth helps them stay in control of their finances, which results in additional freedom.
Those who are in control of their finances are likely to also be in control of many other aspects of their lives. This is not a general rule, but I’ve seen that as people get their financial lives in order, other areas of their life tend to follow. As you start to form better financial habits and prevent financial trash from entering your life, you’ll notice that you might become more picky about what else you allow into your life.
Taking out the trash and replacing it with good habits will put you in the driver’s seat. And why stop with your finances? Let it flow over into your family life, work life, spiritual life, etc. Don’t give anything permission to creep into your life that you don’t want there.
Here’s a good nonfinancial example. There are some shows I’ve been dying to see that I haven’t bothered with yet because they’ve just got too much trash that I’d rather not see. I finally was able to start watching one of them on my own terms with a service called VidAngel. You can choose exactly what you want (or don’t want) to see and hear in the movies or tv shows that you buy from them.
Sidenote: VidAngel is also a great way to get up to speed on Star Wars before you go see The Force Awakens. Each video only costs $1 for a 24-hour period. In contrast, movies cost $4.99 on iTunes, Amazon video, and Google Play. And you’ll have the control to cut out any scenes you don’t want your kids to see. If you are going to be indulging in discretionary entertainment expenses like I do occasionally, there is no reason you shouldn’t be in complete control and getting the best price. Check it out.
Don’t accept financial trash as part of a package deal
Or any other trash for that matter. There is always a better way.
- College doesn’t have to come with loans
- Dating does not require eating at expensive restaurants every time
- You don’t have to pay interest just because you have a credit card
- A car doesn’t have to be new to get your from point A to point B
- You can buy less house than the bank tell you can can afford
- Kids don’t have to be expensive
- Babies don’t have to be expensive
- Traveling doesn’t have to be expensive
This list could go on and on. With a little bit of creativity, patience, and effort, there are so many ways to prevent letting financial trash into your life. Get rid of it!
Do you have any financial trash in your life you are planning to get rid of? Any other ideas of simple ways to prevent it from creeping into our lives?