Lately, I've been trying to get into personal finance. I have a naturally obsessive thought pattern, so if I can emotionally and intellectually attach myself to something, I become pretty driven. I grew up with parents who had both gone through a bankruptcy, bought shoes instead of buying me much needed jeans, borrowed money to pay bills, continued to overspend and then went through a house foreclosure right before I turned 18. Combined with severe abuse, predisposition to mental illness, and you could definitely say I've inherited the scarcity mindset in a lot of areas of my life. Regardless, I've still made more stupid financial choices than I can attribute solely to that. Now, at 23, after having gone through a short period of being truly and genuinely in poverty, I've realized that my previous irresponsible behavior created my current crisis. Fortunately, I start a job in a few weeks which will more than triple my income - from 11,000/yr to 36-40,000/yr. And I'm determined to NOT FUCK IT UP.
I started just by watching Youtube videos on people's debt paydown plans or budgets, then I read through old posts on this subreddit pretty obsessively for a while, and now, this weekend, I read both Ramit Sethi's and Dave Ramsey's books. I was genuinely shocked and fascinated by a lot of the material. I knew a bit about budgeting - hadn't done it, of course - but nothing about investing or the psychology around finance. So, like any good student, I sat down to write out my budget, plan of attack, and figure out my debt pay off date. I took advice from Sethi, Ramsey, and of course, the prime directive, and here is what I found out:
My total debt is around $43k from student loans and medical debt in collections. I don't have a car and I live in a walkable, but expensive city. My plan is to use the 70/30 budget so per month I will take home about $2500, live on $1750, invest $100 per month, and use $650 for debt payoff or savings, depending on where I am in the timeline. All set up automatically so I don't have to rely on willpower. And amazingly, at 30, I will be debt-free, have an $8,800 emergency fund, and have invested $8000 for retirement! I know I'm not technically doing any one of the plans "perfectly" but just being able to visualize the end - and the steps to get there - feels like a huge epiphany. At 30, if I direct that 30% of my budget exclusively towards investing for the next 5yrs, I'll have a total of $47k invested, not including returns. And, all of this assumes I never make a single cent over $36k, which I think - and hope - I likely will at some point, thereby speeding up the process.
I THINK I GET IT NOW. I honestly never thought I would feel secure - in any sense, but especially financially - in my life. But it's there and I can have it - if I work for it. Combined with a pretty transformational mental health journey over the past few years, I'm feeling quite inspired. I know follow-through is the hardest part, but, WOW, do I love a plan. So, besides general commentary, how did/do you stay motivated through a yearslong process like this?
Submitted January 19, 2020 at 08:48PM by AltruisticPeach5 https://ift.tt/2RAh0NZ
