First of all, I completely understand that my problems are first world problems and I’m VERY lucky to be where I’m at financially. Even so, I have very poor money management skills and could really use some advice. Its embarrassing. Thanks in advance for the help.
Me: 37, gross $13k-$15k/mo, 25% w2, 75% self employed. Main monthly expenses are rent: $1300 Child support: $800 Car: $350, along with regular utilities, subscriptions etc. Credit score: terrible. I’ve run the numbers and there is absolutely no good reason for me to essentially be living paycheck to paycheck and having around $5k of debt killing my credit score. I have a small 401k and about $1k in a savings account, but that’s it. Yes, self employment taxes shaves off a fair amount each month, but I’m lucky enough to get health insurance through my W2 job that helps balance things.
I made half what I’m making now three years ago and was also basically paycheck to paycheck. My expenses haven’t increased much. Sure, inflation, but that doesn’t account for all of this. I know lifestyle creep is a thing. I eat a lot of takeout. I have a really hard time choosing to cook after a long day when I know sushi is a few taps away. I just feel really stuck in my ways.
I’m moving across the country next month, and I really want a fresh start with a lot of things, including my finances. There is absolutely no reason I couldn’t be traveling, saving for retirement, and overall just stressing less about money, other than my own ineptitude at money management. How does one roll back lifestyle creep, or begin budgeting like a normal adult at almost 40? It feels totally overwhelming to me. I’ve even thought about hiring someone to give me an ‘allowance’ or something, but that feels pathetic. Any words of wisdom?
Let’s cut to the chase. You’re earning a hefty $13k per month, but your listed expenses are only $2,450. That leaves over $10k unaccounted for each month. Your expenses are not just $2,450. Not even close.
With your high income and relatively low rent, that $5k debt should be a mere blip on your financial radar. You should be able to knock it out with a single paycheck. You mentioned taxes eating up a chunk of your income, but how much exactly? It’s crucial to know these numbers. Vague guesses won’t cut it. You need to sit down and crunch the numbers. Every single expense, from your Netflix subscription to that occasional latte, needs to be accounted for.
You’re bleeding money somewhere, and until you identify the source, you’ll never be able to stem the flow. It’s time to put on your detective hat and track down every dollar.
Grab a pen and paper, or fire up a spreadsheet. Start listing every single expense. Don’t forget the small stuff, like that daily takeout lunch or the impulse Amazon purchase. It all adds up. Be meticulous. Be honest. This is your financial life we’re talking about.
Once you’ve tracked down every expense, categorize them. How much are you spending on eating out? Shopping? Subscriptions? Travel? This will give you a clear picture of where your money is going and where you need to make changes.
Now, I know facing the raw truth of your spending habits can be uncomfortable. It’s like stepping on the scale after a month of indulgence. But just like with weight loss, you can’t make progress until you confront the reality of your situation.
Here’s the good news: You have the income to create an incredible financial future. But it starts with awareness and accountability. No more burying your head in the sand. No more vague notions of where your money is going. It’s time to take control.
Once you’ve tracked your expenses and created a clear picture of your spending, it’s time to create a budget that aligns with your goals. Allocate your money intentionally. Prioritize paying off that debt. Build an emergency fund. Invest for your future. And don’t forget to leave room for the things that bring you joy – just be mindful and intentional about them.
You have the power to transform your financial life. But it starts with facing the truth and taking action. No more excuses. No more avoidance. It’s time to become the master of your money.
You’ve got this. Now go get it.