Introduction – I began writing How To Stop Worrying And Start Caring About Money as just one post. However, I had to many great ideas. So I decided to break it into chunks and release one by one. This is the second part in the series. Read Part 1 here.
Lesson # 1 – Live Each Day
“Our main business is not to see what lies dimly at a distance, but to do what lies clearly at hand.” - Thomas Carlyle
Take one worry you have. Write it down.
Answer the following questions?
- When does this worry take place?
- Is there a 100% chance of this worry coming true?
- What can I do today to change this worry?
Most of your worries about money are in the future, might or might not happen, and have limited daily actions.
Your first lesson is to take each day as it comes.
Does this mean that you should not be setting financial goals or have no emergency fund, far from it. A good financial plan is composed of goals and has room for emergencies.
What I mean is that you must learn that your greatest chance to improve your finances is by concentrating on doing today’s work as best as you can.
The steps you take to eliminate worry and improve your finances can only be acted upon in the present. There is nothing you can do about the past and the future is no guarantee.
If there is something that might happen in the future, by all means acknowledge it. However, never worry about it. Ask yourself “What specific action that is in my control can I accomplish today.” If there is nothing you can to today, don’t worry about it. If there is something you can to today, take action to the best of your ability.
Lesson # 2 – What’s The Worse That Can Possibly Happen?
What is the biggest worry you have regarding money? Take that worry and ask yourself – “What’s the worse that can possibly happen?” The absolute most miserable situation you could find yourself in.
Go crazy with it. Spend at least two minutes brainstorming all possible scenarios. Really try to imagine this happening to you.
For example, what’s the worse that can happen if you don’t pay your mortgage bill?
Chances are you will lose your house. You will have destroyed your credit. You might even have to move your family into a small apartment.
If your single biggest worry can land you in jail or at your own funeral, you have a reason to worry. If you still have your life, your health, and your family, consider yourself fortunate.
Would moving back into a small apartment signal the end of your life? I hope not. Unfortunately, people tend to treat their worries about money as the end of all mankind.
Remember, all things are temporary. So you have to move back into an apartment. Is that really that bad?
Now combine this concept with Lesson # 1. Attempt each day to improve on the worse possible situation imaginable to the best of your ability. What specific actions can you take to improve your situation?
If your biggest worry is that you might lose your house, what specific actions can you do today to improve your nightmare?
Here are 4 specific actions:
- Sell meaningless possessions on eBay. Less to move and more money in your pocket.
- Apply for a second job. Work at night or on the weekends if you have to. Consider no job below your education. Deliver pizzas, wait on tables, caddy at a golf course. Do whatever you have to do for extra money. What’s worse – losing your house or delivering a pizza to your neighbor?
- Call your lender. Negotiate a payment schedule. Tell them you’re working a second job and want to keep the house.
- Learn a new skill that can save or make your money. Why not try learning how to Bargain? It could help you get a lower monthly payment on your rent or stay in your home.
Lesson # 3 – Never Run Out Of Money
If there was no possible way you could run out of money, would you still worry? Good, I hope not.
Let me tell you a secret. There is a way to guarantee that you will never run out of money. Fortunately, it’s very simple – track every dollar that comes in and out of your life.
If you know how much you spend and how much you earn, then you know how much you can spend until you run out. There really is no reason to worry if you understand where money is coming in and out of your life. If you’re spending less than you earn, you will never run out of money.
Pretty simple math.
Starting a budget doesn’t mean sitting over a kitchen table with the checkbook, sweating out if you’re going to have enough room to pay each bill. There are plenty of free personal accounting programs available on the web today that do all the work for you.
It takes me about 10-15 minutes every other week to maintain a budget. It’s not as bad as it sounds.
While you’re tracking your expenses, implement a monthly review. Not only will you be reviewing your expenses, you can see your net worth and other important statistics.
One statistic I like to keep track of is my net wealth. This is my net worth divided by my average daily expenses. This tells me exactly how many days I could live off of my current assets and maintain the same lifestyle.
I know exactly how many days, without making a dollar, until I would run out of money. If I see that I can live 150 days with no income, I can stop worrying about running out. Plus, if I were to do everything to the best of my ability, like I learned in lesson #1, there is a lot I can accomplish in 150 days.
You have time to track your money. Sign up for an account at Mint.com. Review your income and expenses at the most every other week.
If you spend less than you earn, there is no way you will ever run out of money.
To be continued…
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