‘It is great wealth to a soul to live frugally with a contented mind” – Lucretius
It was a lazy Sunday afternoon in the fall of 2017. We were a newly married couple and thought we were living the dream. We were daydreaming, making plans to travel the world, and making enough money to never have to look at the price tag. We were living in an illusion. We casually decided to make a budget, check our finances, how much we owe, etc. Our dreams crash-landed. We soon realized how unrealistic and childish our travel plans were, given our current financial situation. We had a car loan, thousands of dollars of credit card debt, and zero savings. NADA! Like most people, our idea of being responsible with money was to pay bills on time and as an immigrant and good responsible children, send money at home to our families. Whatever is left is to spend. What else is there to do? Moreover, we thought, we don't earn enough anyway to save. There is nothing left to save after paying all the bills and buying stuff.
Save?? What is that?
Pay yourself first? Who does that??
Budget? That’s for old people!
Something didn’t feel right. It didn’t click. We thought this is supposed to be normal. Everyone has a car loan, and a credit card debt, goes out every weekend and spends money as soon as they receive their paycheck to buy new stuff. But we had no idea why it didn’t feel right. We did further research and our jaws dropped when we realized the amount of interest, we were paying every month on our credit card debt. We thought it was so unfair that we work so hard to earn this money and give it away so easily to someone else. It was our money, however, we had nothing to show for our hard work and we couldn’t cover even a $500 expense without using a credit card. This cannot be THE GREAT AMERICAN DREAM. That is when we realized we were in a deep hole, and we must make a change.
We discussed our situation with friends and realized everyone was in the same boat. Give or take. We decided to educate ourselves. But how could we? We barely have time after work and after taking care of other household chores. We did some deep analysis and realized we were indulging in many potential time-wasting activities, such as binge-watching television, listening to non-stop music while driving to work, scrolling mindlessly on social media, etc. We had so much information at our disposal but instead of reading and learning, we were using our phones and computers to consume mindless information that was numbing our brains. A friend mentioned a book by Dave Ramsey called Total Money Makeover. That book was an eye-opener. We decided to start with small changes and didn’t look back. We were able to pay off all consumer debt including paying off two car loans, all credit card debt, and, saving money for the future.
We decided to allocate at least 15 minutes every day to read books, blogs, articles; anything related to personal finance.
We started listening to podcasts instead of music on our way to work.
We decided to discipline ourselves and consciously limited our social media time unless we were watching or listening to something educational.
We decided to restrict our television and movie time only to weekends.
Gradually, we started incrementing our time for reading and listening to podcasts.
We would listen to new podcasts daily and excitedly share our learning with each other in the evening. It was beautiful.
We discovered two things.
No matter how much you earn, always pay yourself first!
It does not matter how much earn, but how much you save.
We came across stories of people who earn less than average but have saved hundreds and thousands of dollars. We also came across stories of people who earn six-figure salaries but live paycheck to paycheck.
The book that introduced us to the concept of saving at least 10% of your paycheck and paying yourself first was The Richest Man in Babylon by George Clason. We decided to follow the strategies mentioned in the book and save at least 10% of our monthly income. We decided to automate the process. Here is how: -
10% of direct deposit was automatically deducted and saved into a high-yield online checking account. This was our emergency fund.
It was meant only for emergencies. Like serious emergencies, such as car breaks down, sudden medical expenses, etc.
Not fake emergencies, such as a Labor Day sale to buy a $1000 television. You get the point. The emergency fund is sacred.
Gradually, as we got comfortable living on less, we increased the amount of saving by cutting our spending on unnecessary subscriptions, cooking more at home, and consciously buying groceries at discount stores such as Aldi.
No matter how small or big the amount. Most people never start because they think $50 or $100 per month is too small to save. Why even bother? They think they will save more when they earn more. But when they earn more, they spend more. Saving always takes a backseat. Why?? Because it’s the mindset.
Rome was not built in a day. When you start saving small amounts, you start training your mind. You are preparing your mind to think in a certain way. You are gaining control of your mind. You are telling yourself you are in control of this ship. You are the leader, the boss, the badass, whatever motivates you. You are the one who is telling your money where to go, not the other way around. Your money is working for you. You are not your money’s slave. This is a powerful mindset to be in.
Once you are in this mindset, you will automatically save $500, $1000, and $5000. Saving will be the first thought when you get paid. Not spending. It’s the mindset, habit, perspective, second nature, and reflex action. You can call it whatever you want. But that’s the key!
Once you are in this mindset, you will soon gain traction and start saving a lot more by squeezing and saving money from wherever you can. There is no greater sight than money in the bank. Trust me. That is how we were able to save for at least six months of living expenses in our emergency fund that included all our basic monthly expenses such as housing, food, health insurance, and transportation.
We hope this post will motivate you and help you get started on your personal finance journey. It is a bumpy ride but worth every penny. If you would like to know more about money-saving strategies, please like this post and subscribe to my blog. Please comment below if there is a specific topic or goal you would like to know more about.
Recommended Reading: -
The Richest man in Babylon- George Clason
The Total Money Makeover- Dave Ramsey
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