Today, I am going to start a series on living simply and downshifting by reducing stress. The reality is that we all have stress in our lives, it is a normal, somewhat natural part of living, particularly in a modern society which places many professional and personal demands on us. But how we cope with stress is crucial, I honestly believe it can make or break a person/family. We all have it in our power to reduce the stress we feel, to cope with situations that arise and to change our life, even through little everyday changes in order to reduce stress, increase our ability to cope with stress and live a happier healthier life.
So to kick off this series, I’m going to start by focusing on reducing stress by getting your finances in order. Here are my top tips for reducing your financial stress: Please note, I am not an expert, I am just saying what I did as I’ve had a lot of people ask me how I got on top of my situation so quickly.
1. Spend a weekend getting your financial picture mapped out. If you have a partner it is crucial that they are involved. If you have children see if a family member or friend can watch them for part or a whole of a day so that you can concentrate on figuring out what your situation is. Bring all your statements to the table, phone your credit card companies, phone your mortgage company, speak to any repayment companies, bring info on your pensions, savings etc and begin making two lists. The first list is how much debt you are in (break it up into non-mortgage and mortgage debt) and secondly how much money you actually have. This is your realistic picture and lets you start looking at what you need to do. The picture at the top, was the weekend I got my own financial picture and goals together, Cornwall early spring 2008!
2. Make lists of all your in-comings and outgoings and be honest with yourself about need vs. want. Do you really need cable, do you really need such a high mobile/cell phone package, do you need to spend £300 a month on groceries (I believe almost everyone who is just starting on the frugal life can drop their grocery bill by at least 15%), do you really need to eat out or get take away once a week? This is your time to get in control of you life and really really make a difference by distinguishing need vs. want. Do you really want to work 5 hours a week just to eat out each week? Doesn’t seem worth it to me! Now you can make a realistic budget with money for savings and repaying debt. This means gone are the days spending £200 a month on stuff! Deal with it!
3. What is the most important short term goal? People like Dave Ramsay say to save $1000 (probably over here £1000) in a mini emergency fund and then focus on debt repayment. I decided this wasn’t right for me, really because with only 1 income I knew, if something went wrong, I didn’t have a fall back income. So, I focused on getting 3 months expenses saved by cutting out all unnecessary spending, as soon as possible. With the way the market is, I’m really glad I made that decision. Then I focused on getting my debt paid off as soon as possible. I still made payments on my debt while saving for my emergency fund, for example putting £150 a month towards debt repayment and £500 a month towards emergency fund. If you don’t have debt, then maybe your focus is building 6 or even 12 months expenses in an emergency fund, so you apply the same principles and make it your goal. If you have a healthy emergency fund, but no pension provision – then saving for retirement becomes your goal. The point is that you goals have to be what works for you, what your needs are. I recommend going to the library and getting a good range of financial books out to help you create a system that works for you!
4. Now that you have your budget, your emergency fund building and your debt repayment plan, make a 1, 2, 3, 4 and 5 year plan. Allowing yourself to actually see where you will be a year from now, two years from now, five years from now, well it is powerful. All of a sudden you can see that those dreams you have, a dream to have a baby or travel to Peru are really possible with a bit of work and creativity. Now you know what your long term goals are, you can have the energy and enthusiasm to reach them!
5. Focus on the positive, yes you may be in debt, yes that debt may be big, but you are on your way out. If you’ve done all these things, such as cutting back on petrol/groceries/activities/non-essentials, if you’ve acknowledged that you need to work hard towards achieving your goals and having financial stability for yourself and your family, then you will get there and you will reduce the financial stress in your life. You can do It! BTW, if you need to write a sign on your fridge reminding yourself and your partner do just that, we all need a bit of daily motivation to remind us of the wonderful capabilities we have!
For Info on how to cut your grocery bill, please read this post and this one
Great idea for a series! Some excellent advice and I can’t wait to see what’s coming up next!
By: Holly on November 16, 2008
at 11:16 am
Like you, I too am downsizing and making my life simpler. I think it has already (after just two months) given me so much pleasure to throw out stuff, remove junk and declutter the house. It’s been a most refreshing experience and I find my finances are more easily managed now too (though they’re all interelated).
By: Andy @ Retire at 40 on November 16, 2008
at 11:38 am
I love your Blog. Everything you say makes so much sense. I think that we (especially me!) are guilty of thinking that “things” will make us happy. It is not the physical objects that we buy that ensure our peace and tranquility, it is being content with the way we live our lives.
Now, can someone please get me to get that into my own head!!!!
By: Lynne sharpe on November 16, 2008
at 12:01 pm
Hi there-a really good post-It makes so much sense to be financially organised and then plans can be that more realistic!
By: sharon rose on November 16, 2008
at 2:23 pm
Great post -look forward to the next one!
By: apieceofwood on November 16, 2008
at 2:28 pm
What a well thought out post with great advice. Everyone needs to take care of their finances whether in debt or not- those that don’t will soon end up in deep debt.
I love reading your blog, you deffo have your head ’screwed on the right way’ as my relations say.
I don’t know if you are interested but over at my blog I have given you an award. A Real Person award- I think you deserve it after all the hard work you put in.
Anyway, it is there if you want it.
By: sharie on November 16, 2008
at 3:24 pm
good post. I like to map out my future anyway as it suits my personality. Looking forward to the rest of your posts!
By: Kirsty on November 16, 2008
at 4:00 pm
Wow…how did you know having a baby and travelling to Peru are on my three years goals list
Great post, and very timely for me. We’ve begun deliberately downshifting in the last few months as we’ve lost a stack in the stock market. For the first time in my life I really feel like I need to get stuck into reducing my debt and becoming more frugal is how we need to do it. I love your blog. Thanks for your inspiration.
By: livingmyrichlife on November 16, 2008
at 4:42 pm
This is all such wonderful advice. Even though I know where I want to be in 3,4,5 years, I need to map out exactly what I have and what I need to have in order to achieve my goals. Thank you.
~Corinne
By: corinne on November 16, 2008
at 5:26 pm
Excellent post! My sweet husband is a big proponent of getting out from under stress, and I’ve learned so much from him. Debt is something we’ve earmarked as our Number One goal to eliminate, and there’s a lot of momentum that can be had in achieving it together! My personal area of focus has been on groceries and meals, and it’s amazing just how much can be gained from being a bit more deliberate about shopping and cooking habits. We’ve cut our grocery expenses by half since last year, and my goal for this year is to cut it in half further by this time next year.
You have such a great blog going here…so nice to see a Can Do attitude and seeing you making choices for your best life
By: Robbyn on November 17, 2008
at 8:52 am
Great post!I think the first step can be the hardest – a change in mindset. After being made redundant I had to look at our budget and control spending, once I had got into the right frame of mind it wasn’t too hard to do.
Such good advice FT!
By: French Knots on November 17, 2008
at 10:38 am
Can’t wait for the rest of the series! Excellent start, FT
By: Sharon J on November 17, 2008
at 3:00 pm
I love this idea!!! I would love to gain some of your tips & tricks for success!! Looking forward to the rest of your series
By: frugal dreamer on November 17, 2008
at 4:38 pm
So true. Mr Chiots and I downsized 6 years ago when he quit it job and started his own business. Great advice! It’s so worth it to become financially secure!
By: Susy on November 17, 2008
at 5:48 pm
Have tagged you …. see my blog for details!
Don’t feel obliged to do it though – just a bit of fun!
By: Sandie on November 17, 2008
at 6:12 pm
Downshifting is excellent and I am glad you are on this journey too. I wish you all the best.
Teresa
http://sailingsimplicity.com
By: ssteresa on November 17, 2008
at 8:28 pm
P.S. I will continue to return to your blog to see updates.
Thanks!
By: ssteresa on November 17, 2008
at 8:28 pm
Thanks for putting things so succinctly. I already do some of the things you’ve listed but the others are definitely something I want to consider.
Looking forward to the next post.
By: Kathy W on November 17, 2008
at 11:07 pm
great! a little over a year ago, i did exactly this. getting your finances in order (no matter what the picture looks like) is sooo easing on stress levels.
By: deepali on November 17, 2008
at 11:22 pm
Excellent suggestions! Living frugally without debt is the biggest stress reducer I know. One of the best things we’ve done is to keep track of every penny we spend. We keep a little notebook in the kitchen drawer and just jot down any cash each day, and I put it in Quicken once a week. You really get a picture for where your money is going.
I highly recommend the book Your Money or Your Life by Joe Dominguez and Vicki Robin–great for planning your financial independence!
By: Queen of Fifty Cents on November 18, 2008
at 2:13 am
great post. we did this about 10 months ago. it was pretty painful, but we’d had our heads in the sand precisely because we didn’t want to find out just how bad the situation was. ever since, the situation has been improving. hoo-rah!
By: neimanmarxist on November 18, 2008
at 10:40 pm
Excellent idea, as usual! Can’t wait to read the rest
By: FruGal on November 19, 2008
at 3:40 pm
hey there. Great post with lots of useful info. I just wanted to let you know that I’ve ’sort of’ tagged you
By: Alice on November 19, 2008
at 5:22 pm
[...] Stress – Part II So, when I first began I focused on financial stress & getting your financial picture mapped. After I accomplished this, I really wanted to get my house in order – reduce clutter, etc, but I [...]
By: Simple Living and Reducing Stress - Part II « Notes From The Frugal Trenches - A Downshifting Journey on November 20, 2008
at 8:14 pm
as always great writing……..
Gill in Canada
By: Gill on November 22, 2008
at 2:13 am
[...] from the Frugal Trenches posted a series on simple living and reducing stress. This is what I’m all about at the moment, so I read her series with [...]
By: Link Love - The super flu edition « Living My Rich Life on November 22, 2008
at 4:47 pm
[...] Way back when I started this series to share how I got out of a rut, I started with step one, getting your financial picture mapped and then step two which was getting healthy. Getting healthy and having your energy levels up [...]
By: Simple Living and Reducing Stress Part III « Notes From The Frugal Trenches - A Downshifting Journey on December 28, 2008
at 8:33 am
I’m not allowed to build an emergency fund.
A student loan garnishment takes 15 percent of my $1004 monthly income, after which I am living on fumes and foiod stamps.
Student loan collections have no provision for emergency fund.
By: poor boomer on January 8, 2009
at 6:23 am
[...] Step 1 was to focus on your finances [...]
By: Simple Living and Reducing Stress Part IV « Notes From The Frugal Trenches - A Downshifting Journey on January 11, 2009
at 11:25 am