A Tipping Point to be Free From Broke
I work in the IT industry and it’s a true fact that I am currently making an income that is below both the median income for my industry as well as the median income for my area. Why am I not crying myself to sleep every night and fretting about how I am going to make ends meet in an area that has such aggressive demands for cost of living? Because I have reached a Tipping Point.
A Tipping Point is essentially that point when you realize your finances have gone wild and then become under control and you are getting traction to increase your net worth. I should be more specific and say that I am more going to describe a few Mini-Tipping Points that happen frequently that will eventually accumulate into one Big Tipping Point.
The first came when I took a serious look at my finances and mapped out everything I was spending my money on. I found that I was leaking money everywhere. Eating at restaurants on a weekly basis that should have been on a monthly frequency. Signing up for services that I did not use. Buying things that I felt I needed but actually didn’t. It was rampant and wildly inappropriate. By taking serious inventory of my in flow and outflow I was better able to map out what I truly needed to focus on. My car payment, my credit cards, my student loans, rent and a myriad of other debts that needed to be taken care of. Once I had my road map it gave me a discrete goal to meet every month and showed me the power of socking away extra money.
The second one might be a little bit controversial but not really. For about 2 months I lived like a monk and put a complete clamp down on extra expenditures. By biting the bullet for a little while and not allowing myself any financial pleasures I built a healthy buffer and was then able to somewhat automate my bill paying process. Some might say that this is not the way to go; “you shouldn’t do away with things that make you happy just for the sake of saving” and/or “automation of bill paying takes you out of the loop and you aren’t able to fully maximize the amount you save.” The way I see it, this was not a perpetual thing, just temporary and the results and rewards are exponentially better then I imagined. I was able to better optimize my bills and see what need to be focused on without stressing if things were going to get paid for. Allow me to reiterate: I am not advocating that you live like a Spartan forever or that you should let go of your bills. Just buckle down and see what happens. Work now, play later. Once you get your homework done, you can go out and play. After your term paper is over, you can go to the party. After you build yourself some buffer for the future, you can pursue other endeavors that you have always wanted to do. You get the idea…
The third is a good one. Self education. I am huge believer that the human mind holds nearly an infinite amount of potential for knowledge and if you embrace your will to learn new things, 20 doors will open to you where normally only one would. Starting this site with Frank has been a complete eye opener that even 2 years ago I would have never known. I had no idea what I didn’t know and now I know tons of stuff I don’t know. Believe it or not, that feels really good to know what you don’t know. Strangely liberating. Probably due to the fact that you can actually do something about and empower yourself. Not only that, but you can then teach and show others. It goes round and round and does nothing but benefit. One thing that I always try to keep in mind is that while the saying goes that its a small world, its really not. Its actually huge. Its far bigger than you can imagine. The amount of people alone is staggering let alone all the ideas out there. Take as much in that you can, due your homework, find the truth and what it means to you and then you can go out and play.
How can you reach your tipping point? Its easy. The only way to start any journey no matter what it is, is to take small steps. Try doing one thing a day that adds to your goal of eliminating debt, saving money and building your net worth. No matter how small, just do something. Lets make a list:
Look at your bank account every day. Start by just looking at it the same time everyday. Thats it. Most people do this anyway, just not everyday. The reason why I suggest this is because your primary account is kind of like a beating heart and by checking it everyday you are feeling its pulse. This is important because invariably you will start seeing some surprises. Don’t worry if you get discouraged or mad at yourself for spending needlessly, you have made the first step: Noticing that there is a problem.
Set aside time. Now that you are in the habit of looking at your finances everyday, increase the amount of time you spend looking at your money and start working on your money. Work up until you are spending about 20 or 30 minutes everyday. You probably workout about that much right? Or you should be. You have to in order to do any good….same with money. Wild, I know.
Get frugal. Where can you milk your money? :-p Where can it best be used? What sorts of things should be paid off first? What should you avoid? Heres is a hint: high interest that you pay is the worst, focus on that first. Another easy one is find the best deals on food: Take your lunch to work, and make dinner at home. The margin that restaurants make on every sale begs the idea as to why we are all not owning them. Jump start your frugality. For the rest you are just going to have to subscribe. 
Research, research, research. I cannot stress enough the value of having the hobby of finding ways to both make money as well as keep it. I have read more books on finances then is probably healthy and dig through the newspaper and as many financial magazines then any other creepy hobby and the more I learn the more I realize there is more to learn. Become curious as to what you can do to save more and spend less. There is an amazing amount of content out there.
If you ever feel as though you want to learn more about something…ask us! While we don’t claim to have the answers to the universe, we will do our best to find out as much as we can or at least point you in the right direction. Thats really what we are here for. We answer every email and respond to just about all the comments we get.
This all came about due to Free from Broke’s Contest about Tipping Points. Want in on the action? Ok here’s the scoop:
The Prize: $25 Amazon Gift Card.
How to Enter:
- Leave a comment on this post telling him your personal finance tipping point. It can either be the moment you realized you needed to fix your finances or that point where you discovered you were finally in the black. Make sure you leave a valid email address in the comment. This will give you one (1) entry.
- Subscribe either to his feed or via email. There will be a secret phrase at the bottom. Email him using his contact form and tell me the secret phrase. This will give you five (5) entries. (Note: If you are already subscribed you can still email him the secret phrase)
- If you have your own blog, write about your personal finance tipping point and link back to him. Email him through his contact form with your link. This can be a full-on post or a quick few sentences in a round-up. This will give you ten (10) entries.
You can enter each way once. He’ll put all of the entries into an online randomizer to choose the winner. Entries can be submitted up to 11:59 am Friday, June 13th. He’ll contact the winner to email the gift certificate. If the email address is not valid he will award the prize to the next email address in the randomizer. Good luck! $
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Comments
Great post! It’s tough to find that balance on spending. I know I could probably find some more fat to cut in our budget but living wouldn’t be as enjoyable.
Thanks for sharing your tipping point!
I love the picture of the pig on the teeter totter. I have a feeling most people will come to this realization eventually. Unfortunately I believe they won’t figure it out until it has become unmanageable.
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Not into contests but this was inspiring. Thank you.