Budgeting for Financial Freedom
After graduating college, one of the first things I was faced with was my finances. I was SO ready to start my adult life, but I left college with quite a bit of student loan debt and I quickly learned I needed to establish a plan to get rid of this debt in order to start living. I was blessed to be able to stay at my parents house after graduating to save money and work on this debt. But after 2 years of paying on my student loans, I have not made much of a dent.
I made the decision that in 2021, I am getting serious about my finances with the goal of moving out on my own. My parents are so supportive but I am craving independence and want to thrive in an area with more people my own age. So here are the steps I am taking towards financial freedom, so I can take that leap of faith to move out and start living how I’ve always dreamed.
1.Move from part-time work to full-time work
Since graduating, I have been constantly working at least 3-4 jobs at a time. I did not want to work full-time because I need the flexibility to pursue theatre, TV, and film. Most full-time jobs wouldn’t allow me to up and leave for an audition at the drop of a hat, and most theatre companies or commercial auditions give you VERY little notice. My multiple jobs covered my student loan payments, car note, and everyday expenses. However, it would not cover monthly rent or utilities. So I made a budget, added more jobs, became super frugal to save more money. But that STILL wasn’t enough. I was doing every little trick in the book to save money but it wasn’t cutting it. I realized that I simply was not making enough money.
God already knew this before I did. One day, my boss approached me about coming on full-time at one of my current part-time jobs. This would nearly triple what I am currently making, comes with loads of time off, and an amazing benefit package. I realized I could still pursue my dream and work enough to support myself. To me, this was obviously a must-do.
2. Consolidate/ Refinance Student Loans
Let’s be real. We all hate student loans. If I woke up tomorrow and my loans were mysteriously paid off, I would ask no questions and would be the happiest girl in the world! But that’s not happening. I am paying multiple different loans throughout the month and they all have different (and ridiculous) interest rates. I spoke briefly with a financial planner (check with your current insurance company to see if you can do this for free!) and she said I NEED to consolidate or refinance as soon as possible. My brother just did and he has 1 payment a month with a reasonable interest rate.
Gab. What is consolidating and refinancing?
So essentially what happens is a new lender pays off your loan to your current lender. This new lender becomes your current lender, and instead of having multiple payments, you just have 1 and you can negotiate an interest rate that works for you (fixed vs variable, shop around for the lowest, etc.) But in order to do this, I need to show some consistent and reliable income because I want to be able to do this without a cosigner. So once I go full-time, I plan on taking the time and effort to get my loans in order so that they are manageable and I can hop on the road to debt free freedom!
3. Budget and save for 1 whole year
The word “budget” can come across as scary. But I encourage you to change that mindset. A budget is merely giving your money a plan and place to go. You can save alot of money by just writing down what you spend and see just how much is being wasted on silly, frivolous things. Here's how I budget.
I pull up my back statement for the last month (I use my bank’s mobile app and focus on my checking account).
Add up all of your expenses and subtract that from your total income. If this number is negative, then you want to set really strict budget amounts in order to get into the green. If you are already in the green, see where you can pull back in some places to save even more money
I then choose categories for how I spend my money: food, car payment, gas, bills, etc. Pick categories that work with your life and feel free to have as many as you need.
I then add up my previous month’s expenses to see how much I should budget for that category. For example, last month I spent $60 on gas. So I am going to set my budget amount for $70, just to give myself some wiggle room, but to also keep it realistic.
Make sure your total expenses are never more than your total income. If they are, you may need another stream of income, or you may need to cut back on spending
This is a REALLY simplified version of budgeting, but you get the point: keep yourself accountable! Once I started budgeting, I noticed I spend way too much money on food. So I made the commitment to buy more groceries and pack my lunch for work everyday. But to keep it fun, I can treat myself to something on Fridays. Once I started doing this, I had more money left over at the end of each month.
I am committed to these 3 changes and I know that they will result in success for my financial journey. I have big goals and I don’t want money to be the reason why I cannot pursue them. I REFUSE! Comment below how you are taking control of your finances in 2021!