Ep 145 | Debt, Savings, or Expenses? How to Know What to Focus On First

Clarity with where your money is going today is essential to you achieving your retirement goal. If you are worried about how to reach retirement or how to save enough money this episode will help you understand if you should be reducing expenses, paying off debt, or doubling down on savings.

What you’ll learn:

✅ How to evaluate your current financial reality 

✅ Why clarity matters before action 

✅ A three point reflection every retirement plan needs

✅ Where your first focus should be right now 

Related Episodes:

Ep 66 - Why Budgeting Isn’t Enough And What You're Leaving Out

Ep 102 - Redefining Your Debt Relationship and Taking Control For Retirement

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💰 Join the Retirement Ready Workshop

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Transcript

  Welcome to the episode. Most people avoid looking at their numbers, looking at their financial situation, but this is your first step to freedom. Now I understand you might be like, okay, but what am I looking for? I'm not sure what that means because we are not all numbers people naturally. But in today's episode, I'm gonna guide you through a mini reflection to help you begin that journey of clarity.

Before I dive into the meat of today's episode, I just wanna share with you that I might ho that I am hosting a. Four day live challenge, September 23rd through the 26th to help you make retirement possible, join this challenge. Just $9 where I will teach you my five step method to turn any money goal into a 90 day win.

To learn more about the challenge and reserve your spot head over to Elevate Finances us slash challenge link will also be down in the show notes. Today's episode, clarity with Your Finances, understanding where you're at and what is going on. Is the first step and it's like, okay, you know, I'm not sure I understand what that means,

as you look at your finances, it's going to show you a gap. And I use a quote gap loosely, but at being able to define if you have checklist, you know, some things off first, and we are gonna walk you through that. I'm gonna walk you through three areas of your finances. That you can get a better understanding and get your own clarity about your finances and then help you understand what steps you need to take within those three areas.

Why do you need to understand what is going on? Well, answering a few of these questions that we're gonna be going through will help you know if you should be aggressively paying down debt. And saving, you know, for retirement. And when I say aggressively like that is your main goal and that's what you're tackling.

But sometimes individuals find themselves, oops, I need to go back and set up my foundation a little stronger. If you don't have that extra money that you're sending towards debt or trying to send to retirement, you may be creating your own financial crisis. Now or in the future. And why is this a crisis?

Because you're instantly removing your stability if you even had any in the first place. What is financial stability? Well, that's you being able to cover all your expenses, wants and desires with ease. I want you to hear that word with ease before stepping out into achieving your next financial goal.

Money should come to a place where it is easy, once you work with it, you get it moving and you get an well-oiled machine, I promise you that your money can be just an ease. Now, there's still stress. There's still worry there because things happen. Life happens, but I want your money to be at a point of ease.

How are you supposed to get this clarity , as promised, I'm gonna walk you through a mini reflection. We're gonna cover those three areas, talk about them, what they mean, and as you listen to that, I want you to determine you next step, or if you can check this off. Okay, so you're looking to that it's solved, it's taken care of, or, ooh, I need to go and solve that.

Next step. This is not all inclusive, but I'm giving the most common things that I see with clients and as I talk with individuals on free calls. The first area is your income greater than expenses. This is a must now. This can be something that a lot of people can say yes to. However, I want you to think about those times when you're like, oh man, I don't have enough money this month, and what is it that puts you over,

we need to be creating a better monthly budget. And what I mean by that is I want you to start thinking about those irregular expenses. Those one off those, you know those situations that don't happen all of the time, it is crucial that you start building those into your monthly budget. Now, when I first said is income greater than expenses?

If you just list your bills on what you spend and you say, yes, I'm gonna tell you not yet. Okay. I am not gonna tell you no, but I'm gonna tell you not yet. I want you to go explore when is your car insurance due? When is your HOA due? When is Christmas coming birthdays. All of those things. They need to be slotted in there as a monthly amount.

This right here will let you know if you're at the tipping point or not. You can go listen to episode 66 where I talk more about those expense expenses and how to create that monthly budget. So if you're like, I still am not sure what she means, go listen to episode 66. Link is down in the show notes as well.

To help you take that step, that would be your step to, you know, if you can't checklist this income is greater than expenses. Number two. Debt is manageable and not growing. It's really time for you to sit with all of your debt, all of the pieces of it, and ask yourself, is it growing or not?

A quick way to kind of evaluate this is if you make just monthly payments. Does the debt still grow? Now I'm saying that loosely because some credit cards are variable, so that could change. But if you know those pieces, you can answer that as well. But if your minimum is, and your debt is not growing within six, 12 months, then it is manageable.

That is where we want to be. Remember I talked about we need to know if we are in a situation before we can aggressively pay down debt. This is just meaning, is it manageable and not growing? If you've been a listener for a while, you may have heard me talk about your driver of debt. You've gotta understand.

If you said yeah, mine's growing. I want you to think about the next time you either get a loan. Use your credit card or say, yeah, I wanna take advantage of that 0% interest for my couch. That sounds wonderful and good, but does that mean you are managing your debt? Is your debt growing? Yes. You just made it grow.

Even if it is 0% interest, it's not 0% interest forever, and it's still that addition to your debt. So really, you know. Understand your relationship with debt. And you can do this by listening to episode 1 0 2 where I help you define your relationship with debt and kind of the things that you should be diving deeper in so I don't have to go into it all here.

If you're like, yeah, I'm not sure you go listen to episode 1 0 2 before you checklist this off and help it, you know, have it help you learn your relationship with debt. The final area, the final thing I want you to check off is, saving is easy. Most of the time I've got that there, and I think that is, you know, something that we need to understand.

Our expenses are seasonal. They fluctuate, but being prepared for them, most of the time, saving is going to be easy now. If you are like, well, okay, I save, but I dip into it a lot, you're gonna want to go listen to episode 66. Those irregular expenses are setting you up to feel like you can't save, and it's important to understand.

How those affect you, how those are playing into the whole cash flow situation and your solution is a savings priority plan. What do I mean by that? What you need to create savings for all of the things that you're committed to. Not on a monthly basis that are happening in the year, and setting that money aside and then understanding when you can use that.

So example, Christmas, birthdays, vacation, or an air conditioner failure. These types of things should not give you panic if they do. And if you're like, well, that happens all the time. This is the area you need to give focus to, but it even goes back to your income is greater than expenses. And understanding those irregular expenses, that is your key to your stability, that is your key to continuing to grow your savings.

That is your key to not have to dip into that savings all the time. Most of my clients. And I, I've mentioned them before. Even my clients who are five years away from retirement have everything saved. They weren't quite taking this step and they didn't understand. They were, you know, ebbing and flowing every single month and feeling like I, I just don't know how much I spend, and that's why they came to work with me.

But helping them understand a savings priority plan was key to them feeling more prepared for retirement. It wasn't about, you know, being able to save 'cause they had checklist that off. But don't jump over this step just to be saving find yourself growing your debt. All of these three things really intertwine together.

If you're wanting a savings priority plan, it is one of the things I can help you set up in my retirement roadmap session. Recently, I had clients of this session and they learned that the questions they were asking on the initial form and what they wanted their session to be about, while they were great questions and I did answer them, they weren't what they needed to be working on first.

They learned that there were other items that needed their attention. After I showed them and explained these steps and how to implement. They're like, oh, that makes sense. I can see that. That's easy. We can implement those. And then I gave them the additional steps to move towards those questions that they had submitted in just two hours.

They had this full clarity and understanding. No more circling, no more questioning if they were going to or if they were on the right track to retirement. So if you are looking for that. Same understanding and a path with steps laid out to put in place and to help alleviate that idea of, am I on the right track?

Am I doing what I'm supposed to? A retirement roadmap session will help solve that in just two hours. Head over to Elevate Finances Us back slash Roadmap to learn more about it and book that session. Let's quickly cover the things that I discussed. The three areas that you want to reflect, have answers to that is your retirement reality checkup that you need to get started.

First one is income greater than expenses. Now this is really, you know, wholly, wholly taking in the other two as well, but you've gotta consider. Is, am I including irregular expenses in my expenses for that monthly amount? Am I capturing everything? And if you are, you can check this off. And I don't care if income is greater only by $10, your income is still greater.

Check it off. You've done it. You don't need to do more with that particular thing. Number two, make sure that your debt is manageable and not growing. I don't believe that we should be debt, debt-free. At a certain point, yes, but relying on debt, there is a financial freedom level by grants a body, or he talks about self-sufficiency.

If we are constantly using debt to make it month to month or even six months to six months. We are not self-sufficient, so we've gotta manage our debt so much better. And number three, that saving is easy. If your income is greater than expenses, even by $10, you are now saving with ease that $10 needs to be effectively applied to your savings priority plan.

What are you setting it aside for or what have you already set aside for making sure that holistic plan is there? I hope this episode was helpful. I hope you understand why clarity with your current financial situation is crucial to your number one, being able to proceed to retirement. And number two, in being successful in reaching retirement, it's not too late.

Go give it a try and we'll see you next episode.