Melanie blogs about breaking up with debt at DearDebt.com and invites others to write breakup letters to their debt as well. She’s accumulated a total of $81k in student loan debt between two degrees. Currently she puts more than 50% of her income towards debt, while living a frugal, fun life. Melanie enjoys travel, art, music, adventure, and of course, personal finance.
There is a lot of financial advice out there, and sometimes it’s really hard to sift through all the voices. But the beauty of personal finance is that it’s personal. You do what’s best for you. While I respect the expertise of many in the community, I also like to do things in an unconventional way.
Here are my 6 unconventional money tips:
1. Don’t Buy a House
Many people think that houses are a great investment and will provide a large return in the future. This idea, coupled with the fact that we need a place to live seems to make home ownership attractive. Home ownership is also seen as part of the American Dream, and one of the rites of passage to adulthood.
The housing bubble burst during the recession, and now the housing market is extremely volatile, and ever changing city to city. In some expensive cities, homeownership isn’t possible for the middle class. I personally don’t think homeownership is a great idea as an investment simply because of the money that needs to go into it: down payment, repairs, insurance, taxes, etc. There’s a lot of stress, money, and time that goes with owning a home.
Don’t buy a home just because that’s what you think you should do as an adult. Renters have more freedom to move and have other people to take care of maintenance issues. For a brilliant read, check out why your house is a terrible investment.
2. Focus on Making More Money, Not Cutting Expenses
Although I practice frugality as a lifestyle, and enjoy saving money, I believe in focusing my energy on making more money rather than cutting expenses. I’ve lived on a bare bones budget before, and there really is only so far you can cut back. However, if you really focus your efforts, time, and energy, you can make an undetermined amount of money. Your income doesn’t have to stop at your day job. I’ve always worked at nonprofits, and have always been resourceful in finding supplemental work. Start a side hustle, examine your skills and resources, and network!
“Never depend on single income. Make investment to create a second source.”
I prefer to make more money than to drastically cut expenses. Suddenly cutting expenses feels like dieting to me. You say, “I won’t eat sugar ever again!” then your caught eating the whole box of thin mints in the corner and feel like a failure. That’s no fun, and not really sustainable. Cutting expenses should happen in moderation and only in alignment with your values. For example, I enjoy going out to eat. It’s definitely a luxury, and an area I can improve in, but I am not willing to cut it out completely. I am motivated to work harder so I can enjoy those simple luxuries.
3. Do What Makes You Sleep Well At Night
Avalanche or Snowball? High-interest or low-interest? Buy or sell? Rent or own? Whatever your financial quandary is, my recommendation is to do what makes you sleep well at night.
It sounds so easy right? We often get caught up in the emotional side of our financial decisions, so instead of fighting with yourself, how about just do what feels right for you? For example, some people prefer to save a lot in an emergency fund while paying off debt. Others think you should have a small emergency fund and throw most of your income towards debt. Making decisions like this are very personal, and instead of crunching numbers, listening to financial gurus, trust your gut and do what feels right for you. You are likely to stay on track with your goals, sleep better at night, and make better financial decisions if you feel secure in your action plan.
4. Check Your Priorities
Think about your ideal life, or the life you really want to have. Not the life your parents think you should have, nor the life you are expected to have by a certain age. From a young age, it’s drilled into us that we should get married, buy a house, get a nice car, and have kids. There is nothing wrong with those things, but they are not for everyone. I’ve been guilty of making decisions because I thought I should, like going to graduate school. It’s hard to divorce yourself from outside expectations, and external influences, but I truly believe if you get back to basics and focus on your priorities, the need for an expensive car, extravagant wedding, or an overpriced house suddenly don’t seem that important.
Imagine you are on a deserted island and all you can bring are 10 things. What would you bring? Why are those things important to you? Doing this exercise can help you evaluate what’s important to you and eliminate the need for so much ‘stuff’ while highlighting the difference between needs and wants.
There is a whole economy out there that doesn’t revolve around money. Bartering is a good option to get things you need that you might not be able to afford. It also places a value on your skills and what you can bring to the table. You can barter your goods and services for other goods and services. Perhaps you trade your writing skills for web design, or offer to fix a bike for photography lessons. The possibilities are endless! Get creative and start taking an inventory of what you need. Think about what you have to offer, and who can help you get what you need.
6. Take Care of Yourself
Money itself is not evil. It doesn’t tell you what to do, or how to use it. It’s just a form of currency. It’s our relationship to money and how we use it where things start to get tricky. People who have a shopping addiction may be filling an emotional void. Buying things we can’t afford are symptoms of bigger issues. Perhaps it’s low self-esteem, unhappiness, resentment, jealousy, keeping up with the Joneses, or something else. Money issues usually have an emotional root, so try to fix that first. Be honest with yourself, and practice self-care. Forgive yourself for previous wrongs and empower yourself to do better.
What advice would you add to the list?