Financial Freedom - is that your Goal?

My friend Bob Lai from www.tawcan.com wrote a blog post this summer about “7 money goals to hit by the time you’re 35” and I felt inspired to give my 2¢. I encourage you to check out his website (after you read this … of course). You’ll find his post HERE 👈 but what I love most is getting his newsletter where he shares ALL the info about his portfolio. I love snooping his income, what stocks he’s using + everything in-between. Sign up HERE 👈👈👈

Although his post was about being able to check off some specific things before a specific age, I thought I’d adapt mine a bit for you to check off some specific things you can do over the next 90 days (if you aren't already doing them). Therefore achieving some great financial goals, habits and traction over the next 3 months (regardless of age, net worth, income, blah blah blah).

When I ask people what is their #1 goal is when it comes to their finances, a very common answer is to “Achieve Financial Freedom”. Because I’m nosey + what to help you achieve ALL your financial goals - my next question is “what is financial freedom + how will you know when you’re there?”

I’d love to hear from you: what does financial freedom mean to you?

From all the answers I’ve heard over my career I think I’ve narrowed down it down to 4 things that would fall under the definition of "financial freedom":

  • Having an adequate emergency fund

  • Not having to check your bank account when you use your debit card

  • Knowing you’re saving enough for retirement

  • Being debt free

So instead of giving you goals to achieve, I’ll tell you what some simple things you can start NOW to get closer to “financial freedom”.

#1. Know how much you make + how much it costs you to live

There are some numbers that are easy to remember. Your favourite channel, the passcode on your iPhone, your annual GROSS salary, your monthly rental income. But if I were to ask you: how much gets deposited into your bank account every month? Or How much does it cost you + your family to live? Would you be able to answer that?

If the answer is no: let’s change that #adulting

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The first step is to complete the cash flow template. It looks like this or you can get your own copy in the workshop: https://www.meghanchomut.com/september

On the left, tally up ALL your NET income. Everything that’ll get deposited into your bank account next month. Your paycheques, your partner’s paycheques, kid payments, government payments, side job payments, everything gets accounted for in that INCOME section.

Next, move on to your expenses. This is your autopay expenses. Any bill that comes out of your bank account automatically. Thinks like mortgage, rent, property taxes, water, heat, electricity, Net Flix, child care, cell phone, subscriptions, car payments, student loan + other debt repayments. That all gets listed on the right.

Then in another column, you list out all the monthly savings contributions you make. Things like emergency fund, retirement, savings for fun, vehicle + home maintenance, savings for Christmas, etc. Whatever you are squirrelling money away for regularly, break it down and total it up.

What’s left?

That is what you have for the month to spend on things you usually use your debit card for. Things like fuel, groceries, hobbies, eating out, kids activities, etc.

So how much does it cost for your family to live: the total of your auto pay expenses + the balance of what’s left for everyday spending.

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#2. Have savings that grow + Savings you CASH IN #yolo

To get closer to financial freedom you need to save #thankscaptobvious But I have another word that we have to remember: balance. It’s important to plan for your future, but it’s also important to live your life now. Financial freedom doesn’t have to be something that you are continuously working towards. Financial freedom can mean going on a family trip without dripping into your line of credit. Financial freedom can mean helping out a friend or family member without having to sacrifice your own family’s lifestyle.

It’s all about perspective and keeping in mind that financial freedom doesn’t HAVE to be about retirement or the liberation on knowing you aren’t relying on a paycheque.

#3. Say goodbye to debt

Debt is heavy. Debt can also be a very useful tool, but in short… Debt sucks. It’s like a fire extinguisher. You want to have it ‘just in case’ but you never want to have to use it. But as we move through various stages of life we find ourselves using it, recovering from using it, using it again, feeling tempted to use it, it’s a crappy cycle.

For most, financial freedom is not achieved if you still have some debt payment hanging over your head. So that’s why it’s important to get this debt freedom goal structured and communicated. If becoming debt free is something that’s important to you, you have to create some guardrails and goals that everyone is aware of. Like: “I want the line of credit to be at $3,000 by June.” or “I never want a vehicle payment again” or “we aren’t using the credit card anymore” and then you need the willpower to stick to these. #TeamWork

Tracking your savings + debt and setting the goals is SO SO SO helpful. From my experience when people have a plan, know the numbers and dates they tend to excel even quicker than expected. When I’m working with a couple and I tell them that based on their numbers it is possible for them to become debt free by a specific date - they are so motivated and accountable that 3 months before that day they call me and say “WE DID IT”!! Telling me their exciting news that they paid off their debt.

So what’s your #1 goal when it comes to your finances? Financial Freedom? What does that mean to you? In short the starting point is AWARENESS. Knowing your lifestyle cost. Knowing you have savings for now + later. Knowing the date you’ll be debt free.


If this awareness would be helpful for your family in reducing any finance related stress, that’s why I did the FREE workshop: “Setting up your systems + processes for getting organized and your family's finances on track”. Get access to the replay of the FREE Workshop + the workbook go to: https://www.meghanchomut.com/september. We go over these steps, along with some useful planning tips, savings rules of thumb and grocery shopping tricks!!

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September is the new January

True story - summer is the best season for throwing my budget off the rails. Better than Christmas, Back to School and family holidays. My husband is a teacher, I work from home and we have a bunch of kids. So the combo of us being home together, the beautiful Northern Ontario weather and trying to fit all the kid fun in over the summer months - can really lead to overspending, ignoring your usual financial guardrails and falling out of routine with our financial checkups.

 

Is it just me?

 

That’s why I created a couple weeks of workshops, helpful resources + a Facebook community where we can get together and get our sh*t organized and put in place a foundation so that September is properly setup + we’ll all end the year heading in the right direction. Not only that but by getting everything properly setup now, and having a few months to run into roadblocks, we’ll have our best chance at having a great financial year for 2019.

I'm calling it: September is the new January. 

This is what'll look like:

➡️Live Workshops in the FB Group:

August 13 - Setup your Finance Foundation: we'll go over the systems and processes you need to organize your $$

August 20 - My Finance Day: join me as I do my monthly finance checkup. Peek over my shoulder as I organize my family's debt, savings + budget

➡️Organize your Month Workbook

➡️Support, Accountability + Idea sharing in the Facebook Group

 

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To get us started we are going to focus on 4 parts of your financial life:

 

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Ready??

We need to get really clear on what we are working with. The first step is to take your time frame (in this case we are going to work on next month) but if you wanted to start for NEXT WEEK and then go our 4 weeks or 30 days from then, that works too! Just pick a timeframe that works for you + your lifestyle + family.

 

From the timeframe that you’ve selected, how much is expected to be deposited into your bank account? This comes in ALL the income that will be deposited into your bank accounts. Paycheques, government benefits,self employed income. BUT NOT your rental income - that’s something different and goes as if it is it’s OWN entity.

 

Tally it all up. In your timeframe HOW MUCH are you going to bring into the money bucket? If your income is variable make your best guess and then reduce that variable income by 10%. So if you work on commission or other variable compensation, it’s important to create a little buffer. I recommend anywhere between 5% to 30% it all depends on how much your income can vary, what type of industry you’re in and how aware you are of the actual dollars that are expected. It’s important to pick a buffer % - anything is better than nothing.

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Now that you have an IN number. You need to calculate your OUT number. The best place to start is to map out all the expenses that are going to come out of your bank account without you having to actually do anything. So these are things like mortgage, utilities, insurance, car payments, debt repayments, NetFlix and other subscriptions, child care… It’s helpful to have the last 4 or 5 months of bank and credit card statements handy so you don’t forget anything and have the actual numbers.

Now you have those autopay type expenses order them by importance. So this might start with things that keep a roof over your head and might end with clothing subscriptions, gym memberships that you barely use.

 

Notice here we HAVE NOT listed important items like groceries, fuel, gift $, eating out, hobbies, clothes, etc. Yes. I know. You need to budget for those items too. But hang on, we’ll get to those. I call those this variable expenses. We may spend a similar amount on those items every month, but it’s variable and not automatic.

 

Now that you know how much you have COMING IN and how much automatically COMES OUT we have to account for the amount of money you are saving for later. This can be saving for retirement, kids education, emergency fund, property taxes, expected expenses (ie. car + home maintenance, new vehicle, home downpayment, vet bills, etc).

 

 

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INCOME - AUTO PAY EXPENSES - SAVE FOR LATER = what’s left

 

So how much do you have left? Do you have anything left? This is the amount you have to spend on your ‘other items’ like groceries, fuel, fun, giving, eating out, gifts, etc. Is the amount you have there realistic. If it is, or way larger than you expected, you have OPTIONS! Set your timeframe or weekly budget for spending and whatever is leftover, put that difference to debt repayment or savings.

 

If you don’t have enough to maintain your lifestyle you have OPTIONS too. You can increase your income (not as easy), you can decrease your expenses (a bit easier) or you can take a break from some of your savings (the easiest solution). Sometimes the ideal option is a combo of all of these.

 

I’ve said it a million times…

 

finances are 20% the numbers and 80% behaviour. It’s so important to know what our ‘stats’ are. That’s most likely the logical stuff that you can turn to when that 80% behaviour monster is trying to peer pressure you to #fomo #yolo.

 

I’d love for you to join me and get your family’s finances organized. Imagine starting the Back to School season with money stress a thing of the past and your only worry being what to make for lunches and how you are going to fit all your shows on your PVR. Go ahead and click → www.meghanchomut.com/september and I’ll get you all the details.

⭐The workshops start August 13th⭐

August 13 - Setup your Finance Foundation: we'll go over the systems and processes you need to organize your $$

August 20 - My Finance Day: join me as I do my monthly finance checkup. Peek over my shoulder as I organize my family's debt, savings + budget

The 3 Steps to Cut the Paperwork Clutter

I've tried some embarrassingly sloppy 'organization' systems for ALL THE PAPER that I need to keep track of. I had a child's rubber boot in my vehicle stuffed with receipts, I wrote 2017 - 12 STREET ROAD on a ziplock with sharpie and shoved my unopened rental property mail in there, and I've just thrown my mail on the kitchen table and let it accumulate there until we had to eat every meal at the kitchen island. ALL THE PAPER that comes with running a household + real estate investments is no joke. It's overwhelming. So what I've done is created this Cut the Paperwork Clutter system - to get started with the 1st step - get the 'what to keep / what to toss' Checklist.

Cut the Paperwork Clutter is simple, easy to follow steps to get your paperwork organized + tidy. No more receipt explosion. Never question if you are missing a deduction. Make tax time easy. My main goal was that the system had to be something I could start right away (no fancy software or office supplies needed), has to track what's important, easy to implement and makes information easy to find. I'm THE WORST for putting things in a 'safe place' never to be found again. 

#1 what to keep, what to toss

You have to keep everything that tracks the income + deductible expenses associated with your property. In addition to your deductible expenses (also known as current expenses), you should be keeping record of capital expenses. These aren't costs you can deduct for tax purposes, but they are added to the value to your property. THIS free helpful CHECKLIST is the 1st step in the system and goes over the specific receipts and documents you should keep or toss.

how to organize

Now that you know WHAT you need to organize, let's talk about HOW you are going to tidy it all up. For all the paper documents, receipts, invoices, policies, bills, contracts, etc. you have to decide between two organization systems; paper system OR a paperless system. The best way to decide which would be best for you + your family is to address the pros and cons and pick the system that you think will be easiest and practical for you to stick to.

If you already get pretty much all your important 'keep' documents via paper, a paper system will be easy since you can skip the whole scanning/uploading step. If you don't have access to a printer to print the documents you receive electronically, a paper system will cause things to fall through the cracks and you will miss deductions that you are entitled to. Make a list of pros and cons like those mentioned.

If you have a smart phone, scanner or receive most of your 'keep' documents via email/online, a paperless system will be easy to implement. If you don't like the idea of storing documents online, than this isn't the system for you. 

where to file everything

Now, depending on HOW you are going to organize; paper vs. paperless, you need to setup a system for WHERE you will 'put' everything. If you've chosen the paper system - you are going to have 1 binder for every property. In each binder you will have dividers for every important deduction category + income source. There are some 'things' you will need, like: binder, printer, hole puncher, paper. I suggest downloading this FREE deduction overview page and using it as a base to what your dividers should be.

If you decided that a paperless system would be a better fit, you will also need some 'things'. Like a scanner or smart phone to make any paper documents electronic. 

By getting started with the 1st step (getting the 'what to keep / what to toss' Checklist) I will be in touch over the next few days. I will walk you through the actual process of setting your filing system, depending on what type of system you've chosen (paper system or paperless system).

In addition to the what, how and where of the Cut the Paperwork Clutter System, there are 3 rules you have to start TODAY. The problem with the 3 rules is they are going to go against your human nature. You aren't going to think following these rules is going to matter. But THESE RULES ARE KEY and if you can resist the temptation long enough (probably 6 or 7 days) they will become habits.

The Rules You Promise to Follow:

  1. Don't open your mail until you're ready to deal with it

  2. Store everything vertically (no more piles)

  3. whatever system you decide to go with (paper vs. paperless) you have to be ALL IN no some paper + some emails. ALL paper or ALL paperless.

It's time to clean up the mailbox explosion. Put away and stop having to stare at the Master Paperwork Piles you've created on your kitchen table. Let's get started with the 1st step - get the 'what to keep / what to toss' Checklist and then over the next few days we'll move through the Cut the Paperwork Clutter system together.

Does Money Stress You Out?

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One thing that I know for sure, is if you are feeling a heavy financial weight, it can have a ripple effect into more aspects of your life than just your feelings toward money. You can be irritable with your family, you can feel frustrated with your work situation, you might just get sluggish and lazy. 

What I want you to know is that you are NOT ALONE. This is SO normal + this moment of doubt or stress with your $$ isn't permanent. And the fact that you are feeling it is actually a good thing. #saywhat ?!? When you are out of alignment with anything in your life and DON'T feel uncomfortable I'd say you have a blindspot there and the issue will not push your buttons until it's a huge monster that just can no longer be ignored.

What does it mean to you to be "good with money?" This will be different for every person and may change monthly (daily... okay hourly... lol) depending on the person and the season of life that you are in. Does it mean no debt? does it mean being able to save every month? does it mean being able to go to the grocery store and not having to buy sale items or adding up the total in your cart?

I want to share 3 things you can do right now if you are feeling overwhelm with your money. 

#1. What's going right?

Let's throw this irritation of money (or lack of money) out the window for a minute. Is there 1 (or more) things that you feel joy about? Are you a good cook? Do you plan fun family moments (not weeks, not full days, M.O.M.E.N.T.S)? Like bedtime. Like lunch with your best friend/sister/spouse. Are you able to create beautiful art? Do you have a green thumb? Give yourself some credit. These are all things that some people wish they had. So appreciate them and own it.

#2. Are there people in your life that make you feel bad about your financial position?

Do you have a 'keeping up with the Jones' friend? Or are your parents trying to help but instead of making you feel supported, you feel judged? Is it something they are doing/saying or is it your reaction to their behaviour and decisions. If it is them you need to set some boundaries. Like friends inviting you to expensive events, encouraging purchases you can't afford, etc. You have to get in the habit of saying - "sounds amazing, but I can't". Some of the scripts I have in my repertoire are:

  • I can't go - I'm still recovering from _____
  • I'd love to, but I just opened my Visa statement and almost had a heart attack
  • Sounds amazing!! But I have to say "no" I'm really trying to save for ________

If it is you - it's nothing they are doing, it's purely jealousy or judgement on your part. You will need to either filter your interactions with them. Think it - BUT NEVER VOCALIZE IT, there's something about verbalizing your negative thoughts that actually makes your brain believe it. And this is not a healthy thought and you just need to think it, and throw it away. Kind of like when you have a terrible dream and as long as you don't talk about it you seem to forget the details. You remember the feeling it gave you, but not the story behind the emotions. My favourite tool is to create a mantra you can repeat to yourself when you feel this green monster taking over.

  • their success is something to celebrate + does not limit mine
  • I'm so grateful that my friends/family are so happy
  • having friends/family that are worried about me is a blessing
  • I appreciate that offer of help - and when they need help I'll be there for them

#3. What's going on? Let's talk about the specifics.

Why are you feeling stressed? What's pissing you off? Do you feel like the family finances are your responsibility and you'd like some help. Is the weight of your debt overwhelming? Do you just want to go on a family trip without using a credit card? What exactly is it?

That's where the magic is. Because that's where instead of putting bandaid on the issue you can dive into it and really isolate your triggers. You have to then brainstorm ideas on what you can do to fix that problem. 

#4. It takes a village - look for some support/guidance/outside perspective

This is where you have to show a touch of vulnerability. You have to ask for help. It is in our nature to try and blame others and outside influences. You're in this situation because of what's-his-name, it's the market, it's my job, it's my kids, etc. But you really have to take ownership and start gathering your tools + resources to change.

Whether it's in secret, by reading blogs + books + other content. Or by showing up and reaching out to a professional, friend, mentor or family member. Do whatever feels right. And keep in mind that what feels 'right' isn't always what feels easy.