Achieving Financial Freedom

Talk to anyone and they'll tell you that the secret to achievement is self discipline. As I discussed in The Process of Transformation, "Balance" is the key. All things we do must be in balance in order to keep the teeter totter of life at an even keel. To be healthy, we may look at our eating habits, to be spiritually well, we may look within and assess our spiritual diet as well. To be mentally well, we must clear negativity from our space, but no matter how much we want to steer clear of material reliance, unfortunately, to reach some goals, sometimes we have to make and spend some money.

Whether it is to buy supplies for a project we are working on or buying nutritious food, money is the necessary vehicle to obtain what we need most of the time. As such, we are required to be wise stewards of our money so we are getting what we need, but also ensuring we have some leftover for the necessities of life. Today I want to share with you how I paid off a lot of debt and experience less stress when it comes to my finances. I call it the envelope technique - with a digital twist.

The classic envelope technique involves writing labels on envelopes such as "Groceries" or "Auto Repair" and gradually putting money in each envelope over time. I have to give credit to my sister for this method. I was 16 when she taught me this nifty trick. I evolved this method in helping me to save money for goals and life maintenance as well. Let's use my friend, Paul, as an example on how to do this:

1. First, Paul calculates how much money he needs to have in order to cover his bills and absolute necessities on a weekly basis. He determine each week he needs $500. This doesn't need to be exact, however, even if some of your bills are monthly, simply divide them out to get an approximate weekly amount.

​2. Paul then observes that his regular take-home pay from his job is around $750 a week.

3. Paul subtracts the bills he pays of $500 from $750 to get a difference of $250, meaning this is how much he could potentially save. Paul would like to have a bit leftover for fun, so he decides he will save $150 per week toward his goals.

4. Paul sets up an auto transfer on his bank's website to have $150 get transferred from his checking account to his savings account every Friday.

5. Paul then sets up a table on Microsoft Excel (or Google Sheets) and lists out all of his goals along with some long term responsibilities such as:
Emergency Fund
Maintenance Expenses
Vacation 2023
Christmas Fund
Vehicle Payoff
Home Payoff
Stocks Contribution

He then makes a column for several entries after each item that includes the Goal Amount, Saved Amount, and Owed Amount. Once this is done, he does some fancy footwork with his document so it does some smooth calculations such as automatic calculations on his entries.

6. Each week on Monday, Paul sits down and figures out which goal he would like to allocate his money to (the $150). In this case, he wants to have an emergency fund of $1500 to go toward unexpected surprises, just in case, and makes that his top priority. After 10 weeks, he has saved up his emergency fund and then moves on to maintenance expenses so he has money for car repairs if they come up.

After 10 weeks, Paul realizes he isn't feeling like his savings are adding up as fast as he would like. He makes it a goal this week to come up with a list of a few ideas on how he can save faster. Here is what he comes up with:

• Reduce Expenses
• Ask for a raise
• Take a part time gig driving for Uber or Door Dash.
• Take on an extra shift each week
• Find a different job
• Start a small business

Paul makes it a goal the following week to ask for a raise. Luckily, Paul's boss feels like he really does deserves one and gives him a fifty cent raise. Paul now makes $20 bucks more per week! He can now save $170 per week.

Next Paul realizes he has been paying for an internet streaming service he seldom uses that is costing him $8 per month. He also switches from one security alarm company to another saving him $20 per month. That's $7 per week (approximately $5 plus $2). He now saves $177 per week.

Once Paul reaches his "Maintenance Expense" goal of $1,000.  If a car repair comes up now, he now enjoys that he can pay it with a lot less stress and worry. Feeling even better about his savings, He realizes now how much more he could save per week if he paid off the $3,000 he owes toward his vehicle. He now pays $400 per month on that loan. In only a few months he could pay off his vehicle if he puts the $177 he saves per week toward the payment.

After a few months of extra payments, he pays off his vehicle, which had a loan payment of approximately $100 per week ($400 per month). He now has $277 per week he can save.

Now, after so many months of saving, Paul feels like he has been sacrificing a lot and would like some more money to spend, feeling good about how much he is saving. He decides to pick up 4 hours of overtime each week and now delivers for Door Dash. He uses this as his fun money to do more fun things since he is putting the extra effort toward making some more money. A hundred or two-hundred bucks a week means he can go to a concert once a month, eat out a few times, and even see a movie.

As this illustrates, gaining control of your finances doesn't happen overnight. It is an ongoing effort of determining the trade-offs of spending and saving. Once you get used to it, it can become a very comfortable way of gaining control of your money if you don't mind making small sacrifices often. With money being one of the biggest stressors in life, it is important to make your financial health a priority so you can focus your attention on the things that truly bring you joy.

Have you or anyone you know ever used a method similar to this? If so, let me know in the comments.

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