You know how there’s a difference between broke and poor? Broke is making enough money to pay your bills on time but not saving anything and having few to no indulgences. Poor is living off credit, missing payments each month and having to choose between essentials (healthcare vs rent) because you cannot afford them all.
For the three years I have lived as an independent adult I have been broke. I have made just enough money to pay my bills (rent, utilities, student loan minimums, car insurance, gas, food, and fun) and was able to save about $50 a month. It’s not a great way to live. I worked as a waitress for two years out of college and let me tell you: working for tips blows. You can never be sure how much you’re making week to week, let alone year to year. Your take home pay depends entirely on other people-but this is a post for another time. My point is, I wasn’t making any real money and it was stressful.
Moving into 2015, my situation isn’t going to change. In fact, I have several costs now that I didn’t before: health insurance, increased student loan payments, retirement. Additionally, January and February are traditionally lower-income months for me. One of my jobs (catering) enters a slow season in the early months of the year and another of my jobs (coaching) doesn’t start until February 5th, meaning I don’t see a paycheck until mid-February. My monthly income decreases by around $500, yet my monthly costs (rent, utilities, internet student loan minimums, car insurance, gas, food, and now health insurance) all stay the same.
What does this mean? How can I avoid slipping into ‘poor’ territory? How do I keep myself from accruing more debt (in the form of opening a credit card) and still head towards my goal of paying off my student loans?
It means shifting your money around a little bit. Knowing that I make more money in Oct-Dec than I do in Jan-Feb of each year, I have saved a little extra cushion for these coming months. Knowing that my main focus is paying off my loans, I have forgone the extras that often come with this season: I gave no Christmas presents this year, I didn’t go to any Christmas parties (saving myself from buying a host gift), I drove as little as possible and I am saving all the cash I got for Christmas for the next couple months. All that sacrifice now means more possibility later.
Sometimes it seems impossible to do everything you HAVE to do, let alone what you WANT to do. I think it’s incredibly important to remind yourself in tough moments of what your goals are. When I had to sit through my family Christmas party and watch everyone else open presents, it sucked. But knowing that I’m going to have healthcare for the first time in 8 months is something that fuels me. Making the call to give up one thing in order for me to get another is the only way for me to meet my goals in 2015.
I am taking an athlete’s approach to my finances this year: Sacrifice early, win later. When an athlete triumphs on the field it is because she put in hours on the track, in the weight room, watching tape, eating and sleeping right. It’s the behind the scenes effort that matters the most in getting to the finish line.
Kara Perez is the original founder of From Frugal To Free. She is a money expert, speaker and founder of Bravely Go, a feminist financial education company. Her work has been featured on NPR, Business Insider, Forbes, and Elite Daily.