Follow these 4 steps to help organize your finances
I recently held a contest to find a person to coach on their finances. In this post, I will take you through the exact process I used to overcome my fear of coaching someone for the first time and help eliminate their debt.
They always say that in order to grow you have to do something that’s outside of your comfort zone. This is one of those quotes that I’ve always agreed with.
If I see this quote on Instagram I’ll hit the like button and keep scrolling. It never occurred to me how true this quote was until I was sitting across the conference table from my mentor.
“What if you held a contest and choose a winner to work with for three months to help them organize their finances” he said. A contest?
“Wait no, I can’t work with someone one on one, I’m not a financial advisor; I’m just a writer who helps people with their finances. No, I only deal with my finances. I can’t help someone else organize their finances.”
“Yes you can and you will, this will be good for you. A little scary at first, but it will really teach you what people are struggling with when it comes to their finances.”
Doubt and fear crept in.
I was upset leaving the meeting with my mentor.
How does he expect me to work one on one with someone? I didn’t want to hold the contest. I was nervous. Isn’t there another way to help people? What if I don’t know how to help them? What if they’re not in Boston?
Doubts quickly started to fill my head like a tall glass of water. My mentor was right. I had written a book that would help people with their finances, but this contest would put everything that I wrote in the book into practice. Or put my money where my mouth is.
About my mentor
My mentor Derrick Duplessy usually never steers me wrong and it’s great to have people who constantly push you to do things that will help you grow. Derrick has a podcast called Purpose Rockstar. He interviews people who have found their purpose.
I meet with Derrick once a month to go over how to grow my brand and strategize about Young Yet Wise.
The next time I saw him, I had to have the contestants for the contest. In our next meeting we would choose a winner.
Developing the contest
The first week that passed I procrastinated.
Thoughts of the contest would brush across my mind, but my fear kept me stuck from really taking action.
Finally I decided to sit down and plan the contest. As I’m sure you’ve probably heard a thousand times, the only way to get over your fear is to do the exact thing that you’re afraid of doing.
First things first, I needed to come up with a list of questions to ask each candidate.
Questions that would help me gauge what the person was really struggling with when it came to their finances. I asked two questions:
1. What is your biggest financial obstacle?
2. What is your number one financial goal?
Now who is the ideal person I would want to work with.?
My Blog is “Young Yet Wise” so I choose to work with someone who was between the ages of 18-32.
The income level I set was in the range of $25,000-$65,000.
I chose $25,000 as the starting range and I chose $65,000 as the cut off range because someone who makes more that would have a good ideal of handling their finances.
I also wanted to work with a single person who didn’t have any children.
I really love children; however for this contest it will be easier for me if I just focused on one person. Once we start adding partners and children it’s a whole different ball game.
I set up my questionnaire for the contest on a Google forum.
I wrote the post and posted the link to the Google forum inside.
Within a few hours of posting my post I had more than 10 people who entered my contest. I was shocked. I know 10 people may not seem like a lot of people to you, but to me it was plenty. One thing that shocked me while reading through the contestants answers was that most of the people who entered the contest weren’t from Boston.
Most of the contestants were struggling with the same obstacles: Paying off debt and spending money on things that they want, not what they need. I’m going to share three of the contestant’s answers with you. Of course I’m keeping their names anonymous.
Contestant 1 age 21-24:
What is your biggest financial obstacle? My biggest obstacle is my income to debt ratio and creating a budget I can actually follow while also saving. Since I became fully aware of my financial status at the end of last year, I’ve been making better decisions regarding money and I am currently in the process of training to raise my income.
What is your number one financial goal? I am determined to pay off credit card debt ($8,500) by the end of this year and let my credit score soar! My second goal is to save to purchase property in the end of 2016; in addition to investing, and mapping out a plan to pay off grad school debt ($60,000) in 5 years MAX. I need financial freedom! One day I would like to enjoy my entire pay.
Contestant 2 age 24- 28:
What is your biggest financial obstacle? My biggest obstacle is dipping into my savings. I end up saving just a few hundreds of dollars only to end up withdrawing for something I want, or something I think I need. I really want to begin investing and watch my money grow. When I get my paycheck, I tend to always pay the bills first and have nothing for me. By the end of the month I feel like I am waiting for the next check. What am I doing wrong? Why do I only have enough for gas the last week of the month?
What is your number one financial goal? My number one goal is to pay off my credit card debt. All of them!
My second goal would be to begin investing. I know money isn’t everything but knowing how to use it, where to put it etc., can be powerful. I like seeing what you’ve learned and being able to work with you one on one would be a great experience and help me to get on track.
Contestant 3 age 21- 24:
What is your biggest financial obstacle? My biggest financial obstacle is sticking to a budget and paying down my debt without having the feeling that I am missing out on life. I have a problem setting realistic goals. I can cut back on what I want but my plan usually requires cutting them all the way out. I also want to start investing to create a safety net since I am new in my nursing career. My parents have no money for retirement and that is a huge fear of mine, but I have no idea of the best course of action for me specifically. I know now is the time to lay a strong foundation, but I am unaware of how.
What is your number one financial goal? My first goal is to pay off my credit card bill, which I am currently working on. Second goal is saving for a new car and third becoming a lifelong investor.
How do I choose a winner?
After I reviewed all the responses, I realized that choosing a winner would be hard decision. I wanted to help all of them, but I knew there could only be one winner. When I went to meet with my mentor he recommended that I do a video chat with each contestant before choosing a winner so I could get a better picture at what each person was really struggling with financially. Before doing the video chats, I had a pretty good idea of who I was going to choose to work with.
HELP! NO SERIOUSLY I’M DROWNING! It was Friday, March 13th. I was riding the train on my way to work when I received an email with that subject line.
HELP! NO SERIOUSLY I’M DROWNING. “How are you doing? I really need your help. I know you’ll be choosing a winner soon for the competition, but would you be willing to help me along with your winner? I am seriously drowning financially and I don’t know what to do anymore. I am struggling between my needs and my wants. I also have a lot of weddings this year. I was hoping to have money saved up to move out. This doesn’t seem realistic anymore. Any help or advice would be awesome. I’ve tried the automated splitting, but I am finding that I am dabbling between accounts to make ends meet. I hope to hear from you soon.”
If there was ever a time when I thought that people needed help with their finances, this email was proof. This person was in dire need of help, but I still needed to do a video chat with the contestants before making my final decision.
I emailed each contestant letting them know that I wanted to do a Google Hangout with each of them in order to really understand how I could help them organize their finances. At the end of the 20 minutes Google session, I would give them a spreadsheet to keep so they can see exactly where their money was going. After I’ve met with each person, I would choose a winner. For the Google Hangout session, I would need to know each persons income, monthly living expenses, and debt.
Not every person was able to meet during the scheduled times, but for those who were able to meet after the Google Hangout I created a chart for them so they could visually see where their money was going. Below is an example of the chart I created.
A Winner is chosen
Deep breath, so after the long process, I finally chose a winner. Her goals in the beginning were to pay off her credit card debt, save up money to move out, and start investing. However after talking to her further I mapped out a plan for the next three months.
Step 1: Set up your financial goals
I wanted her to just focus on getting rid of some of her credit card debt, building up her emergency fund, gain discipline to not spend money on things that she doesn’t really need, and set up a budget for the weddings that she had to attend in the upcoming months. It was also important that she set up a separate account where she could automate her savings.
Sometimes what we think our financial goals are and what our financial goals should be are different. I wanted her to really get a sense of how much debt she had, so I redesigned the chart so she could get a better visual picture. Once I showed her the chart of all her debts she was shocked.
“Thanks for the chart. It’s a scary image, making me realize I need to stand in my truth and be honest with myself and take full responsibility for the financial mistakes I’ve made. I look forward to talking with you tomorrow, and will make my automatic deposits adjustments for my savings.”
Step 2. Visualize your debt on a chart
You can get your very own copy of an empty debt chart like the one above and put in your own numbers. I am also attaching an excel spreadsheet for you to fill out your actual budget. The numbers will automatically populate for you. For both the chart and the excel document Download Tools here . It’s free!
Step 3. Figure out your exact debt amount
It’s extremely important to realize exactly how much debt you have, so that you can figure out a plan on how to get rid of it. Too often we don’t get it written down because we don’t want to know the real number, but it’s the only way to make progress at removing the debt.
step 4. Implement your “Debt Relief” Plan
I would meet with the winner once a month, during each meeting we would set up some goals for her to achieve by the next time we spoke.
For the first month, she really needed to work on spending less money on eating out and bring her lunch to work as often as she could.
I know you may be thinking,… but Candice I love my Starbucks lattes and my great sandwiches from Al’s, instead, fall in love with your financial goals.
My client didn’t realize how much of her money was going towards food. Instead of spending money on food I wanted her to spend that money towards her debt.
For the first month, the goal was to have her paid off her Victoria secret card, put $100 towards her sprint bill, and $100 towards Bobs.
She also had a wedding coming up so she put some money aside to pay for a dress.
TO BE CONTINUED…
Next week I will go over the rest of the winner’s monthly progress her victories and her struggles. Was she able to reach the goals that were set for her during the first month?
I’ll let you know next Sunday. Again for both the chart and the excel document be sure to Download Tools here.
By Viktor Hanacek