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This episode was recorded in February 2020 prior to the widespread economic effects resulting from COVID-19 stay-at-home regulations.

0:01 It’s the same thing with money... I'm promising you.

Welcome to Debt-Proof Living with Mary Hunt. Today's episode is brought to you by Mvelopes. That's M, like Mary, V E L O P E S. Envelopes uses the tried and true envelope budget system. All in one easy app. Give every dollar a purpose. Mvelopes.com.  

Today on Debt- Proof Living with Mary Hunt, we continue along our journey based on one of Mary's best selling books 7 Money Rules for Life, How to Take Control of Your Financial Future. That book is available online or wherever fine books are sold. This episode is part two of our series, How to Take Control of Your Money.

0:38 Mary: Hi everyone! This is Mary Hunt. I'm so happy you're with me today for this episode. We are putting together the series basically for how financial intelligence is going to improve your life. I know that sounds so academic, doesn’t it? This is just basic basic rules for life having to do with your money. Think about this. If you have children or wherever a child yourself which I guess includes every single person you know. We grew up with rules. Probably the first one I ever remembered 

0:56 having to do with your money think about this if you have children or wherever a child yourself which I guess includes every single person you know we grew up with rules and probably the first one I ever remembered learning was crossing the street.

1:10 There's a rule - you just don't run out, you stand there. Are you with me? You look left. You look right. You see if a car is coming and then you can proceed cautiously.  We all know that. We don't have to relearn that every day of our lives. We just know it. It becomes instinctual. How about -oh, I don’t know- touching a hot stove? You'll do it once, maybe, but that'll be all.  Managing money is, it is very similar to that. There are underlying rules that, if broken, if not paid attention to, can really really mess up our lives and if you haven’t listened to part 1 in this series

1:50 you might want to do that because how do I reveal just exactly how not following rules or in my case not knowing the rules— I didn't realize that there was a fine art to managing money that we all need to know about.  So make sure you either go back and listen to that or a read about it. Whatever. But we're going to pick up today and I want to talk a little bit more about how to look at this. As we proceed and I only know this about you because I know myself.  It's going to be easy to see everything I talk about and we discuss here through the lens of your current financial situation.

2:32 I don't know what that is but mine is much, much different than yours. It's very unique.  You might have some student loans. You might have a couple of past due bills right now. Perhaps you're out of a job. Your situation is huge and it's easy to say there's just nothing that'll fix it now. It's too late. It's not too late. It’s not. Believe me. So what I want you to do. I want us all to mentally do this. I call it clean sweep and I only take that because that was the name of a television show on cable years ago. (I loved it.)

3:13 The premise was that the show would go into the home of someone who is having trouble with the organization, had a big mess, maybe even on the brink of being a hoarder. It was called clean sweep and they would come in and the show would do a clean sweep. Re-organize. At the end of the show everything's perfect. You know they walk in and their new home… oh it was fabulous and I loved the show. But the premise was this. They never attempted to organize clutter. It's impossible. So taking that principle here to our series here on how to manage and take care of money. 

3:52 In your mind I want you to just do a clean sweep. Just push everything out of the way. All the debts. Are the challenges. Whatever your situation might be. Even if it's fantastic. If you've got so much money in your savings account you don't think you'll ever ever ever have to worry or learn how to manage money. Get rid of that part too. Let's get just a nice clean canvas as we proceed. OK, ready? Here we go.

4:20 Rule Number One. It's not difficult. Here it is. Spend less than you earn. Five little words.  They become so, so unthinkable in our society and where we are in the world today. Do you know credit has become such a huge part of our lives? I shared with you in part one just how it affected my life. This first rule is so simple. I hope it doesn't prompt you to just blurt out- oh come on Mary everyone knows that.

4:51 Well, I promise you not everybody knows it or at least lives according to that. So the first money rule for life is so logical but so misunderstood that so many people miss it. There's a lot of competition for your mind and your wallet these days and there's a big world out there that would rather you not pay too much attention to this first rule. Spend less than you earn. Let’s talk about that.

5:30 There's many ways that people might refer to this. One of them is live within your means. If you live within your means, what that indicates is that you don't spend more than you earned. So let’s say you earned $1000. If you live within your means, you spend $1000. Ok? Of course you could spend less, but that's your max. You can spend as much as you have. If you spend less than you earn which is our rule. Spend less than you earn.

6:09 It means that you spend LESS than $1000. Now am I splitting hairs? NO.  I'm talking about a principal. The difference between what you spend and what you earn is a gap. OK, is it $1? Maybe it's $100. Maybe it's $500. I don't know, but there's a there's a gap there. Here's the principle. It’s in that gap that you are going to find financial freedom. It’s the money you don't spend that is going to allow you to live the life you love. That's the principle of rule number one.

6:50 So live below your means— is correct. Spend less than you earn. Live within your means means that you can spend it all. All right! The principle is we were looking at that gap. That part that you are not spending. Because… if you're following along in the book you're going to see some simple charts there that I hope will be very revealing. It’s in the a gap that you're going to be able to build an emergency fund. It's in the gap that you're going to learn how to start investing. It is in that gap that you are going to back away from debt. You're going to be able to pay off your debt. You’re going to be able to go forward to live debt free. 

7:30 You're going to eventually be able to live in a mortgage free home. See all those things are available if you stop spending all that you have or even worse— spending more than you have by going into debt. All right. So that is rule number one.  Let’s talk about how we do this. Oh my goodness. First thing we have to deal with is: what's the difference between needs and wants? That has become so blurred in our world during the last— oh I’d say— couple of decades.

8:03 but even more so in the last year or so because we're living in an amazing economy in the US. I don't know how long this is going to last, but people are working. Unemployment is almost unheard of thing. People are getting raises. The wages are going up because of supply and demand. When there are fewer people to work employers must pay more to get good employees. So it is just part of life. So, it's easy to think: Oh you know what? Let's move into a bigger home. Let's let's get some new furniture. Things are going so great. We’ll be able to pay it off in a short period of time.

8:42 A great economy doesn’t necessarily mean that we're going to stop spending more than we have. In fact, just the opposite is more likely. So we need to get rid of our ugly attitudes of entitlement. You know, I deal with that a lot when I when I wrote about my book for children: How to Raise Financially Confident Kids. We need kids to get rid of those attitudes of entitlement, but you know what? Adults have them too! Do you know— oh me, I just got an awful old iPhone 8 I need the… What what's the latest one, Julie? 11? 12? 14? 98?

Julie: I don't even know cause I have a 6

Mary: Oh dear, I don’t… you know….they do become part of our lives. That’s a subject for another time.

9:26 but…just think of all the things that our lives absolutely do not depend on, that we find the absolute needs not wants.

Julie: You're so right. Let's take a quick break for just a minute. Hi, I'm Julie producer of Debt-Proof Living with Mary Hunt. You know, many of us have the experience in our lives of living paycheck to paycheck and many people. I know it well, have a difficult time following a budget. But not managing our money as a leading cause of stress in our lives.That's why Mvelopes created a simple, affordable envelope budgeting program that just works. Mvelopes helps you take control of your future by giving every dollar a purpose, every dollar, a purpose, people who use Mvelopes see monthly savings of 10% of their spending within six weeks of getting started and they report less anxiety.

Now, currently Mvelopes is extending their free trial to 60 days for all of their subscriptions. So there's never been a better time to start on a new path. Just click the link in the show notes and sign up today. Risk-free .Okay. Now let's get back to our conversation. 

Mary: Dealing with needs and wants is not easy. I got to tell you what I did when I was in my really rough time when I was making this journey myself. I want to tell you about a quick little flow chart that I created years and years and years ago when I was in, that you know, dealing with this whole issue of coming out of that dark night of financial distress. There is a copy of it on page 57 of the book if you’re interested.

10:04 You could photocopy it. Write it up yourself. It's just a flow chart. It starts out, do I need it? If I say yes, then I go on to can I afford it? But if I say do I need it, and the answer's “Well, no, not really.” Then it is the end. I just saved myself from making a foolish purchase. These little tricks really, really help you do to do that. I also want to talk about widening the gap. At first, there's many of us who are making tremendous progress if we can end up on the next payday having not spent one dollar, a single dollar, from the previous paycheck.

10:43 That’s a start. That's a tiny, tiny gap. There are so many ways to widen that gap. 

So I just want to go over a few of them and these are from my history folks. These are the things that really, really spoke to me. Helped me. I wrote them all down. The first one is borrow and share. Rather than feeling like I had to buy something new. Always have to own that movie. It’s a change of mind for me and I have to tell you that, yes, my watch word was Blockbuster and I know probably don't remember that, but do you know there was a time…? Julie, she shaking her head. Do you remember Blockbuster? We would actually walking to the store look at all the movies. 

11:22 Julie: I do remember it and actually that was… my husband was working there when I first met him.

Mary:  Really?

Julie: Blockbuster is close to my heart.

Mary:  Yes, yes. For me, that started mind a mind-altering kind of thing because I realized I didn't have to own things in order to enjoy them.  Something else, this is easy now because a lot of people don't like to go to the mall. But years ago when I was going through this the mall was my place that was my antidepressant. That was my happy place. That was where I could get away and take my kids. I’m sorry. I’m sorry boys. I took you to the mall way too often. 

12:04 I had to stop that. I had to see that, that was like a slippery place for an alcoholic. It was, it was my bar! Gosh, that's so hard to say. But it was the absolute truth. Something else that I did was to limit my exposure to advertisements. I had to stop looking at women's magazines. Now, this was a time, yeah,  Internet wasn't that big of a deal. But I could go through a woman's magazine… in a fact, there’s something you maybe not know, Julie. Do you know that I was a contributing editor for Woman’s Day magazine for 10 years? 10 years! (Julie: Wow) 10 years I wrote for them.

12:40 So I kind of know I would see all that.  I would have to stop reading magazines. I couldn't trust myself. It was like I was a spoiled brat. Something else, and this is still true today, much harder than it used to be, I lived with cash. I'm talking about your day-to-day walking around money. What you have in your purse. I had to learn, I could not carry plastic with me. I could not. My drivers license I considered paper, but no, I'm talking about debit, credit, gift cards, all of that. I had to put them away because if I had them too handy, I was mindless with them.

13:19 In future episodes we're gonna talk about living with cash. There’s some great great tips and tricks. I'm gonna teach you. But back to our list here. Spend free days. Oh my goodness! Do you want a wake up call? Do you wanna see into yourself? Do you want to clear your vision? Come out of the fog? Determine, and this is gonna be hard. I know you can do it! We can do it together. Let's all do it. OK. Commitment. All right. We are going to start by naming a get a spend free day. I don't I will let you know, but we’ll think about it and let you know. Julie and I will try this out.

13:56 Here's how it works. You can plan ahead. That's fine. For one- 24 hour period you are not allowed to spend. And that's in any way! You can't pay the mortgage. You cannot pick up milk on the way home from work. Whatever. Can't go online. Can't go to Amazon. Spend-free day. (Julie: Nothing.) Nothing! Can't eat out. Nothing. You can't believe what’ll happen. Another way to do this is to save the difference. This just goes in a lot of different ways. What I'm talking about is if, let’s talk about the grocery store. You're shopping. It's not your spent free day. You have some coupons and you’ve got on that’s for $1. $1 coupon! I love it when there are 3 digits in a coupon.

14:40 So you pick up whatever that item is. You take it to the check out. You get your dollar off. You save the difference. You get it. You just don't let that dollar you saved melt into the atmosphere. Just take it put that one dollar into a secret savings place. It's great great principle.

15:02 Here’s something. Stay healthy. There’s nothing like medical bills to obliterate any gap you might have in your life. How about this one? Cook in. Stop eating out so much. Julie, have you been to McDonald's lately? I went there recently.

Julie: it's expensive for a family, for a person.

Mary: I almost had a heart attack.  I took my two grandsons. The three of us went for lunch. Two little boys, well sort of, and me. It was, it was like almost $30. I can't believe it. What? Of course, I let my kids pick what they like. I'm telling you I am about… I about… I couldn’t even finish a sentence just like right now… so expensive. Cook in. Oh my goodness. You can't believe the money you'll save.

15:50 Pare down. You know we're overrun with stuff. Just get rid of stuff. Pare down. Number 10. We’re getting to 12 here, so we’re almost there. Don't pay retail. Oh I love that! That’s my watch word when I go grocery shopping and I plan my meals and so on. If it's on sale, yes. It's not on sale, no.  We’ll wait till later. We’ll wait until it does go on sale and then we’ll get two to last till next time. Number 11—unfriend the Joneses. Does this happen to you? You’re having a wonderful day. You drive home and see your neighbors just drove up and parked a brand new SUV. There your car is and it’s a little scratched. Kind of old. Needs new tires.

16:35 That’s just an awful feeling. I hate that. That wanting to let my neighbors, allowing my neighbors to determine my decisions and so on. Just unfriend them. Not really. Not in true life. Don’t tell them! Just stop trying to keep up with them. And number 12— increase your income. Yeah, that'll help with that gap and less you keep spending up to the limit there.  Finding new ways. Get a side hustle. Do something. So many things and by the way if you're not getting my blog post every single day (www.everydaycheapskate.com) You are missing out on so much. We talk about this a lot.

17:16 OK so that's rule number one spend less than you earn. OK Julie, did I stir up any questions?

Julie: I do have a couple questions for you because I love how you were talking about the gap. In the gap is where you find the financial freedom. A lot of people think I find the financial freedom when I can spend whatever I want anytime I want. But the gap is that place and so I was thinking of that. 

I was thinking about needs versus wants. What could I be content with? Actually when you asked me what version of the phone iPhone I have. A 6 sounds so old, but it works fine. 

Mary: You're talking about the phone.

Julie: I'm talking so but I'm talking about is… I guess I wondered if you could speak to, a little bit about being content with what you have. Or a time that you, maybe a time from your own story where if you have a specific place and in your mind where you thought, “You know what? I can just go with what I've got.”

Mary: OK let's go back to your first one. Let's talk about financial freedom. What is financial freedom? What is that thing that we find in that beautiful place in life where we are spending less than we earn? I think it has…let's take away from money for a moment.

18:36 Let's talk about kids, raising children. As they become teenagers, they get more and more freedoms, right? But as you give your children freedoms, and they earn freedoms because they show a maturity and a discipline that they're able to handle that. Let’s say that it has to do with them being able to stay out later at night with your friends. Which I know is a big deal. (Julie: Right) You would, you would not in 1 million years expect that your child will take that to mean, “Oh good, for two hours of my life I can do anything I want. I can rob banks. I can I can egg cars. I can be a vandal. I can do anything I want because I have freedom to do anything I want.

19:15 It all comes in that want. (Julie: yes) Because if they have been raised properly. If you have instilled in them the values, beliefs. You expose them to God's Word. And they have embraced those, those things in their lives that you've taught them. Their wants are going to change. They’re not going to want to do that, because all of a sudden freedom now gives them not no boundaries, but allows them to live out the boundaries and rules and the values that they have learned. 

19:53 It’s the same thing with money. I'm promising you that when you have that gap. When you have, let's say $10,000 cash in the bank in your emergency fund, that doesn't mean that you live like an idiot. No! You drive more carefully. I promise you you will. (Julie: Right) because you don't want to have to take any of that $10,000 to pay for a deductible on a car wreck that was your fault. 

20:18  You are not going to let the paint job on your house get to the point where it's gonna cost you twice as much because it has deteriorated. You'll become so much better at maintenance. You will become so much more frugal when it comes to replacing things. Say you need a new sofa. You've got a nice gap. You have no debt. The last thing in the world is that you want to go into debt and so you see things through new eyes. You see things through eyes of financial freedom that you have. You have the freedom and I'll tell you there is bondage to be in debt.

20:56 because when you need that new sofa and your only choice is to use the available credit on one credit card and you've only got $600. Well, yeah, you shop well. But not for the reason we would've thought. So financial freedom doesn’t mean I have so much money I can have everything in the whole world. It's I have enough money to have those things that I need and some things that I want and you wants change. To me that is contentment. It’s knowing that I have options. I have choices. Does that help? 

Julie: That does help, and then I wondered also if you could speak to the fact that maybe listeners are thinking: You know what? This is all great, but in this day and age I do have three kids. They all need a phone. They all do this. They all are in sports, are all eating, and there is just- the family budget is just has so many more expenses than my parents day. It seems like there's no way that I could possibly spend less than I earn, because of all the pressure on a family budget now that wasn't on a family budget 30 years ago. I don't know if that's really true but I've heard my friends say that exact thing.

22:12 Mary: Well, I understand that. I also have to say that we need to rethink. We need to rethink. I have worked with families who have been in such dire situations that they didn't have the options that you speak of. Now, it might sound like a phone for everybody in the whole house is absolutely mandatory. I promise you that it's not. It's not. It might seem wise and for some people, they might choose to make it mandatory. But it's not. One family I'm thinking of right now with three teenagers. They had one phone between the three of them.  

22:51 And the parents would decide on a certain day who needed it the most. Then they taught and what do you do if you don't have a phone. Julie, there was a time none of us had phones.

Julie: We had a dime or quarter.

Mary: Children are fine. You grew up fine. OK. Yes, there were phone booths, but I think that friends have taken the place of phone booths. If you’re in a dire situation, you can always find someone who can make that call for you or allow you to use their phone to make it. That’s another subject for another day. What I’m saying is that we have to really rethink what is absolutely necessary. I know some families who think their kids having a meal card at elementary school is actually mandatory. No, it is not. Children can still take lunch to school.

Really, that’s what Everyday Cheapskate, my blog, my daily email is all about. Helping people to find all these ways to be able to reduce the expenses in order to widen the gap. I even wrote a post on how to widen the gap: bake bread. Yes, little things like that.

24:00  So I would say to your question that, yes, we have many expenses perhaps. Every teenager in the home doesn’t have to have their own car and we need to rethink a lot of things. Especially during the period of time are you getting out of debt, because I'm telling your credit card debt that interest-rate is chewing up peoples gap like you can't believe it. Getting rid of that it's going to really, really help.

Julie: Thanks Mary, I appreciate that.

Mary: Thank you for joining me on today's episode and I hope that you'll join me for the next one. See you then!

Debt-Proof Living with Mary Hunt was created and hosted by, Mary Hunt. Produced by Julie Emerson, with Harold Hunt, Executive Producer.

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