How I Went from BROKE to Financial Freedom | frugal living + minimalism

the other day I came across a shocking quote about Financial Freedom and this is what it said according to the Social Security Administration if you take any 100 people at the start of their working careers and follow them for the next 40 years until they reach retirement age you'll find that only one will be wealthy four will be financially secure five will continue working not because they want to but because they have to to pay their bills 36 will be dead and 5 four will be broke and dependent on their friends family and the government to take care of them which means that only 5% of the population will ever succeed in creating a life of Financial Freedom and the rest of them the other 95% will struggle their entire lives reading that quote really touched a nerve for me because I know there was a point in my life where I was on the path to a lifetime of struggle but then thanks to a few small changes I was able to break free from that future and I know that if I could accomplish this anyone else out there can too which is why today I wanted to talk about what it means to be financially free what steps you can take to get there as well as share a few stories and insights from my personal experience as someone who went from broke to financially free but first if you're new around here hi and welcome to my channel my name is Marissa and this is a tozen life where I talk about the a toz of simplifying your way to a happier and better life and if we're going to talk about Financial Freedom I think it's important for us to have a clear understanding of what that means and I think Investopedia said it best when they Define Financial Freedom as having enough savings Investments and cash on hand to afford the kind of lifestyle that you want but there are all sorts of things that can hold people back from Financial Freedom some people have bad money habits that keep them poor and broke some people are born into poverty like my husband was and I will make sure to link to a video where he talks about his experience growing up poor in China down in the description box below and sometimes people can go broke because they've fallen on Hard Times such as a job loss or getting diagnosed with a chronic illness in my case I ended up in a tough spot due to A Series of Unfortunate Events and some poor choices on my part at one point in my early 20s I had dropped out of college and I was working multiple low-paying jobs to get by when my Dad's health took a turn for the worse and we knew that he was going to be passing away soon and so that kind of gave me uh kick in a butt to try to get my life back together and go back to school but to do that I had to escape an abusive relationship and I was able to do that but when I left that relationship I had to leave a lot of stuff behind and so I didn't have a lot of money to buy new stuff either and I remember it was Winter and I I was walking around on campus and the snow was like really thick on the ground but I didn't have a winter coat or winter boots so I was just wearing a sweatshirt on top of a T-shirt and then some plain tennis shoes on my feet basically freezing my butt off in the snow and I remember walking into one of my classes and my shoes and socks were just soaked through and it was so uncomfortable and at the time I was wearing these camouflage pants that you have actually seen in some of the old videos of me decluttering that were really long and wide and so I decided to try to kind of subtly take off my shoes and socks and hang my socks underneath my chair in the hopes that they would dry out a little bit so that I could go on with the rest of my day and attend the rest of my classes without having soaking wet socks but then halfway through the class my professor who was kind of a jokester saw my socks hanging there underneath the chair and he decided to come over with his pencil and pick up one of my socks on the end of it his pencil and hold it up for the entire class to see and of course everyone was laughing and I was mortified and looking back I don't think that he or my classmates had bad intentions how could they know that I had just escaped a bad relationship and that I had multiple family members who were sick and dying and that I was going through a really tough time but I remember how even when I was getting laughed at I was so so determined to save money and get back on my feet that it didn't face me at all that was 20 years ago and what's funny is that now even though I've achieved Financial Freedom I still get comments that make fun of me for how my home looks or the clothes that I wear and in fact just the other day on Instagram I got a comment where someone called me trailer trash which gave me a nice little giggle cuz it's been a really long time since I've been called that but like I said comments like that don't phase me because it's just like like the Pablo Picasso quote goes where he says I'd like to live as a poor man with lots of money because I'd much rather live below my means and be comfortable and Frugal then try to live according to someone else's standards and end up going broke trying to look rich so with that being said now I want to break down the simple steps that I took to go from someone who is flat broke and $25,000 in debt to achieving Financial Freedom and number one on this list is to find your why it might be that you want to be able to go to the grocery store and fill up your cart with anything you want without having to worry about prices or if you love to travel it could mean that you want to have enough money to travel to a new country on your bucket list every year or maybe what you really want is to just work less and have more time to spend with your family no matter what your goals are having a clear idea of what you're working towards is going to help you map out a path to getting there and all also help keep you motivated when the going gets tough and remember your why can and probably will change over time like for me when I was in my mid-20s my goal was to pay off my $25,000 worth of student loan debts as fast as possible so I didn't have to live with that debt hanging over my head and right now my husband and I are working towards the goal of saving money to buy a nice home in a safe area that has good schools for our kids so think about your why and don't be afraid to adjust or change it as you meet your goals and your life changes as well next up on this list we have tracking your spending and this is such an important step because it's really hard to save money if you have no idea where your money is going every month I've been tracking our spending for 15 years for my husband and myself first and then for our entire family when our kids came along so it's become second nature to me but I know that when I first started I was shocked to see how much money I was spending and where when I realized that I was overspending on categories like clothes books and eating out that made it easier to reduce expenses and know where and how to cut back I stopped going out to eat at places like subway IHOP and chipotle multiple times a week and learned how to grocery shop on a budget and meal prep yummy food at home and instead of going on bookstore binges I started borrowing books from the library instead and tracking your spending also makes it easier to create a budget that you can stick to and that leads us to number three which is once you figured out how much you're spending the next step is to write a budget I personally think this step is a lot easier if you track your spending first but if you haven't been tracking your spending you can also sit down with your computer and go back through your bank account to try and work backwards to figure out how much money you're spending and break your spending down into categories just keep in mind that you might have missing expenses or ones that you've forgotten especially if you tend to pay with cash so make sure sure to start tracking right then and then when the next month rolls around you can see how accurate your numbers were now there are a lot of different philosophies when it comes to budgeting and how to set up your budget categories but I like to break expenditures down into fixed and variable expenses where fixed costs generally cost the same and are paid once a month like your rent mortgage or car payments and variable expenses can change from month to month and include things like groceries gassing up your car or going sh shopping or out to eat with your friends and then to calculate your savings you look at your income minus your expenses and that amount is how much you're saving each month and by the way if you want to know more about this and see the exact budgeting system that I use I will put a link to my 50-page minimalist budget bundle down below for you to check out because it includes principles for all of this including 12 months of spending and budget trackers but remember it's highly likely that you have been overspending especially if you're new to budgeting so so at that point it's time to move on to the next step which is to cut unnecessary expenses I'm sure you've heard the saying money doesn't grow on trees but while that might be true when it comes to cutting your expenses it's actually really helpful to think about a money tree because when you prune a tree you remove the dead and diseased branches which can rejuvenate growth and make the tree healthier and the same thing goes for money so when you're trying to cut back a good place to start is to look at the categories that you've been neglecting or that you don't care about such as unused gym memberships or subscriptions and then once you've cut back there take a look at your budget and see where you tend to overspend and try to trim back in those areas as well and that could look like going out to eat once a week instead of buying lunch or dinner for yourself every single day or maybe giving yourself a set amount of cash so that when you go out to buy new clothes or shoes you'll be more mindful about staying on budget step number five is to pay off your debt after I graduated college and met my husband we started planning our future and part of that future included conversations about good things like planning our wedding but also some not so good things like how we're going to pay off our debt I came into the relationship with $25,000 in student loan debt and my husband had already paid off his student loans but had debts that included his car and condo and over the course of 5 years using a combination of budget no spin challenges and other Frugal Living strategies we were able to eliminate a grand total of $250,000 worth of debt when it comes to paying off debt there are a ton of great books that you can buy or borrow for free at your local library and I will make sure to link some of my favorite books on personal finance and paying off debt down in the description box below so that you can see what I like and used but I can't downplay the importance of educating yourself on topics like personal finance and paying off debt because there are so many tricks and hacks that most people don't even know about for example I graduated with a degree in speech language pathology which isn't the most high-paying job out there but because I got a job working in a lowincome sector hospital I was able to then defer and cancel a portion of those loans for each year that I worked there and that ended up saving me money and made it easier for me to pay off my student loans faster and none of that would have been possible if I hadn't taken the time to research and read up on the best debt payoff strategies the next step to Financial Freedom is to build an emergency fund and this is important because accidents happen and unforeseen expenses like home or car repairs or medical emergencies can surprise you at any time for example in this video that I'll link up here about why I'm so Frugal I shared a story about how I messed up my ankle really badly and I couldn't go to the doctor because I didn't have health insurance and I couldn't afford to pay for it out of pocket but if I had an emergency fund I would have had a safety net to fall back on instead of having to suffer so much pain and worry if you're wondering how much money to save a good rule of thumb is to try and save up 3 to 6 months of living expenses and if that sounds like a lot remember that you don't have to save it up all at once especially if you're trying to pay off debt or save for other financial goals at the same time and you can also set smaller saving goals like $250 a month or 5% of your paycheck every time so that you can slowly Build It Up over time and one of the things that I've done to boost my savings is to put my emergency fund into a high yield savings account and this is great because one you can earn passive income on each dollar that you save two you have quick access to your money in case of an emergency unlike long-term Investments like stocks and three it's separate from your daily bank account which keeps it out of sight out of mind and makes it less tempting to dip into and not only do we have an hysa for our emergency fund but we also have a good amount saved up for our goal of buying a house which is earning us thousands of dollars a month just sitting there until we're ready to use it and speaking of which that brings us to the last step on this list which is to grow your wealth because when it comes to Financial Freedom both saving money and making money are important and it's like yin and yang and it's hard to find balance if either the inflow or the outflow of your money falls out of alignment and just like yin and yang growing your wealth can be done both actively and passively and in fact actively looking for ways to increase your income and make more money can make all of the earlier steps on this list a lot easier one of the things I did to increase my income in the past was negotiate a 133% raise at work at after my 9-month supervision period ended and I became a fully licensed SLP which gave me an extra $8,000 a year or $667 a month to put towards my goals and I've also done plenty of side hustles including selling unwanted clutter and ended up making thousands of dollars each month with that and as far as passive income both my husband and myself have put money towards Investments for our children's college and for our own retirement which continues to grow every year through the power of compound interest if you've made it this far I would love to hear your thoughts on Financial Freedom and what that would look like for you as well as any tips or stories that you'd like to share down in the comment section below and if you're ready to get started spending less and saving more you can go check out this video with 25 of my top Frugal Living tips that have helped us save over 50% of our income every year for the past 15 years or I'll see you next week until then take care bye-bye

Channel: A to Zen Life

Views: 293,170

Keywords: how i went from broke to financially free, how i went from broke to 6 figures, broke to financially free, broke to financially free in a year, saving money, how to save money, broke to rich, how to, financial freedom, minimalism, minimalist, entrepreneur, save money, personal finance, frugal, money, never be broke again, how to make money, financial independence retire early, stop being broke, financial independence, financial minimalism, frugal living, a to zen life

Id: fU9oobKgmEU

Length: 15min 6sec (906 seconds)

Published: Sun Feb 25 2024