Welcome to “The Best Thing I’ve Learned About Money” audio blog series. Today I’m so excited to share my own financial freedom story, our debt-free journey and the best thing I’ve learned about money! Hi, I’m Shanna! I fix broken businesses and help burned out business owners create profit, rest, and renewed passion for their […]
Today I’m so excited to share my own financial freedom story, our debt-free journey and the best thing I’ve learned about money!
Hi, I’m Shanna! I fix broken businesses and help burned out business owners create profit, rest, and renewed passion for their craft. Does your business need my help?
As a former Fortune 100 financial advisor turned business consultant for business owners, I’m on a mission to bridge the gap between the world of money and creative entrepreneurship so you can feel confident in your finances, clarity in your direction, and freedom to go on creating just as long as your heart desires!
And today, I’m excited to share with you the best thing I’ve learned about money through my journey to financial freedom.
Let’s dive in!
We were sitting pretty. Some might say “living the American dream.” I had a shiny new car, Kyle had a shiny new car, we owned two houses, had flexible work schedules and were sooo googly-eye in love. But one big life change later, and those things we once found dreamy became the very chains that bound us.
It wasn’t long after we got married and I knew Kyle wasn’t happy in his job. One day as I was on my way to a client meeting, I called Kyle and asked him “if you could do anything, what would you do?” That one question led us on a five-year journey to a new state, toward a new career, and honestly an entirely new life.
We left our cooshy paychecks behind to chase a new dream. It was invigorating and so exciting until we realized the debt we’d acquired tagged right along with us. Our first month into our new life and we were financially drowning, underwater, not sure how we were going to pay all the bills. Something had to change, and fast!
Turns out the American “dream” felt more like a nightmare.
Before I deep dive into the solution, I want to share with you three lies we believed that landed us here—buried in debt, chained by our monthly obligations.
It’s likely as a business owner you’ve heard this once or twice yourself … “it’s ok, it’s a write-off”. While no one ever told me a write-off was actually free money, the actions I saw my business mentors taking taught me it was. I’ve been told this on all sorts of material things from clothing (wrong!) to my daily coffee addiction, a justification for spending because well… “it’s a write-off”. For many business owners this turns their very real business money into seemingly fake play money.
While yes, there are definite perks to being a business owner including tax deductions on genuine business expenses, for every $1 you spend on a business expense that might save you .30 cents on taxes at the end of the day. I don’t know about you, but I’d rather have the .70 cents after tax money to spend on reducing debt or affording other things I dream about personally, than to spend it all on unnecessary “business write-offs”.
Let’s stop playing monopoly with our hard earned money, yes?
Before starting my own company I actually worked as a Fortune 100 financial advisor for five years. During that time I was taught that if I took a potential client to lunch they were much more likely to buy from me. Translation : spending $40 on buying a client lunch would more than pay for itself when I made the sale.
Now, more than ten years later, I’ve learned the sales psychology behind this theory. It’s called “reciprocity”. According to Salesforce, The law of reciprocity means that when someone does something nice for you, your hard-wired human nature determines that you do something nice for them in return.
So as we were having a hard time making our $250/mo car payments, I calculated I had spent over $1,000 the month prior “taking people to lunch”. Could someone pass the tissues? I sat in tears knowing that $1,000 would have more than covered our two car payments or the entirety of our remaining mortgage.
Here’s what I wish I had been taught—Reciprocity is an important part of selling but does not have to mean financial reciprocity.
That $1,000 I was spending on “taking people to lunch” was not generating the return on investment necessary to justify that expense. Reciprocity is created when you give something of VALUE, and value isn’t just monetary. In fact, I believe I can give more value now by spending time with a potential client, creating great free content like this blog and free education resources, and continually working to make my products better.
Is the money you’re spending in your business truly bringing the return on investment necessary to justify that expense?
Our country has built a personal finance industry based on credit scores and debt to income ratios. By default we’ve seen people building their “American Dreams” by maxing out credit cards and financing their dreams by taking on second mortgages. This isn’t your fault. We’ve been taught it’s ok. “If you can afford the payment, you can afford it.” Maybe this way of operating will serve you well and work for the long haul … but for us it all came crumbling down the minute we decided our big career dreams were worth taking a chance on.
Just a few months after this big life change went down, we were financing our debts by taking on more student loans and working part-time jobs until we figured out something more stable. We sat in church one Sunday and the pastor introduced the “Be Rich” campaign.
The concept : have you ever said you would do something when you had more money?
We all want to believe we will be more generous with our time and money when we have more time or money, right?! Here was the challenge : what would it look like to live as if we were rich right now? To practice “being rich” with what we have now to give.
We went home that day and took an honest look at our finances. We had no room to give anything because we couldn’t even pay our own bills. There was only one thing we could do.
Our first move toward financial freedom was simply taking an honest look at where our money was going on a month to month basis. We printed off our bank statements, sat down with multi-colored highlighters, and got to work!
Where is your money going? Do you know? We sure didn’t! But as I always say, awareness is the first step to change.
Margin is leftover. The difference between what is coming in and what is going out. You guessed it. We had none. Kyle had found a part-time job working at an airport. We took out student loans to live by and luckily a month in I found a new job as well. But our income was still around half what we were used to making before. If we can’t make our income go up, our spending has to go down. Margin!
So we sold our beautiful cars and bought bikes. Now I know this sounds extreme. It was extreme! But, it’s what we had to do. We had renters for our home and sold our second home. We ended up owning back $16,000 to the IRS for home buyers credits.
THIS is where that “American Dream” landed us. Buried in debt, commuting by bike to make ends meet.
What did we really want? What were our money values? What did our “American dream” really look like? Was it cars and homes? Travel? Starting a business? Being debt-free?
We value flexibility in our finances. We wanted to be able to chase our big business dreams. This meant little debt and low “personal” overhead.
When I worked in finance I used to say “what they need more than anything is a budget” and I believe that more than ever today. A spending plan. A way to manage money day to day. Everyday kind of money. Not big investment money, not retirement money, not house buying money. EVERYDAY MONEY. Money you send with your kid for school lunches. Sit down and tell your money where to go instead of wondering where it went! Give your dollars a job and they’ll go so much farther for you!
Live below your means. Don’t let money be the barrier to your dreams!
Wondering how the story ends? It’s been over eight years since this journey began. In that time :
Financial freedom is possible for you too but (just like us) it will probably require a new approach and a shift in mindset! But here’s the awesome truth : Wealth is not about how much money you make, it’s about how you spend the money you make.
Now that we’ve taken this journey, we want to offer this blueprint to as many others as possible! Especially those of you out there chasing your own big dreams, starting businesses and aspiring to be your own boss. Traditional budgeting just wasn’t designed for the self-employed.
There’s a lot I wish I had known back in my financial advisor days. There’s a lot I would do differently and I want to share it all!
I’m passionate about this because in the past five years our financial life has completely changed. It’s weird when bankers ask us “how old are you?” because they’re not used to someone being able to afford the things we can (who isn’t a doctor or lawyer).
I’m sharing our story because it’s changed everything for us and the stress we (no longer) have when it comes to our personal finances. I want to share this freedom with you because it’s simple really—but not easy.
I believe in you!
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April 10, 2019