A Financial Cleanse?

An old dear friend of mine has an absolute fascination with the idea of “cleanses.” She’s constantly trying out juice cleanses and organic fruit cleanses and other such things, with the idea of clearing her body and mind of “toxins.”

I’ll be the first to admit that I doubt the usefulness of juice cleanses and other such strategies for improving one’s health, as the human body is already a pretty effective cleanser of almost anything we put into our bodies. The idea of purging “toxins” by drinking a bunch of fruit juice is not something I’m personally into. Having said that, there is a lot of benefit in terms of making good health choices for yourself. You can drop excess weight, which has a ton of health benefits, and you can make lots of choices to improve your heart health and so on.

The idea of “cleansing” yourself (in the form of better blood sugar numbers, lower triglycerides, lower blood pressure, and so on) by making better dietary and exercise choices and even better mental practices such as prayer and meditation is something that is backed up by medical science. So, although I’m not on board with the idea of purging “toxins,” I’m strongly on board with the idea of treating your body well by running it through its paces and ensuring you’re putting healthy things in it.

Here’s the thing, though: the idea of a “cleanse” applies really well to other areas of your life beyond your physical body. A period of de-stressing, meditation, prayer, time spent outside, and intentional relaxation can do wonders for your mental health, providing something of a “mental cleanse.” You can do the same with the contents of your closet, removing all kinds of stuff and “cleansing” your possessions.

Naturally, the same idea works with your finances. You can give your finances a “cleanse” as well, getting rid of unnecessary things and practices that are clogging things up and keeping you from reaching your goals.

Here are five cleansing practices you can put into practice right away that will improve and simplify your financial life.

Cleansing Your Wasteful Spending: Live Off of a Small Pool of Money for a Week (or a Month)

One financial trap that many people find themselves falling into is losing track of where all of their money is going. Money slips between their fingers in drips and dribbles, quarters and ones and fives and tens, and before you know it, it adds up to a lot of money. But where did it go? It’s often unclear, because many of those little drips and drops of money are completely forgotten.

It’s not that different than a diet, really. Many people who diet wonder why they’re not losing weight, but it’s because they eat little forgettable snacks throughout the day that, individually, don’t add many calories to a daily caloric intake, but over the course of a day add up to quite a lot of calories. Then, even if you’re careful at meal time, you’re still often eating plenty of calories and the weight isn’t disappearing.

It’s those little forgotten “treats” that undo your forward progress, and it’s time to cleanse them.

Here’s what you do. At the start of the week – say, on Monday morning – withdraw a certain amount of cash from the ATM. Choose an amount that won’t leave you starving, but won’t give you so much money that you won’t have to make any choices. You can do with that cash whatever you like, but it must pay for your food and for any gas beyond what you need to commute to work. If you get any “treats,” it comes out of that cash. If you want to buy anything online, you have to put that much cash back into your checking account (because you’re likely using a credit card or cash). See how far that money takes you.

A few things will happen.

One, you’ll begin to really notice all of the little ways you spend money. You might buy lunch with the swipe of a card normally, but if you do it with cash, you’ll notice the supply of cash dwindling. You might stop for a morning coffee… but then your cash supply for the week dwindles. All of those expenses become more real when you see them sucking money out of your supplies.

Two, you start to make some choices. You might decide to skip out on eating lunch out of the office today and take leftovers instead so that you’ll still have $20 to go out this weekend. You might decide to stop your coffee shop treats for the week and drink the office coffee instead because it’s really not that much of a difference. You might order water at the restaurant. You might decide to eat dinner at home on Wednesday night instead of grabbing some takeout.

Three, some of those choices will be easy and others will be hard. Maybe eating at home is easy. Maybe taking your lunch each day is hard. Maybe skipping out on your morning coffee on the way to work is easier than you thought. It’s different for everyone. Pay attention to what’s really easy to skip and what isn’t.

At the end of the week, reflect on those experiences. Which choices were easy? Stick with those choices going forward, because those are examples of ways where your spending wasn’t generating much value for you. Which choices were hard? You might want to restore some of those.

In the end, what you’ll find is that you’ve eliminated some forgettable expenses and kept the ones that matter. Repeat this cleanse every once in a while and try to stick with the results of it for smarter use of your money.

Cleansing Your Credit Cards: Cut Down and Consolidate Your Plastic

Roughly 38% of American households carry some form of credit card debt, and in those households, the average credit card debt is over $16,000, according to survey data from ValuePenguin. That’s an astounding number. Furthermore, the average credit card holder has 3.7 credit cards to his or her name.

Those statistics paint a risk-filled picture of the average American’s use of personal credit. Holding four credit cards presents an elevated risk for identity theft, as your account information is (typically) held by four different card issuers. That means four different databases (at least) within which your information can be compromised and your card number can be stolen.

It also paints a picture of debt. The average credit card interest rate hovers around 15%, so $16,000 in credit card debt generates $2,400 in interest payments annually. That’s money that simply vanishes.

$2,400 a year disappearing into the ether, along with a heightened risk of identity theft? That’s something to clean up.

First, get started by learning how to live without credit cards. Rely on using your debit card only instead of using credit for your purchases. If you can’t afford something using just your checking account, then you have to start making choices about what’s important. Cleanse your spending habits, in other words.

Second, start consolidating your credit card debt by transferring your balances with the highest interest rates to other cards. See which of your cards offer low balance transfer offers and take advantage of them. Do everything you can to reduce the interest rates on your cards. Then, take advantage of those lower interest rates to actually start paying off your balances.

Finally, close out some of your credit cards. Hold onto the oldest card, as it’s important for establishing the length of your credit history, but close out all of the others aside from the one you use the most. Stick with the one with the best bonus program for your needs and strive to reach a point where you’re paying off your card in full every month.

Cut down your credit card debt. Cut down your number of credit cards, too. Together, they’ll provide a real boon for your financial future by reducing the amount of money you lose to interest while also reducing the chances of identity theft and the potential damage that could be done by an account intrusion.

Cleansing Your Food-Buying Habits: Adopt Once-a-Week Grocery Shopping

In our busy lives, it’s very easy to fall into a routine of eating takeout for every meal or haphazardly shopping for a few groceries at Whole Foods on your way home. Rather than putting a focus on food shopping, you instead use it to fill in the blanks in your busy life, buying restaurant items and groceries as needed rather than with any sort of coherent plan.

Here’s the thing, though: having a coherent plan will not only save you a bundle, it will also save you time over the long run, believe it or not.

Try this approach instead.

First, identify a discount grocer near you. Look for an Aldi, a Fareway, a Save-A-Lot, or a Price Rite – those are discount grocers popular in different regions of the country.

During the next day or two, figure out a few recipes that you can easily prepare at home. Choose really easy recipes, ones that are hard to mess up, like pasta and sauce, soups, or simple fajitas (basically any meats and vegetables you like wrapped in a tortilla). When you’re considering such meals, take a look at the flyer from the discount grocer you selected and see what items they have on sale for those simple recipes, and then base those meal choices around those on-sale food items. For example, you might try to make a sweet potato chili if sweet potatoes are on sale, or you might choose a particular pasta sauce if it’s on sale.

Once you’ve figured out four or five easy meals that line up well with the flyer, make a grocery list. Simply make a list of everything you need to buy to pull off all of those meals. You can store it however you like – I like to either use a pocket notebook or to simply store it in Evernote or Paprika (I use Paprika if I’m doing more complex recipes; Evernote if I’m doing really simple stuff; and my pocket notebook if my phone is out of juice or close to it). Plan to make large batches of these meals, enough so that you have leftovers.

On your way home from work one night, stop at that discount grocer and buy all of the stuff on your list. Head home, unpack all of it, and then make the easiest meal you listed. Pasta with sauce and a small salad can be done in twelve minutes, for example, and it’s about as easy as can be. Prepare enough so that you’ll have a meal or two left over, and when you’re done, put the extra meal in a storage container of some kind. Take it to work for lunch the next day.

Basically just repeat this plan four or five nights out of the week. Make a simple meal, make enough for leftovers, take the leftovers to work for lunch sometime in the next day or two.

What you’re going to find is that your food costs shrink rapidly if you follow this plan, and you’ll also find that it’s a lot easier to just go home and make a really easy supper if you know what you’re going to make and have the stuff on hand for it. You can also adopt a strategy of using a slow cooker for things like soups, as you can put most non-pasta soup ingredients in the slow cooker before you leave for work, turn it on low, and come home to soup that’s ready to eat (or to have pasta tossed in to cook for another half an hour or so).

The thing is, you’re still going to be eating good, tasty stuff. You can be pretty picky about your ingredients and still save a lot of money if you make a meal plan, use a grocery list, and use a discount grocer as your primary source for groceries. It just requires a different food routine than you’re used to.

Cleansing Your Possessions: Do a “Closet Cleanse”

Almost all of us have a closet or two that’s stacked completely full of stuff. Extra clothes, items from abandoned hobbies, papers, things that you saved from college and should really toss but are still there for sentimental reasons… it’s amazing what can wind up in a closet.

One of the best ways to clean up your life and help your finances is to purge those closets and get rid of some items. Not only will it make your living space feel a lot less congested, you can often get a nice financial return on the items you’re selling.

Again, this cleanse is a simple one, though it’ll take some time to implement all of it.

Just choose a weekend afternoon where you can put aside a few hours of free time, then pull everything out of that closet. Once you have it out, go through each individual item and decide whether or not you really need to keep this item. Will you use it again realistically in the next year or so? If it represents a memory, is it really a memory that requires saving a physical object? Are you really ever going to return to this hobby? Are you really ever going to wear this item again?

Be honest with yourself. Don’t keep stuff because you have good intentions. Only keep stuff if you’re truly and honestly going to use it going forward.

Ideally, what happens is that you put a few items back in the closet, but most of it doesn’t get returned. At that point, it’s time to sell off some stuff.

Many individual items are perhaps sold easiest on Craigslist to local buyers. Other items, such as DVD or CD or perhaps even book collections, are best sold on the Amazon Marketplace using Fulfillment by Amazon. You may find it best to donate some items as well to places like your local clothing pantry or Goodwill store. Some better clothing items might sell at a consignment shop. There’s always the option of a yard sale for all of the remaining items, too.

The goal here is to obtain some value for the items that you’re no longer keeping. I tend to view items that just sit in storage as having almost no value whatsoever, so any value that you recoup from them is not only a financial benefit to you directly, but also frees up space in your home and also makes it easier to move in the future. It’s truly a “cleansing.”

Cleansing Your Debt: Make a Debt Repayment Plan and Stick To It

Many Americans find themselves with all kinds of debt, not just credit card debt. Many people face, car loans, student loans, mortgages, personal loans, and debts of other kinds on top of their credit card debts, and those debts can add up to a real problem that restricts your financial and lifestyle choices.

If you have hundreds or even thousands of dollars a month in debt payments, your choices become restricted. You have to have a good paying job or else you’re going to quickly find yourself not only with disastrous credit and with creditors hounding you, but also in potential legal trouble as well. Some types of debts, such as many student loans, never go away, even if you file bankruptcy.

It restricts your day to day financial choices. It restricts where you can live. It restricts your career choices. It simply clogs up your life.

It’s time to clean it out.

You can start by making a simple debt repayment plan. Just make a list of all of your debts and order them by the annual interest rate, with the debt featuring the highest rate at the top of the list (it’s probably a credit card).

Take steps to consolidate some of those loans, if possible. Look into student loan consolidation that locks in your loans at a low interest rate. Look into zero interest credit card balance transfers. This might result in a reorganization of the list, and that’s perfectly fine.

Each month, make a minimum payment on all of the debts on your list, then do everything in your power to not only avoid adding to any of the debts, but make the biggest possible extra payment you can to the debt on top of the list. Make that balance drop through the floor. Hopefully, sooner rather than later, you’ll pay off that top loan! Cross it off and start hammering the loan that’s now on top of the list.

Use the other “cleansing” strategies on this list for help. Take the money you’re saving from your food buying cleanse and apply it to this debt repayment plan. Take the money you made from selling off your closet contents and use it to hammer the top debt, too.

What you’ll find, sooner rather than later, is that this cleanse rewards you in terms of lower stress and in terms of a much greater range of life and career possibilities.

Final Thoughts

I may not believe in “toxins” or food cleanses, but there is a great deal of value in stepping back, reassessing areas of your life, and making moves to improve what you take in, what you keep, and what decisions you make. Improving those areas is all about “cleansing” your life, leaving you in a better state than when you started.

Good luck!

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