In Part 1 of the Money Smart Medics series, I explained my back story and how I went from completely broke to actually getting ahead financially and planning for my future. If you read the article, you can clearly see that my life was a giant struggle. I used to believe that it was impossible to survive on an EMS salary and that my only way out was to find another line of work or to “move up” within the healthcare industry. I blamed my problems on the industry, taxes, child support, the economy, and even those pesky politicians. It wasn’t until I accepted complete responsibility for my situation that I started to make traction.
We can say what we want about EMS pay, but we have got to stop blaming the industry for our financial woes. Nobody made us promises of riches and a life of ease when we joined. Actually, we were all warned that it would be quite the contrary. As adults, we are responsible for our own lives. We have to quit blaming our employers
Yes, there are plenty of jobs that come with a higher hourly pay and much less responsibility. If you think that you can make a better life for yourself doing something else, then by all means, do it. But if you really enjoy what you do and don’t want to leave, this series is for you. Like I said in Part 1, money problems made me forget how much I love being a paramedic. I was so stuck on the “need” for more money that I simply couldn’t focus on doing what I truly love. Once I realized that I could live a comfortable life and secure a comfortable future – all while working in EMS – I knew that I would never have to leave. And you know what? If the day comes where I don’t want to do this job anymore, I can make that decision, because I won’t be tied down to a pension plan, and I won’t be dependent on the overtime cycle to support a paycheck-to-paycheck lifestyle.
First Things First
Before we can move forward, we have to accept responsibility. I know I’m repeating myself, but I simply can’t emphasize this enough. Control and responsibility go hand in hand. You can’t have one without the other. From this point forward, the only thing that matters about our current situation, is that we got ourselves here and only WE can get ourselves out.
When my financial situation was at it’s worst, I wouldn’t listen to the advice of others. They just “didn’t understand”. I used to say things like “they haven’t seen my paycheck” or “they don’t know what it’s like to live on an EMS salary”. What I didn’t do is ask myself if what I was doing was working. It may be extremely hard to do, but there’s nothing wrong with admitting that what you’re doing isn’t working.
Allow me to present to you, the definition of insanity:
Doing the same thing over and over again and expecting different results.
If you’re going to get ahead financially, you will have to admit when your wrong and be willing to listen to people that are doing it right. Now, having said that, we have to be very careful when we try to determine if someone is “doing it right”. Debt and income can cover up irresponsibility. Just because all of your Facebook friends are taking trips, driving nice cars and buying big houses, doesn’t mean they are in a good financial place. Actually, I’ll take it step further and say that most of them are not. Most of them will be tied down to loan payments for the rest of their lives and will continue to be one lost job away from losing everything. It’s just like Warren Buffett said: “Only when the tide goes out do you discover who’s been swimming naked”.
Getting Caught Up
For the longest time, getting caught up was something I could only dream about. If I was only 1 month behind on my car payment, it was a good month. Hell, I would get excited if I saw my account reach over $200 in the black on payday. Of course, this was because I was living in the negative. Yep, I was that guy.
When I hit my breaking point, I was $600 in the negative. My car was nearing the point of repossession and the county was 2 days away from issuing an arrest warrant for a traffic ticket that I kept putting off paying. Now, if you’re like me, you get resourceful when your broke. I always managed to scrounge together something to eat and I could always manage to dig up another $5.00 to put enough fuel in my car to get back and forth from work. When I got serious about fixing my situation, I got really resourceful. I needed money and I needed it now and nothing was off the table. My first line of business was to call everyone I immediately owed money to. I explained my situation and more importantly, my plan with 100% honesty to my bank, cell phone provider and the courts. Verizon worked out a deal where I would pay the normal bill with an extra $50 tacked on each month to pay off my past-due balance over time. The court actually gave me a week extension and even reduced the amount owed. The bank that held my car loan agreed to accept a post-dated check for the amount of a payment and a half. My personal bank actually agreed to reverse enough overdraft fees to bring my account into the black. It was the first time I actually had a plan, and nothing was going to stop me from following it.
Now that I knew exactly how much money was going out on the next check, I had to make sure I actually had the money in the bank to make good on my promises and to survive for the next 2 weeks. I knew that I was either going to work enough hours to make the money or sell enough items until I had everything covered. I took a long hard look at my bank statement and asked myself what I would be willing to give to never see the color red on my statement again. In that instant, price tags suddenly appeared on all my possessions. I stayed up all night and did an inventory of everything I owned and looked up how much I could sell each item for. I made a spreadsheet showing all my possessions valuing largest to smallest and started crossing off things I didn’t need or use. The next day I started putting items up for sale and the cash just started rolling in.
Getting caught up wound up being much easier than I had anticipated. Once I let go of my attachment to my possessions, I started making some serious progress. My guns were the hardest part. I told myself that I would NEVER sell any of my guns. However, once I added up the amount of money I was paying every month towards loan payments, overdraft fees and unneeded expenses, I realized that I could afford to buy 3 new guns a month with the cash that was going to be left over once my debts were paid off. Talk about motivation!
Figuring Out What’s Important
Figuring out what’s important wasn’t limited to just material possessions. Actually, they were a very small percentage of things that I needed to get rid of in order to get ahead. I had to take a hard look at all my monthly expenses and figure out what was important to me. The small stuff was easy. The Pandora subscription, XM Radio, and the Hulu Plus account were easy cuts and they actually saved me a substantial amount of money. But I didn’t stop there. I had to look at things that I actually did use and enjoy, like cable TV. Once again, I had to look at each item and ask myself if it was really worth the negative account balance that I saw every month. I wound up cutting out the majority of my luxury items and saving nearly $400 a month. That’s a car payment.
Balancing wants versus needs isn’t an easy task. The lines can get blurry when it comes time to make cuts. When it comes to monthly expenses, I recommend writing down everything that is absolutely essential. For example; food, rent / mortgage, utilities, transportation, and insurance. These are things that you know you absolutely must have. From there, start to list all of your other expenses and try to prioritize them. How I did this was simple: I made a hypothetical situation where I could only keep one of those monthly expenses. For me, that was internet. I use it for work, school, blogging, continuing education and entertainment. It isn’t essential for survival, but it’s extremely valuable, so clearly that was going to be my number 1 on the priority list. Once I established that, I then did the same with the remaining items of the list. Next up was my cell phone. Do you see where I’m going with this? Once you force yourself to place a level of importance on each item, you’ll start to realize what you can live without. Trim it down as much as you can with the understanding that once you get your financial situation under control, you can look at the luxury items to see if there’s something that’s worth the money.
I could write an entire book on everyday expenses, but the basic principles are simple. Look at where you’re spending your money and do your best to see what you can cut out. For me, the biggest expense was Starbucks and fast food. They were tough to cut out, but the results were immediate. Once I started to set limits on fast food consumption, I easily saved over $200 a month. Do you see a pattern here?
Get The Facts Straight
One of my biggest issues when it came to my finances was organization (or lack thereof). I had no clue what I owed, or what was going in and out. I would go days, and sometimes weeks without checking the mail because I knew it was just bills. I tried to pretend the problem didn’t exist, but deep down, it ate away at me every single day.
When I setup the appointment to meet with a financial counselor, he asked for 2 things: all of my monthly expenses and a list of debts owed. The sad part was, I didn’t have an answer for either. I really had no idea. I didn’t want to know.
I knew I had to get organized. I put my fear aside and opened every piece of mail I could find. I started stacking the papers from the smallest amount owed, to largest. I then entered them in the same order on a spreadsheet and added the total. It wasn’t a number that I was proud of, but I knew what it was, and now I could come up with a plan. In a way it felt very empowering. I had to do the same with my monthly expenses. I wrote down all of my monthly expense due dates with the amount on a calendar so that I knew exactly how much I owed and when it was due. For the first time, I was organized.
Once I was caught up on my past due balances (on essential items), I had to devise a plan moving forward. I knew I had to setup a budget and I had to start paying down my debts. The problem was, I had no idea how. My financial coach really helped me with this and I also learned a ton from resources like Dave Ramsey’s book. Getting adjusted to living on a written budget wasn’t easy, but it was very liberating. For once, I was truly in complete control, and that felt amazing.
Budgeting, saving and preparing are all going to be essential to our success. Paying off debt is going to be a must. Accepting responsibility for our actions will allow all of this to work. If your situation looks anything like mine did, then I have a pretty good idea of what you’re going through. It sucks, it’s scary and it’s painful, but it doesn’t have to be permanent.
I’ve heard many people say that financial peace happens when you pay off your debt, save up money for emergencies and start to enjoy a debt-free life. I say it starts the second you take control. I lived the steps and stories that I laid out in this article. I struggled and I felt hopeless. Once I took control and accepted responsibility, it felt like a giant load had been taken off my shoulder. I started to love my job as a Paramedic again and realized that I don’t want to go anywhere. I’m happy doing the work that I love and even happier living the life I have.
In the coming articles, I’ll be talking a lot about budgeting, saving money, preparing for emergencies and even retirement and investing. The cool thing is, I’ll be doing it right along side everyone. I’m still building my ideal financial situation and I have a long way to go. I’m going to continue to make mistakes along the way, but I’ll never give up. My hope is that by sharing my experiences and knowledge, that somebody’s life will be changed.
I see good people leave EMS every day, many of which that don’t want to leave but feel they have to in order to get ahead. I want to show people that once we get our finances in line, the world is ours to take. We can do the work we love and not have to chase a pension or a dollar sign. We can build a legacy for our children and be the change that our industry so desperately needs.
I really hope that you enjoy this series as much as I will. If you have questions or need help, please e-mail me. I will gladly respond to all e-mails and help anyone get setup with the resources that they need to succeed.