Finding Financial Freedom

cameras and money by mike verzella

Earlier this year, the Director of Development at my alma mater, the University of Oregon, reached out and requested a meeting with architectural alumni like myself who were still part of the industry and even appearing to thrive in it despite the recession of the early 21st century as well as the Great Recession of 2008. Architectonics along with many of the other creative sectors lost much of their incredible talent during that decade and many of them never returned to those professions. The university wanted to know what my secret was for making it through.

While I didn’t have a single silver bullet secret for them, I did know the inspiration for what drove me to make it through. I love being an architect. Love designing homes people will build families in. Love designing the perfect hotel for a stressed traveler to relax in. Love designing the perfect restaurant for friends to make memories in.

During the recessions and financial turbulence of my early career I was motivated to remain involved in the built environment however I could. I wanted to stay involved in my industry somehow because it is my true passion and what I truly enjoy doing every day. Armin van Buuren has a great interview on NextShark about doing what you love, what inspires you, what you’d want to be doing any way even if it weren’t your job; and taking on side projects and jobs that allow you to do so. I followed the beat of a similar drum, taking on freelance work during the worst of the economic downturn on everything from furniture production, to runway lighting, to newspaper ads marketing the sales of condo units for realtors.  Not the business of a regular architect, but it kept me afloat and in the industry.

One topic Armin touches on during his interview is how important he feels it is to be free of financial worries in order to be as creative as he can be. Knowing everything is a’ok with our bank account allows us to better focus on the other things we want in life; friends, family, travel, creativity, and passion projects. So what can we do when our work is not supporting the financial freedom we want in our life? Luckily there are actions we can take to help bring more financial freedom to our lives, and I’ve listed them below in what I consider to be the easiest or best first steps to take, increasing in difficulty to those that can be more strenuous but also more rewarding. Here are the building blocks to improving our financial situation so we can find the financial freedom to pursue what we love in life.

Building Blocks for Finding Financial Freedom

  1. Budget and regularly monitor the discrepancies between your budget and actual spending
  2. Lower debts and interest charges
  3. Negotiate a better salary
  4. Realign your skills
  5. Switch jobs
  6. Take on side-work
  7. Relocate to an area where the opportunities you want are located
  8. Relocate to an area with a lower cost of living
  9. Build equity

Define Your Motivation for Financial Freedom

One or more of the building blocks can be applied at a time and I’ve applied each of them across various points in my life, but what I find most important to achieving financial freedom and financial peace of mind is having a goal for why you’re taking action to improve your financial situation in the first place. If you’re going to put in the effort to make changes in your life in order in improve the finances of your life, you need to know why you’re doing it and really commit to it. Is your motivation like mine, where you want financial freedom to pursue a passion? Or perhaps you want to better manage your finances because you’re expecting a new baby? Buying a new home? Saving for a travel fund?

Do you know what your inspiration is for putting forth the effort to make a financial improvement in your life? Yes? Hooray! Write it down immediately and put it in a place where you will continually be reminded of it; whether that is on your fridge or on your bathroom mirror or in Evernote (one of my personal favorite apps) or wherever else you will be reminded of the joy and inspiration of what you are working towards. You might find drawing a quick sketch of your inspiration will further help you. There are five styles of learning and I happen to be a visual learner (we all learn in all five modes which are visual, verbal, physical, logical, and aural, some methods just stick better in some of us than others) so if you happen to be a visual learner as well, it’s motivating to have pictures of your goals and inspirations along with what a quick wording of what you’re hoping to achieve relating to that image.

If you’re unsure what your motivation is to make a financial change, give it a few moments of thought then write down at least one motivating reason before reading on.

Now that we know our motivation for wanting to make this change, let’s touch on each of the building blocks to help get you there. I was able to apply these tools during my first five years in NYC to negotiate my salary up to 1.5 times the salary I had when first moving to NYC and took on side business capable of supplying me with half of the salary I made at my full time annual salaried job in a matter of months (so those funds were in addition to working my regular full-time job). These building blocks can be applied one at a time or in various combinations to help you achieve your goals.

Building Block 1: Budget and regularly monitor the discrepancies between your budget and actual spending.

Unfortunately, there is no magic wand to wave over our finances and voila come up with the perfect budget for our income that works for our individual lifestyle, unique priorities, and personal interests.  It wasn’t until just a couple years ago, when Ciara Pressler’s book Game Plan came out that I finally found the motivation I needed to stick to a budget. It provided me with the vision to do not just what I loved to do, but figure out how to budget and plan to use the funds I earned from work to do other things I love doing as well.

The closest thing we’re going to get to our magical financial wand is our budget. This is where I recommend anyone looking to better your financial freedom start. If you set your budget and realize your spending is already on track, simply knowing that can bring a peace of mind, likewise if your finances and budget are worse than you thought, at least you now have reason to make a change to improve your financial freedom and start applying the other building blocks to help you make those improvements. Budgets should be in a format that will allow you to add, track, and change them regularly.  Here’s a few tools (almost magical for their ease of use) that can help you achieve that, including Google Sheets applications like mint or software like Excel which Vertx42 has some great personal budget templates set up for you . Pick whichever application you think will work best for you.

When setting your budget be sure to cover all the categories of your spending, and include all the little purchases and charges in those categories. These will not be just daily or typical expenses but also monthly, annual and special expenses; so be sure you’re budgeting monthly for items that you know you will need to cover over the course of the year. This becomes particularly important if you’re someone who receives a large bonus at the end of the year or are an entrepreneur who makes more money at certain times of the year based on the services you’re offering. Below are some examples of categories to budget for and possible associated costs in those categories to help you start formulating your monthly budget (and building it into a yearly budget).

  • Income:wages, tips, dividends, gifts, transfer from savings (this is all your positive funding, all the other categories will be expenses out of your funds)
  • Rent and Utilities:cable, internet, gas bill, electric bill, mortgage payments, home repairs
  • Decor:furniture, artwork, storage, linens
  • Transportation:metro and public transit passes, taxi and uber rides, car payments, car insurance, car maintenance, gas, parking, toll roads
  • Food and drinks:liquor and wine at home, drinks out, dinners out, lunches out, breakfast and brunches out, happy hours, ingredients for home cooked meals and snacks, kitchen utensils
  • Health:vitamins, prescriptions, annual doctor visits, monthly premium costs, massages, contacts and solution, unplanned injuries and illnesses, aspirin, cough medicine, wellness supplements, first aid supplies
  • Hygiene:toilet paper, soap, sponges, shampoo, lotion, deodorant, perfume, makeup, manicures, facials, cleaning supplies
  • Entertainment:movies, Netflix, concert tickets, Broadway plays, museum tickets
  • Fitness:gym fees, yoga and other classes, sneakers, work out clothes, fitness equipment
  • Clothing and accessories:work clothes, dress shoes, after work clothes, jewelry, watches, purses and bags, hats, gloves, scarves and jackets, socks (where do all the mates of socks go when we do laundry? If anyone figures that out, that could save us all some money.)
  • Books, Audio & Magazines:iTunes purchases, kindle books, records, Elle Decor and other printed and digital entertainment
  • Gifts for others:wedding presents, Christmas presents, birthday presents
  • Hobbies:ski passes, fishing licenses, art classes, passion projects, bikes
  • Travel:holiday visits home, spring and other breaks from work, long-weekend get always, airline flights, cruises, train rides, souvenirs
  • Finance charges:ATM fees, annual credit card fees, interest charges, late payment charges, student Ioan payments
  • Memberships:Amazon prime, American Institute of Architects and other professional and social memberships

Got your budget per month in a good format? Are all the items unique to your habits built into your budget?  How is the budget looking? Are you spending more than you’re making? Spending more than what you’ve been budgeting? If you want to lower your monthly expenses, look at areas in each category where you could cut back your spending.  Here are some examples:

  • Decor:could you buy a piece of furniture used rather than new, or look at pieces located at the back of the store where the previous floor items with minimal show floor damage are often sold?
  • Transportation:could you take less taxis and more public transit? Could you sell your car and take public transportation instead?  Could you return the car you’re leasing and buy a car for less with cash on hand?
  • Food and drinks:could you hit up the spots that offer deals like Taco Tuesdays and Friday Ladies Night to save money going out with friends? Could you order wine and beer for home by the case for a discount? Could you make more home-prepped meals like breakfast, packing your own lunch, and making dinner at home now and then to save costs spent eating out?
  • Health:is there a more affordable plan available for you without compromising your health?
  • Hygiene: could you buy less expensive products or perform some of the same services at home such as facials and manicures at home which you can make fun by inviting all your girls over to enjoy a day of relaxing pampering together at your home?
  • Entertainment: could you set a limit on how many movies you buy/rent a month or how many concerts, museums, etc you see a month?
  • Fitness: can you move your membership to a less expensive gym, or even less days per week and spend some of the other days working out at home, taking a run, or in your local park? Could you purchase your next workout gear at the next seasonal clearance or outlet mall?
  • Clothing and accessories: for people like me it maybe necessary to watch this area of the budget very carefully.  Luckily there are other solutions as well such as finding our favorite designers through other outlets like TJMaxx or hitting up our favorite stores at their annual sales. Even vintage stores have become part of my repertoire in NYC for saving funds on my threads.
  • Books, Audio & Magazines:what can you get online without having to subscribe to a magazine?  What audio can you listen to through outlets like spotify and pandora to hear the music you like without purchasing it?
  • Gifts for others: ensure to set a budget for these items, especially as the festivities associated with these often mean you’ve already spent quite a bit of funds on new clothing and transportation just to arrive at the event itself before you even deliver the present you so carefully selected for them.
  • Hobbies: considered an easy category for many people to cut back in, this is one of the hardest areas for me, as I’m a person driven by passion, so taking passion projects away from me can leave me unfilled, unhappy, and uninspired. Decide which hobbies you absolutely want to fund in your life, how you can cover those expenses, and which you could wait to renew until later when you’ve paid off a credit card or received a raise.
  • Travel: I feel part of being human is seeing every corner of the globe and trying to see and experience as much of the world out there as we can, and that there are always ways to fit in travel that fits in our current budget.  Sometimes its as simple for me as taking a bus out to the Jersey shore to enjoy the beach for a long weekend, other times it’s been exploring Laos in southeast Asia, where my personal bungalow along the river set me back just $17 a night. Figure out what travel you want and start budgeting for it.
  • Finance Charges:can you consolidate your mortgage or student loans? Lower your interest rate to a different credit card with a lower rate, transfer your credit card to a 0% promotional card, or work with a debt consolidation organization (more on these topics in building block #2 below).

Keep tweaking your budget until you have it at a place where you’re spending less per month than what you’re income is bringing in (otherwise you’ll be in the hole each month).  If you want to be saving towards some larger financial goal, or if you can’t seem to budget in a way that will allow you the financial freedom you want with the income you currently have, then it’s time to look into augmenting the budget with some of the other building blocks for financial freedom.

Building Block 2: Lower debts, interest, and finance charges

If you can’t immediately increase your income then the next easiest thing to do is decrease your costs of spending, and once you’ve run your budget and tried to cut expenses in #1 that way, the next best step is to lower debts, interest, and finance charges which we will discuss here in #2. Here you should look into transferring any high interest credit cards and loans to lower interest cards and loans, refinance mortgages to lower rates, transfer cards with annual fees to cards with no fees, switch to a bank that doesn’t charge ATM fees or only withdraw cash from ATMs where you won’t incur a service charge, pay all bills on-time to avoid late charges and interest, and ensure all credit cards are paid each bill so you’re not paying interest on your cards.

We often fail to realize our credit card interest is as high as 25%, which means the first month you don’t pay the balance on that card, every item purchased you paid 25% more for than if you had just paid for it with cash.  Make sure you know the interest rate of every card you have and start transferring the high ones to lower rates.  There are programs out there that will allow you to transfer your credit card debt from one card to another card for 0% interest for one year.  This is a great option that gives you one year to pay off all that balance, however realize if you haven’t paid off that balance by the end of the 0% promotion, the interest rate usually sky rockets, which you don’t want to let happen.  Make paying that transferred balance off a high priority by applying a good motivation towards it.  There are also debt consolidation non-profit organizations that help negotiate down your outstanding credit debts if you can completely pay them off in a pre-agreed amount of time with no more interest charged during that agreed upon repayment period.  Just keep in mind the US government considers debts like this a source of income so they will tax you on whatever the difference was from your original debt to the negotiated amount the company agrees upon.  To put it in perspective, I was able to work with one of these companies, Elite Financial, to negotiate my credit card debt down by $12,000, which meant that was $12,000 of credit card debt I’d never have to pay if I paid off the rest of the balance by a certain date; however that also meant I paid the US government taxes on what they considered an additional $12,000 of income.  Get your debts and interest down.  Every borrowed dollar is a dollar that costs you more and more as time passes.  Knock your loans and interest charges down as soon as possible. Get your finances in order so your credit cards simply become reward cards that earn you prizes every month as you pay off the full balance.  I currently use an American Airlines card to get me free flights each year by charging everything I can while completely paying off the balance every month when the balance is due in order to avoid interest charges.

Building Block 3: Negotiate a Better Salary

This area requires some finesse; and sometimes the company you’re at can’t offer it as a solution.  I’ve been employed at companies that were asking all employees in the company to collectively agree to a pay-cut to receive 4-days worth of pay for the 5-day work week, in order to allow us to keep all employees at the company working without having to let anyone go.  I’ve also come across situations where the company places salary increases on hold for any employee for several years because they invested so much of the firm’s assets in an office relocation or funds are caught up in a litigation the company is stuck in.  Luckily, there are many times when a firm is able to offer you a raise, and here are a few tips to help you navigate those negotiation waters.

Come at your request for a raise as a mark of your dedication and contribution to the company; never from a frame of threat or revenge where you will leave the company if they don’t start to pay you like Mike from marketing is being paid or that you will leave the company if they don’t give you $X annual salary right now.  None of that is focusing on your contributions to the firm, how successful you can help make them by working together, the worth you have brought to them by now, nor the worth you see bringing to them in the future.  Focus on your successes, the potential you have together, your vision for that success, and how your negotiation with help both you and the company achieve that success.  And you can’t BS this, especially if you want a significant increase.  Start building up your arsenal for these negations by saving off compliments clients and colleagues email you as they come in so you can use them as proof towards the reason your company received repeat business from that client.  Ensure each time you know your project came in under budget or on-time, you document that and use it to help support your case for being rewarded as a valuable employee. Do you have a plan for helping the company grow in a new direction or work more efficiently, bring those plans to the table during your negotiation.  Do everything you can to reaffirm your efforts, support, dedication to the firm and your desire to continue that; rather than any kind of ill-willed threat to leave if you don’t receive a pay increase.

Building Block 4: Realign Your Skills

While going back to school to hone new skills is an option for some, it’s not for all of us.  However, there is plenty of self-tutelage and ways we can apply our existing skills to expand our viable opportunities.  Ciara’s book Exit Stage Right  is a great example of this in which she helps performers understand how to utilize their existing talents towards success and fulfillment in other industries.  I’ve applied similar strategies over the years, putting my design skills to use designing brochures for companies when the building industry was down and waking up every morning at 3:30am to master 3d modeling software when it became the new hot service in the architecture industry. Think about how you can diversify the services you offer by using skills you already have but in a different methodology, and maybe even add one or two new tricks like mastering a new software or earning a new certification to make you the ideal candidate for that next big opportunity.

Building Block 5: Switch Jobs

Switching jobs or the services you offer isn’t the simplest of tasks, but it can bring great financial rewards.  Sometimes switching jobs is the only way to negotiate a higher salary, but you may need to have realigned some of your skills in order to be viable for the opportunities available; so it’s a good idea to have experimented with building blocks #3 & 4 before immediately jumping here to #5.  I’ve been able to negotiate my salary by about a 10k increase each time I switch firms. A large part of my ability to convince firms to increase what they are offering me, is pulling together a strategy to showcase to my potential employer what unique skills and talents I have and exactly how I will apply them at their company to contribute towards their company’s success and growth.  Don’t just tell them you’re efficient or meet deadlines; remind them of how those and the other unique skills you’re bringing to the table will augment their bottom line.  Put it in the terms that effect their bottom line, meaning you being more efficient means you can work on more projects in the same amount of time as another employee, thereby bringing more projects and revenue into the company and how completing your projects on time means the company will be receiving their full estimated revenue from the project rather than paying employees longer to complete the project.  Sell them (whether them is your new employer or your new clients) on the benefits you’ll bring by being part of their team and growing endeavors.

Building Block 6: Take on Side Work 

Sometimes we want to flirt with entrepreneurship a little before totally committing to it.  And that’s a good strategy; flirting with your entrepreneurial ideas rather than jumping in with both feet can be looked at much like flirting in dating.  What is on the market? What are they looking for? What do you want out of the relationship? Side-work entrepreneurship is an area where I’ve found success and seen many examples of it that not only help people get closer to reaching their desired financial freedom but also often help them feel happier and more fulfilled as their side-work can be a passion project of theirs they are working at developing towards bigger dreams they have for themselves.

Seen a teacher who loves the outdoors and gardening work as a gardener in her summers off from teaching and turn that side-work into a full time landscaping business with staff she now manages on the side while still teaching full time.  Seen a stay at home mom find joy in making her own income by running social media for a business a couple hours a day from the comfort of her home.  For me, I take on exciting projects side projects that remind me why I love architecture so much (not to mention they greatly help fund my fetishes for sample sale shows and Broadway show tickets).  Side-work over the years has helped keep me inspired when sometimes my regular day job doesn’t.  Recently had the pleasure of working with some phenomenally design-minded developers on a lifestyle development home in the Hamptons.  Whenever I need a little inspiration to remind me why I put all this work and effort into a side-project, I watch The Third and Seventh. Hope you find (or already have) your inspiration and use it to help motivate you to achieve the happiness you’re looking for; both in the financial realm and the other realms of your life. A passion project that brings in side income might be just the thing to help fulfill your financial needs along with other areas of your life.

Before you take on any side-work, however it is important to ensure you have all the resources you need to successfully deliver that work.  If you’re looking at taking on side income through Etsy, you’d need to know where to buy the materials you’ll need for the products, when you’ll set aside the hours needed each week to create the products you sell, and come up with an effective shipping method and packaging.  If you’re looking at taking on more complex side-work, it might even further involve support staff, specialty software and equipment, separate email and phone accounts, a marketing campaign, and a special environment for you to perform the work in.  Ensure you’re fully prepared to take on side-work before offering or accepting it.  Successfully prepping for your side-work sets you up for success and repeat side-work, however poorly managing your side-work could give you a bad rap and block you from future possibilities of side-work

Building Block 7: Relocate to an area where the opportunities you want are located 

Relocation to pursue your dreams provides both exciting and terrifying possibilities.  You’re leaving your whole life as you know it behind, however you’re also moving forward towards potentially phenomenal opportunities.  This is how I ended up in NYC (well that and some incredible architecture in NYC I decided I just had to live by).

During the recession, I was in Portland, OR, watching creative firm after firm shutter their doors, never to open again.  Hundreds of some of the best creative talent I knew were unemployed for several years.  I managed to stay afloat taking on side-work, however that’s all it was.  No matter how much effort I put in, my work in Portland was only going to keep me afloat, not move me forward.  During my entrepreneurship quests in Portland I achieved some phenomenal accomplishments, like winning an architectural design competition for the City of Portland that was supposed to give my client city land for free in exchange for developing the building on the city land, but the City, like everyone else, was short on funds and so the bonds for the project disappeared, along with payment for my work and my colleague’s work on the project.  Many of my successful creative and entrepreneurial efforts end in similar defeat, and so I decided to move to NYC, the architectural capital of the world, to pursue my success and passion in architecture. And that move has been one of the most rewarding, interesting, and financially successful adventures of my life.  An adventure I continue to live on a daily basis in the concrete jungles of NYC. Sometimes you have to take yourself to the well if you want to drink.  If your current geographic area is not providing you with the opportunities for success you want, consider relocating to other areas.  In some cases it maybe the only viable option for financial success, no matter how talented or valuable you are in the area you are currently located, if the geographic area simply can’t support your financial goals at the time. Relocation is not easy, but just consider the possibilities and potential rewards of a successful relocation.  Telecommuting and working remotely are of course all viable options to consider in this building block category as well.

Building Block 8: Relocate to an Area with Lower Cost of Living

When I first moved to NYC from Portland, Oregon I was completely unprepared for how expensive NYC would be. Wanted to see everything, experience everything, taste, touch, and smell (ok not always smell) everything the incredible city had to offer. Soon that meant credit cards were stacking up as I charged $100 chef tasting menus, $200 Broadway tickets, and $300 sample sale shoes. I used building blocks #1-7 to get me where I am now; credit cards consolidated then paid off and, debts consolidated then gone, several inspiring side projects under my belt, several negotiated salaries and jobs later with plenty of realigned skills helping me navigate all those waters, regular budget in place that I revisit monthly, numerous passion projects over the years; so I was recently left with one of the few final financial building blocks to conquer on my path towards financial freedom. So just last month, I packed up my adorable apartment in East Village Manhattan, and moved to Bedstuy, Brooklyn in order to lower my cost of living.

Uprooting our lives to relocate to a new area is not a simple task by any means, which is why it ends up near the end of our list of building blocks on the road to improving our financial freedom. This is because unlike building block #7, in this building block you might not even be moving to pursue an exciting new opportunity in an exotic new land, you may just be accepting a longer commute, farther from your favorite every day hang outs, for a location that is simply more affordable and much less convenient.  This is where the motivation around your financial freedom we talked about earlier becomes astronomically important.  This relocation maybe a huge readjustment to your daily life and the daily friends and family you connect with and routines you have.  That maybe the case even if you’re just moving an hour away to cut living costs.  So if you are going to put you (and potentially whatever friends, family, and pets you have) through this potentially huge life change, make sure you have a really good motivation for moving to a new area in order to cut living costs and ensure you’ve really gone through the budget and are sure this move truly will save you the costs you anticipate. Use that motivation to keep you positive while you adjust to the transition.   It doesn’t hurt to focus on other positive changes that come along as a result as well.  For me, I’ve actually enjoyed the longer subway commute as it gives me enough time to write down my plan of attack at the office for the day, or listen to a Past Present Podcast, or start reviewing my work email before I even arrive at the office each day.  It’s going to be a challenging change, so take a moment to enjoy the benefits this big life change is helping you accomplish.

Building Block 9: Building Equity 

Once you have your financial ducks in a row, it’s a good time to start building your savings and equity. March towards your financial freedom with the on look of savings rather than cutting back (hopefully with those ducks as the University of Oregon’s mascot happens to be a duck, fun fact for you if you didn’t already know).

Building equity is where you start to make your investments.  Invest in retirement. Invest in your home, or purchase properties you can rent out to others and gain income on.  Invest in the stock market or a business. Own your car rather than lease.  Once you’ve mastered the art of budgeting, cutting back and pursing your opportunities on the road to financial freedom, it’s time to start building up that equity.  Consider which investment types appeal to you, and start investing.

To Recap, Here’s our Building Blocks to Finding our Financial Freedom:

  1. Budget and regularly monitor the discrepancies between your budget and actual spending
  2. Lower debts and interest charges
  3. Negotiate a better salary
  4. Realign your skills
  5. Switch jobs
  6. Take on side-work
  7. Relocate to an area where the opportunities you want are located
  8. Relocate to an area with a lower cost of living
  9. Build equity

Hope we’ve inspired you to revisit your budget, find your motivation for working towards financial freedom, and provide you with a new perspective on how you can align your work and financial goals with your passions and other interests in life. It’s an ongoing journey for all of us, so please leave comments and questions about how we can all better ourselves on our quests toward financial freedom.

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