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Let’s Be Real. Are You a Financial Disaster?

Have you ever heard the saying, “If you don’t have a goal, then you’ll wind up hitting it with amazing accuracy.”? In other words, if you have no idea where you want to be in your future life, then it really doesn’t matter what you do because wherever you end up will match your goal…which apparently was never important enough for you to think about in the first place.

While I believe that’s certainly true, I think many people need to step back even further. They need to question their starting point.

It’s quite often that I hear people tell the story of their financial destruction, and somewhere in the mix they typically say something like, “I always heard of people living paycheck to paycheck and thought they should change their ways. It never occurred to me that I was one of them!”

If you don’t get real with yourself about your starting point, then how on earth do you expect to get to the finish line??

Many times, we become blind to our own financial blunders because we’ve lived with them for so long. It seems only natural to live the way we do without ever even considering that we’re going about it all wrong!!

At this moment, I want you to seriously consider where you are financially. Of the examples below, where would you place yourself?

20160529 - financial stress1) Financial Disaster

Put simply, you’re going backwards. You have debt. Your expenses are bigger than your income. You may not even realize it, but your credit card balance is rising every single month. You are a financial disaster, and if you continue to spend more than you make, you’ll go broke.

It sucks being here. I get it, I’ve been there. But it’s time to get real about your situation. Admit it to yourself, and start taking the first steps to fixing the problem. It’s the only way things will get better.

You are a financial disaster.

2) Paycheck to Paycheck

You maybe have a few hundred bucks in the bank account. You get paid on Friday, quick pay all the bills that have been stacking up, and then your entire paycheck is gone. *poof* just like that.

The next paycheck is used to buy food, clothes, and maybe a little bit of fun if there’s anything left over. When the account goes back near zero, you stop spending and you wait for the next paycheck.

This cycle happens every month, every year, every decade. You might never feel strapped, but you’re living paycheck to paycheck. If your income ran dry, you’d quickly default on some bills and your credit card balance would shoot through the roof.

You’re living paycheck to paycheck.

3) Stagnant Savings

Sometimes you get ahead, sometimes you get behind, but your savings account actually looks pretty decent. You like the cushion of that $5,000 emergency fund. It gives you security. But…it never seems to grow.

In part, your savings doesn’t increase because you don’t earn a ton each year, but you also spend lavishly once in a while on trips, concerts, and random toys. You could probably save and invest more, but you never felt the need to push it.

You are a stagnant saver.

art of negotiation4) Getting Ahead Slowly

You get it. You realize that in order to get ahead, you must take action today. You income is larger than your outgo, but the progress seems sooo slow. In this stage, you likely still have debt and you’re trying to bust your way out of it. The credit card probably isn’t an issue, but the car loan and that pesky student loan are keeping you down. You’ll get out of debt someday, but it really would be nice to speed up the process!!

You my friend ARE making progress. You’re just getting ahead slowly.

5) Socking Away Money

The debt is dwindling (or gone) and you’re able to sock away a few hundred bucks or more each month. You finally feel like you have traction and are getting ahead financially. While you’re able to save and your accounts are growing, you aren’t necessarily investing in your future.

You’re at a crossroad. Part of you wants to upgrade your life (bigger house, better car, or maybe even a vacation home), while the other part wants to earn money with your money but doesn’t quite know how to do it.

You are socking away money.

battling debt6) Starting to Develop Passive Income

You have wealth on the brain. You’re out of consumer debt and  you’re starting to learn and invest – first in the stock market (likely for the dividends) and maybe even in real estate.

You realize that your investments can grow exponentially and could make you very wealthy in the distant future.

You are starting to develop passive income.

7) Earning a Living Through Passive Investments

It probably took a while, but you did it. You got out of debt, invested in the market, in real estate, and perhaps even in your own business. You now earn enough from your passive investments that you can do whatever you want – travel the world, work at what you love, or simply sit on the beach and work on your tan.

You’re earning a living through passive investments.

Be Real

Alight, so be real with yourself. Where are you on this crazy financial journey? Are you a financial disaster (P.S. If you want help, always feel free to email me at derek[at]lifeandmyfinances[dot] com)? Or are you getting ahead slowly? Take the poll below!

Battle of the Mind Passive Income


My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. Thank you for sharing such an insightful article. It’s really shocking to see majority of us are stagnant savers. I really need to get my act together.

    • Thanks for the comment Esther. Glad you liked the article!

      I think out of all of these options, it’s just the easiest to land in the stagnant saver category. You don’t have much debt, you’ve got some savings…things are comfortable. But, we need to understand that the race isn’t done. If we all settled in as stagnant savers and had an accident or lost our jobs, those savings would soon be wiped out and we’d be in big trouble.

      Thanks again for reading, and best of luck as you start getting ahead!

  2. Thanks for the article. I am retired and at step 6. Trying to learn where to invest. Financial advisors knocking at the doors. Would love an article on how to select passive income investments.

    • Great! Congrats Lucas! Beware of the financial advisor sharks out there. Not to say there aren’t good ones, but don’t hand over any money unless you’re completely comfortable.

      I absolutely LOVE writing about passive income and am happy that you’re interested. Watch for future posts. I’ll start busting them out! 🙂

  3. I guess it’s better to be a stagnant saver than a total disaster.

    I think they are the people who can save, but just spend the money because they have it. With a decent budget they could easily start saving a lot more.

    For Lucas, I would recommend real estate. It’s how I became total financially independent by the age of 30.

    • Totally agree Eric. I threw my hat in the real estate game 6 months ago. It has been fantastic. The house value already went up $40,000 (we only put $8k into it), and we’re earning about $900 free and clear every month. If we’re able to duplicate this 4-5 more times, we’ll be financially independent!

  4. Generally I would put myself into number 6, developing my passive income, although it feels more like just savings a bit at a time recently(#5).

    It is nice though to see my passive income starting to contribute nicely to my overall monthly income though. My portfolio currently yields about 5%, with a few solid monthly payers.

    Nice post.

    • Glad you liked the post DW! It sure is nice to have passive income huh? We have a rental property and absolutely love the passive income it generates! Minus expenses, we’re $800 to the good each month. It’s not a ton, but it definitely helps!! 🙂

  5. I’m getting ahead slowly, but definitely just experienced a set back due to job instability.

    • That’s too bad, ZJ, but I’ve heard many people say that job loss was the worst time of their life, but also their best because they figured out what they actually enjoyed doing and now make a living doing just that. Hope you make that same discovery!

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