We sat down for an interview with Octavia Ramirez and are excited to share our conversation with her. Octavia is the founder of paper & coin a financial platform, and service. She started her personal finance journey to learn not only how to eliminate debt but how to stay out of debt, how to invest and how to manage her money on a day to day basis. We spoke to Octavia about practical ways to start building a healthy financial future.
Q: How do you balance savings vs actually enjoying/living life?
There is a new trend in our generation of YOLO (You only live once,) and the need to have made all sort of amazing experiences in your 20’s - when you are the most broke, still trying to get educated, and still trying to build your career. I think this is really hindering our ability to delay gratification. There is a longitudinal study which shows that delayed gratification builds character, especially one that is long-term focused.
When you are trying to balance between savings vs living you have to have a long-term perspective. I don’t like to tell people to put aside $5 every day, that’s hard. When looking at your finances you have to have an overall vision for your life. Suddenly, those little things that don’t feed into your greater vision start to lose their power. It’s when you lack that overall long-term vision that you give into the short-term pleasures. I know a lot of financial advisor/coaches like to say, “it’s really easy if you just cut one coffee a day and put aside $2, then you can save X amount in X number of years.” Unfortunately, that’s not how humans work. Humans are emotional, we are impulse driven. So, we need something more, our “why” needs to be greater than our daily wants. When that’s in place, the little things start to fall into order.
Q: How does one combat debt effectively?
Debt is so prevalent today. It is considered a normal part of financing. A lot of people are told that it’s ok to have some debt because it’s considered to be “good debt. “I don’t think any debt is good. My husband and I don’t have a credit card, we completely cash flow our life. We have a zero-debt tolerance and so we only use the money we have.
You are told, “you just need to manage it all.” From my experience, you end up just juggling. From managing your monthly obligations and payments to trying to get some savings going, and investing for retirement, It’s a constant struggle. How are you supposed to live your best life most focused, most geared towards your dreams when you are just juggling.
When it comes to tackling debt, I say go in full force. I tell people - every little bit of extra money you have, throw it at the debt and kill it. Don’t try to put $20 into your credit card, $20 into savings, $20 into vacation - It becomes a situation where you have too many things going on at once.
You can’t build when you are permanently in a hole. And that what debt essentially is - a trap that keeps you stuck and bound to your past. You can’t balance your future while still trying to build out of your past. I say get rid of debt as soon as possible, by any means necessary, that’s legal (Laughs) and then you can start building.
Q: You spoke about not having a credit card, isn’t that essential in day to day life?
My husband and I are world travelers, we go on international trips, we have booked flights, booked hotels, rented cars, cash flowed a wedding and have done it all without a credit card. There is luckily technology in place, financial technology - apps that you can earn rewards and points with, using a debit card. You don’t necessarily have rely on credit card points. So, we just use our Visa/debit for everything.
We took the perspective of never wanting to owe anyone anything, money wise. As Christians, we feel we are only indebted to loving people. We believe having debt puts us in a position of being a slave. Even when a friend lends you money, there is a feeling of owing them and I hate that feeling. Same with credit card companies. So we kind of took a radical approach.
If you are worried about buying a home, a credit rating is not your only option. I used to work at a mortgage company, I used that advantage to learn about the business. I remember asking - “do you need to have a credit score to buy a house or get a mortgage?" and the truth is you don’t have to have one. The majority of people do because that’s how the society has built the financial system. When they look at your credit score they are looking at your financial stability. It is just a measure of your ability to pay something back. There are other ways to measure that without having a credit rating. The credit rating is for sure a quicker way to look up if you are capable, otherwise, they have to do a little bit more investigating. Most lenders don’t want to withhold their money, especially if you have an occupation which shows you have a great work trajectory and are financially stable. They would want to lend you money and earn interest off of you. It’s in their best interest to win your business, so they are going to find a way to get you that money.
Do not think that having a good credit score puts you in a strong financial position, it just means you are able to repay debt in time. Cash is king. Cash is the true measure of wealth. Having cash to outrightly own your assets - that is a place of power, not having the ability to pay back debt all the time.
In the case of renting, a credit score is not your only option as well. My husband and I don’t own a home, we have chosen not to for the time being. I have rented a place alone, he has, and now we rent as a married couple and have never had to present a credit score.
Although, I would say it’s more common in the states that you have to present your credit score than it is here in Canada. Our current apartment is with a management company and we didn’t have to present that. Some places might ask you for it. And you can always prove your ability to pay your rent on time by showing your previous rental statement if you do have one, letter of recommendation, or a history of bill payment. This requires you to be on time with your bill payments or any other financial responsibilities you have. In today’s world, there are so many other ways to prove your financial stability. A credit card is not the only option you have.
Also, remember you have the power, if somebody doesn’t want to rent to you, then you take your money and go somewhere else. We often especially as young people feel like a victim to the system. If they are not going to accept what you have to offer, of course, you work with them, but if they won’t, take your business somewhere else. That’s the power of being a consumer, and that’s how you change the system. Be confident in yourself as a consumer.
Q: What are some practical ways to hinder debt build up
First and foremost, for the day to day expenses don’t use a credit card, cut it up entirely, you don’t need it. As a coach, my clients often times tell me they use their credit card when running out of money to pick up the slack. That means you are not managing your money properly if you always have to pick up the slack. And others tell me “it’s just for emergency.” If an emergency comes up, you don’t have the money, and then rely on debt to save you, it only further makes you in a worse state. It’s a situation of making bad matters worse.
The second thing will be to have a strong emergency fund. This should be about 3-6 months of expenses i.e. groceries, transportation, cell phone bills, whatever your essential needs are. Build enough to survive for at least a few months if you were to lose your job tomorrow.
You come from a place of peace when you cashflow your life and have an emergency fund. I also advise people to keep the emergency fund in a separate account that is not easily accessible. So, with us, our emergency fund is in a separate bank in a savings account. It takes 2 business days to transfer. Taking it out isn’t convenient and we have to think ahead, this way, it makes it less assessable - that’s another way to avoid debt for bigger emergencies. Have your own money to save you so that the credit cards don’t have to.
Q: How does one budget effectively and manage expenses?
It is hard, especially with social media where you see people going on trips and having beautiful things, and you want it. But again, I go back to that vision for your life. First, see yourself in the future and what you want for your life and then work backwards. That’s when you can budget well. As a Christian, I tithe 10% of my income right away. And then the next thing is basic expenses. If you get paid semi-monthly, work backward, have rent at least two weeks ahead of time set aside. Take a chunk out of your first paycheck, and take a chunk out of your second. Don’t wait until the last minute. Be thinking of those more important expenses ahead of time.
I think the hardest thing for lots of people to budget for is food, because when you are on the go you want to eat out, which adds up. When it comes to budgeting for food be realistic with yourself. Do you work late usually 3 times a week? You probably will end up having dinner out. So plan for that. I always suggest people cook at home, but that is not necessarily realistic for everyone’s lifestyle. A lot of times it’s looking at what your behaviors are and then basically putting money towards it. If you have finically distractive behaviors like you are constantly shopping for clothes you don’t need, then it goes back to your vision, what are you putting more value in.
So, first and foremost have that vision in place, secondly, make sure your essentials are taken care of ahead of time, so you need to work backward. A simple spreadsheet can help with that. And lastly, when it comes to the nice fun things like eating out and clothing be realistic.
Keep it simple, don’t over complicate everything. Money is really just a balance sheet, what is coming in vs what is going out.
RELATIONSHIP & MONEY
Q: What are some of the actionable things you have done to help prevent money problem in your relationships?
One practical thing is, if you are married, I would say it’s advisable to have a joint account. My husband and I have one joint account, we both have visibility to everything. It’s not because I don’t trust my husband, but it honestly put’s us on the same page. We have our regular life budget, vacation budget etc. We are both in all those documents together. We can see each other’s activity. Having that open communication with my partner has been essential to the peace of our marriage because we talk about it. He works a cooperate job, with that comes a hefty wardrobe budget, and I want that for him, so we plan for it.
This can be applied to a single person, making sure if there is something you need to organize with someone financially that you just have an open conversation. If for instance, you are planning a girl’s weekend. Don’t be shy to ask, “who’s putting in what? how are we organizing?” Just talk about it, talk about money, don’t be afraid of it.
MYTHS & TRUTHS
Q: What would you say are some financial myths and truths you have personally come to know?
That you need a credit score or can’t do anything without one is a huge myth that has been debunked in my life. Another one like I mentioned earlier is that there is such a thing as good debt, there isn’t. Ask anyone that has ever had debt, they will tell you is not good. It doesn’t feel good.
A truth that I have experienced is that when you are generous with your money, your time, intellect, emotions, and have an open life mentality, you don’t stress about money that much. We’ve always put God first in our marriage and finance, even when times are tight, we always tithe. And God never ceases to provide every single time, on time.
Don’t hold onto money, feeling you are going to lose it if you give it. Let it go, but be a good steward of it. When you are out with friends, pick up the bill now and then. Generosity breeds a sense of gratitude not only in your heart but it also inclines people towards you.
ANY RECOMMENDED RESOURCES?
For financial podcast, “The Dave Ramsey show.” His book “The total money makeover,” I will also highly recommend and his app “Every dollar” is really good as well.
Couch potatoes is a website that teaches about Canadian finance, I would recommend people go there just to learn the basics of investing.
For entrepreneurship, anything by Set Godin is really great, just in terms of marketing.
I like Chris Guillebeau because he offers a lot of practical tips that you can implement tomorrow. He has got a couple of books out, a new one called “Side hustle.” If you’ve got a business idea, get his book.
Looking to get rid of debt, build wealth or just to get a personalized and fresh perspective on your finances? Talk to one of the coaches at paper & coin. They also have free consultations you can take advantage of.
Paper &Coin is a platform and service that helps millennials build a future of financial freedom. They are transforming the way young adults think about and handle their personal finances, and are passionate about helping our generation eliminate debt and build wealth.