3 Steps to Debt Free Living
If you really want to achieve the dream of debt free living, you need to stick to some basic requirements. First, live on a cash basis. If you have $100.00 in your bank account and a $60.00 bill to pay, pay your bill and live on $40.00. Don't be tempted to spend another $40.00 on a credit card thinking you can just pay it back the following month. Second, look at your real expenses and set a reasonable budget. Look at your paycheck and subtract all of your monthly payments. Reserve some money for savings and then divide the rest of the money into days or weeks and you'll see what you should really be living on. Finally, make sure you have some money working for you. This could be small deposits into an IRA, 401K or a money market account, but no matter what, make sure you have a nest egg garnering high interest and preparing you for your retirement.
Track Spending – A Helpful Money Management Tip
One of the best ways to really get in control of your spending is to write down everything you buy or spend money on each day for about two weeks. Simply carry a journal with you and note when you buy anything - coffee, gas, diapers, new clothes, tools...anything! At the end of those two weeks you will be amazed at where your money is going. You may discover that by brewing your own coffee at home that you can save thousands of dollars! You may realize it's time to get a library card and to avoid your favorite book nook. You may even realize that by going to a different gas station can save you hundreds on gas for your car. Assess your spending and you'll learn where you can save.
Benefits of Professional Money Management Firms
You may think - why should I spend money on a professional money manager when I can simply stay financially afloat myself? Well, the reason is that they know a lot more about making your money work for you than you do. Too often we think that staying on top of bills and having a savings account will be enough to see us through to our retirement. In most cases, you couldn't be more wrong. By approaching a money management firm or professional, you'll learn about the various ways your savings can be spread around for the best long term benefits. The key to using these folks is being as honest and up front about everything as humanly possible. You may be embarrassed about your shopping habit, or your save and splurge spending habits, but you can't get good advice if you don't furnish them with all the information they need. Be up front, be honest and be amazed at the solutions they come up with.
Staying Debt Free After Recovery
If you've achieved your goal of becoming debt free, make sure you really learn from your mistakes and make decisions that support your new, healthier financial outlook. For instance, if you got into trouble with credit cards, get rid of all but one - and keep that in the freezer and out of your wallet. You'll have it for emergencies and for building credit, but you won't be tempted to use it whenever you see things you like but can't really afford. If you had a home equity line of credit and you used it like a credit card, close it out. Protect your home from poor spending habits and build your equity. Good financial habits are like good eating habits. If you can't resist chocolate, keep it out of your house - if you can't resist credit card spending, get out your scissors.
Personal Money Management – Build a Plan
How can you start saving and ensuring smart money management? Set some minimums for yourself. Set the minimum you will put into your savings account. Set the minimum that you will put into your IRA or money market account every month. Set a maximum that you will let yourself spend each month on frivolities or dinners out. Then set to "beat" your minimums and maximums. Put a little more into your savings. Put a little less towards shopping. Eventually you'll look at those accounts and be amazed at what has accrued. Having a secure job is not always enough to ensure security. Plan ahead and have a nest egg for emergencies.
Money Management with Automatic Bill Payments
Money management can be a challenge for anyone. If you find yourself forgetting bills or missing payments, consider setting up automatic bill paying through your creditors and service providers or through your own online banking. Generally, if you want more control and you want to see the balance of what is going out, we recommend your own online banking for really getting control of your bills. In this way, you schedule the payment, and essentially write the check. You'll see everything being paid in one place. If you sign up for automatic withdrawal, you *must* be religious about your check registry so you know what is going out and when. The last thing you want to do is automate all of your payments and then assume you have more money in the bank than you have.
Getting Through College Debt Free
College is where so many people gather debt. Students are barraged with credit cards and offers and are seduced into getting credit they don't need and worse, don't have the income to pay off. If you want to graduate from college ahead of the game, avoid debt. First, take out as few student loans as possible. If you need to get a job at a local pizza parlor, then do it. It will be worth it in the long run. Second, don't spend your money on bar hopping and spring break. Rent an inexpensive apartment, buy used books and try to live a frugal lifestyle. Finally, don't get sucked in by the clothes, the iPods, the laptops and the other expensive and cool trappings of college life. You may not look as cool in the moment, but you'll look a lot cooler when you graduate debt free.
Discipline – The Essence of Debt Free Living
Like going on a diet, or starting a workout regimen, debt free living requires a complete realignment of your attitudes towards money and spending. It also requires discipline. You have to push yourself to keep to your minimum savings per month and to paying that extra mortgage payment each year. It's so tempting to buy that cool accessory or even that appliance you want but don't need, but if you stick to your guns and don't give in, you'll be ten times further ahead of the game than your peers who have all that stuff. Money management is about good habits. If you need to plan around those habits, by keeping no credit cards in your wallet, by keeping separate checking and spending accounts, then do that. Eventually, debt free living will be a way of life.
Getting Professional Help for Personal Money Management
Did you know that your credit card company may have financial planners that can help you? Your bank or accountant may have excellent recommendations for financial planners as well and you should consider going to see one. Not only can they help you with your day to day budget but they also cast a serious eye on your long term goals. These folks can teach you what to forego and where to put your savings so your money is working for you and so that you manage your day to day expenses and put money into your future.
Let Better Money Management Tip Your Scales
Are you scrambling for money at the end of the month? Are you living from paycheck to paycheck? Sounds like you may be living beyond your means - or darn close! Money management isn't any fun. It often means giving up things we enjoy like shopping, eating out, movies, concerts and other aspects of life that are considered frivolous. The key is to consider that if you get ahead of the game, you'll be able to do these things again. You just may need to make some short term adjustments to your money management style. Also, make sure you always budget in some money for fun. It could be one manicure a month or one night out at your favorite live music place. You have to live your life!
