Sunday, August 18, 2013, AM | Leave Comment
Whether we are in recession, depression or booming economy, there are some strategies that, if taken, will always put you on the path of financial success. The only way to truly achieve financial success is to live within your means or better yet beneath your means.
If you are in debt, that will give you the extra money you need to pay off your debt. If you have paid off your debt already, living beneath your means will give you the extra money to live more comfortably now and later.
Some folks think it is impossible to save today in this economy. But they say the same thing even when the economy is booming. It is not only possible but essential to be financially responsible. And it is not as difficult as you may think.
If you want to dig yourself out of debt shit hole, you must figure out how you got there. Here is a 7-step plan for getting control of your money.
Organize your financial records
At a minimum, gather these records:
Recent pay stub – will tell you how much you bring in from work
Latest tax return – will tell how much you get from investments and other sources of income
Most recent bank statement & Checkbook – will tell you where you are spending the bulk of your money
Current credit card bills – will tell how much additional money you spend that is not being covered by your paycheck.
Find out where your money goes
Make a list of all your expenses from your financial records. Pay particular attention where exactly your cash goes. You will quickly realize two things: 1) avoid waste and 2) save more.
Categorize your expenses
Most folks have three kinds of expenses. 1) Regular payments such as mortgage and utilities, 2) expenses you must incur like for food, clothing and transportation that could be reduced, and 3) expenses you could eliminate entirely such as eating out, going to concerts and buying sports tickets.
Devise a plan for living beneath your means
The basic mantra is to spend less than you make. Follow this tip from experts: If you are adding certain amount of money to pay off your credit card balance, then you must cut down the same amount from your spending. In this case, your debt will not increase further. To eliminate debt, you must cut down a lot more from your expenses.
Develop plan for debt-reduction
When you take the above step wholeheartedly, start paying off the debt that charge the highest interest rates with the extra money that you are saving. To be successful in your endeavor, set target date for the completion of debt.
Establish plan for saving
Plan to begin saving while reducing your debts. Your savings will come in handy in case you lose your job.
Automate your investments
Call your financial institution and arrange your automatic investment plan. Money will be deducted directly from your paycheck or bank account every month and put into your investment account.
In a Nutshell
After you have followed this 7-step plan, you will feel much better and will be on path of financial success. You must quit into repeatedly getting into the spendthrift ways of the years bygone.