To be able to enjoy living a debt free life there are some basic requirements that need to be followed. The first step is to rid yourself of credit, credit is so easy to obtain that it will quickly overtake you without even knowing it. Pay your bills and live off the left over cash. It is wise to resist the temptation to use credit cards when you are strapped for cash. Another important step is to examine your expenses and outline a budget that reasonable for you. Take your total income for the month and subtract all the payments you will have to make each month. It is a wise choice to put aside some money for a savings account and what is left over divide into the number of weeks. After you have done this, you will have a look at what you budget should be. Make your money work for you, invest in IRA, 401 K or an money market account, this will provide you interest bearing accounts and help you prepare for retirement when the time comes.
Track spending is the process in which you begin to control your spending by writing down everything you purchase or spend any amount of money on, regardless of how insignificant. The best way to get started with track spending is to write everything down every day for about two to three weeks. Tote a journal with you everyday, everywhere you go and make immediate note when you make a purchase. This means ANYTHING and EVERYTHING, such as coffee, tools, diapers, clothing, and food, everything you spend your money on. When the end of the time period ends you will see where your money is going and how much is going to it. It is wise to save money where you can, for example, brew your own coffee at home, or obtain a library card and check books out free instead of buying them. If you try going to a different gas station you may end up saving money on fuel purchases for your vehicle. The point of track spending is to analyze your spending habits and cut corners where you can save money.
It is likely you will think that spending your money on professional money management is foolish. You may also believe that you can keep yourself financially stable. Simply put professional money management firms know a great deal about how to make your money work for you that you do. This may seem harsh, but most people tend to think that keeping the bills paid and holding a savings account is enough to carrying you into retirement. Typically, that is the wrong point of view. By obtaining the services of a professional firm, you will obtain helpful information about the many different ways you can spread your savings to obtain the best long-term conditions and benefits. When you approach a professional money management firm, it is important to be honest and upfront with them. They are not concerned with your financial habits you currently have, so do not be afraid to let them know the truth. They are far more concerned with the financial habits and advice you gain from them. If you are not honest with them, they cannot properly help you. You need to help them, help you!
One you have achieved and maintained your goal of freedom from debt you will need to ensure that you have learned from your experience. You will also need to continue to make the proper decisions that reflect your new and improved financial situation. If your problem was the credit cards, it is wise to cancel all of them with the exception of one, keep that in a safe place and not on your person at all times. By keeping only one credit card you will still have it if an emergency should arise, as well as for rebuilding your credit. It is important that you refrain from using the credit card for things that you know you cannot afford. If the credit card is at home and not, in your purse or wallet, when you spot something you desire but know you cannot afford you will not be tempted to use the credit card for it. You will likely, by the time you are back home where the credit card is, have thought about it two or three times and hopefully will have talked yourself out of it.
It is wise to start setting some minimums for yourself in regards to your new financial freedom. You should set a minimum that you will deposit into your savings account with every paycheck. It is also wise to set a minimum amount you will invest in your IRA or MMA (money market account) per month. Then you should do the opposite and set a maximum allowance for yourself per month. Yes, that is right give yourself an allowance. This allowance should be the maximum amount you will allow yourself to spend on special items such as things you do not really need, but want, or dining in restaurants. Then challenge yourself to spend more than your minimums and less than your maximums. Invest more into your savings accounts and spend less towards shopping and items not needed. After a while you will look at the investments you have made at be shocked at the amount you have saved. This money invested will help you when it comes to retirement and emergencies.
Managing your money is always a challenge for everyone. If you come upon every month, look at your bills, and find that you are forgetting to pay the bills or missing your payments you should consider taking advantage of automatic bill payments that many creditors and service providers offer today. These can be set up by contacting your service provider, or going to your online banking and simply setting it up. Typically, the way it works is that when the time comes that your bill is due, the creditor or service provider sends to your bank a request for funds, and the entire amount of your bill is deducted directly from your bank account. This means you, no longer have to worry about forgetting your bills or missing your payments, which will also save you money by avoiding late fees and possible collection. You will of course want to make sure the proper amount is in your account each time, so this is where it is wise to deposit, instead of spending to ensure the funds will be available. If you do not have the appropriate amount of funds in your account, you will cost yourself more money than need be with fees from the “bounced” automatic bill payment, as well as fees charged by your bank.
It is supposed to be one of the best areas of your life, but most often college is the area of life when often time’s people obtain the bulk of their debt. Companies often send students various credit cards and credit offers, which are very tempting to a newly, away from home college student. Often times they will obtain credit they do not need and will likely not have the income to pay the debt. It is a good decision; while still in college avoid all that debt. If you can resist the temptation, you will have the ability to graduate from college debt free and far ahead of many of your peers. If you have the need for extra money, there many places within college towns that will hire college students during the school year, this would be far better than having debt. Try to avoid spending your hard-earned money needlessly on things like clubbing or an expensive trip on spring break. Use your money wisely, if you must live off campus rent an apartment that is inexpensive, purchase your school textbooks used and live a lifestyle that is frugal.
To obtain the discipline needed to live a debt free life you need to require of yourself an adjustment in attitude towards you spending habits. You will have to push yourself consistently to save your money and pay at least one extra mortgage payment yearly. It can be extremely tempting to purchase an appliance or accessory you want but do not have a need for, however, if you practice you new found discipline and refuse to be sucked in, you will find yourself living the debt free life that your friends, who have the extravagances, only dream of having. Living a debt free life is all about obtaining, maintaining good spending, and money habits. You should plan around your good habits, keep credit cards away from your purse or wallet, separate your checking and spending accounts, you will have obtained good money management skills.
Often times a credit card, company will have a financial planner available to help you on the road to debt free living. When you want to obtain the help of a financial planner, contact your bank representative or our accountant, they will likely possess contacts and recommendations about the right financial planner for you. Financial planners can help you with your daily budget, as well as initializing your long-term goals and needs. They will also show you how to effectively invest your savings, to enable your money to work for you instead of against you. They will not only help you with the daily money management but also guide you to investing within your future and retirement.
If the end of the month arrives and you find yourself scraping for money, or if you live week to week, paycheck to paycheck, you may be living outside of your means. I think we are all in agreement that managing your money is not the greatest thing in the world, but it is a necessity. Often times it will mean giving up many of the things we enjoy such as, concerts, dining out, going to the movies and other things in life that are frivolous. The main key to money management is to remember that once you have obtained debt free living and learned to master the discipline you will be able to afford to do these things again in the future. When deciding your budget you should include at least some money for fun, just do not go overboard. Before your fun can begin, you should make sure all other responsibilities are taken care of.