Picture this: Friday, 3pm comes along and you get a text from your best friend that reads, “Hey! El Adobe?” You’re sitting in your office thinking, “Oh man! I love their margaritas, and if I leave here on time, I can go home, change and still make it there for happy hour so I don’t have to pay full price. That’s being budget friendly, right?”
Now Picture this: You hardly ever carry any cash. You tell your friends it’s easier to keep track of things on the credit card, or you don’t like carrying cash. In reality, you don’t have any cash to carry. Every dime you make goes to making minimum payments on your credit cards, student loans, car payments, insurance payments, rent payments, utility bills, Netflix, Hulu, online subscriptions, gym membership, it all adds up. Your bartender asks you, “Should I keep it open?” You look back and think, “Keep it open? Shoot is there enough money? Did it go through?” Mondays have you thinking, “I should probably check how much is in my account, but I really don’t know if I want to know.”
Does any of this sound familiar? This is no way to live. You probably know just as many people as I do who are buried in $30,000+ of credit card debt, lying to themselves saying that they can handle it. At one point I was there. I once had $20,000 on my credit cards, $75,000 in student loans, $24,000 in car loans, and more. It’s no fun. I would tell myself, I’ll just sell more next month and once that big check comes in I’ll pay it all off. I’m here to tell you, DON’T WAIT. Instead, embrace the steps I’ve outlined for you to take control of your finances.
Steps to Financial Freedom
Step One: Admit you have a problem. Hopefully if you’re still reading it’s because I struck a chord. Maybe you don’t quite have $100,000 in consumer debt or maybe you have much more, but either way you are feeling overwhelmed and want to take your life back. You want to get back on the path towards financial freedom. I’m not suggesting all of you need to join Shopaholics Anonymous, although it’s not a bad idea if you have a severe spending problem. At least visit a meeting or arrange some sort of accountability. If you aren’t at that extreme level, you can use the following simple steps to get back on track.
Step Two: STOP SPENDING. For the love of God, please stop spending. I can’t tell you how many people I’ve seen spend money on all sorts of gadgets and gizmos hoping it would help them financially. If you are struggling to pay your monthly bills and are overburdened with debt, then please don’t spend any more money. That “get rich quick” seminar or that “house flipping with no money down” scheme won’t solve your problems. Trust me, I’ve been to a lot of them. They lure you in with their “For a limited time <insert name here> will be in town to show you for free how you too can make $10,000 a month flipping houses and never come out of pocket a dime.” In reality, all they want is for you to join them on a three-hour pitch over a free lunch at some cheap local hotel. The whole pitch is how successful they are, how great they are, and how they are making so much money. They want to show you how you can too. They’ll even tell you they’ll lend you the money to get started. It’s three hours of this until they break the news to you. You need to spend $2,500 now to go to their two-day conference where they will tell all. Please don’t buy into it. There’s no such thing as “get rich quick” and there’s plenty of information out there to help you that doesn’t cost a dime.
Step Three: Budget. Now it’s time to create a budget. This part is easy. It’s just putting numbers down on a piece of paper and saying you’ll stick to it. Make sure there’s room for savings in your budget. You can learn how to create an effective budget here. The hard part is what comes next.
Step Four: The in-between. You must stay strong! Sticking to your budget at times can feel damn near impossible. However, stay focused. Break down your monthly budget into a weekly one. See if you can stick to that. If the weekly one is a challenge, break it down by the day. Take it day by day. During the week is typically easier than the weekend. You’re at work, may even bring your own lunch, and the distractions of TV, internet, and social media have somewhat muted your desire to spend. If you’re still having doubts that you’ll be able to stick to the budget you create, bookmark this page. Come back to it. Read this article and remember why you’re doing this in the first place.
Step Five: Pay off debt. Now is the time where you use the extra money each month to pay off debt. As things get paid off, you’ll find the drive to keep pushing through. Little by little you’ll pay off debt, take your life back, and continue building your blocks toward not only freedom, but wealth.
Step Six: Invest and enjoy. Once consumer debt is gone and you understand the inter-workings of how to properly manage your money, you can begin investing. In a few years, you’ll begin seeing dividends from these investments.
There you have it! Over time, if you follow these six steps diligently, your future finances will definitely thank you!