Why is it that some people cannot achieve financial freedom, yet others can?
While riding the bus on my way to work I overheard two young women next to me discussing how they both “maxed out” their credit cards. They were cavalier in their attitudes about their money woes, comparing their debts and deciding who had the largest balance. I was surprised to hear this. I am sure that under their indifferent attitudes they have lies a great deal of stress about money.
Keeping up with expenses can be a struggle and it can be overwhelming trying to stay afloat among a sea of debt. If there is no plan to change dysfunctional money patterns and choices, it is impossible to overcome money difficulties. Following the herd and spending money without much thought or care will lead to an increasing financial burden in the form of accumulated debt. Managing your own finances does not have to be so overwhelming. If you take accountability for your money woes, follow some specific frugal thoughts and put these thoughts into practice, you will be on your way to achieving Financial Freedom and making your life easier. Now this is empowering!
What is Financial Freedom? It is freedom from debt with the ability to direct your money to where it counts. It means having control over your money and creating a plan on how you should spend and save your income to become free from money worries. Avoiding debt and maximizing savings are essential to achieving this freedom.
The path to Financial Freedom means actively planning on how you will spend and save your money. It means making smart choices to get out of debt and to save for a bright financial future. Here are four frugal thoughts to create a path towards Financial Freedom:
- Get out of debt. No matter how much debt you are in, you can climb out and be free of it. There are countless stories on the internet of people with substantial amounts of debt who have successfully eliminated that burden in a short amount of time. You can be one of these people who also achieves this milestone. Follow some tried-and-true techniques and you will on your way towards achieving this goal. Making minimum monthly payments on accumulated debt does not make good sense since you will just be paying mostly the interest on the debt. It would be next to impossible to eliminate debt by continuing to make only minimum payments. Those who have achieved financial success have made debt repayment their financial priority by making substantial monthly payments to greatly reduce their debt with the goal of eliminating it. You will need to have a specific plan on how you will get out of debt. Crucial to this plan is to stop the excess spending. Your plan should also avoid the use of all credit, including personal lines of credit, credit cards and the like. In addition, to get out of debt you will have to make regular payments on that debt which is much larger than the minimum payment required. The amount of money you allocate towards debt repayment will determine how quickly the debt will be reduced. If you focus your energies on using any excess funds towards debt repayment, this will escalate the rate at which you can quickly reduce your debt. Your debt will decline and this will fuel your enthusiasm to continue making those payments until your debt is all gone.
- Make a budget. Budget your expenditures so you are spending less money than you earn. The excess money saved can go towards debt repayment and eventually to create savings. The goal behind a budget is to manage your money so you are not spending all of your income. A budget will help you allocate where you will spend your money. Staying close to your budget will help you achieve your goal of being financially free.
- Consume less. Shopping should come with a warning – it may be hazardous to your finances! A little bit of shopping here and there, and before you know it, you are in the red. Don’t let the media or other people make you believe you need to buy that shiny new SUV to be just like them or to make your life complete. Consumerism does not give long-term satisfaction or happiness in life. It is definitely not frugal to spend excessively and is terrible for our landfills. Live within your means, buying only what you need and what you can afford. When possible, save up funds beforehand and pay in full so that you don’t need to consider using credit cards. If you analyze each potential purchase before getting to the checkout line, you will ensure that you are not making impulsive or unnecessary purchases which can be draining on your bank account and elevate your stress levels. The biggest frugal benefit of consuming less: you can now begin to save money to add to your savings account.
- Keep track of your expenses. It may be time consuming, but to attain Financial Freedom, you need to keep track of all your expenses. This may seem like a daunting task, however, there are many free or inexpensive apps and programs (For example http://mint.com and http://mvelopes.com) to help you with expense tracking and to record all of your expenses, and even sub-categorize them to analyze what items you spend your money on most. It is truly eye-opening to see where your money goes. Expense tracking will help you determine where you can cut unnecessary expenditures and help you to make a realistic budget to stay on track.
Follow these four steps to begin creating a financially free life for yourself. When you carefully budget your expenses and eliminate debt, you will find that you have money left over. This is Financial Freedom! The freedom to stop living from paycheck to paycheck. Now you can start saving and invest your money and by diligently following these steps and careful planning you can begin looking forward to financial independence and an earlier retirement.
How are you creating your own financial freedom? Send us a comment and let us know how you are achieving this.
Frugal Thoughts