A few years ago I was supposed to get married but, the day before our wedding, my fiance got sick and died. From that incident, I ended up $25,000 in debt for expenses from a wedding that never happened. Financial security and being debt-free were things I only dreamed about. Fast forward a few years and I’m completely debt-free. I managed to do most of it in just a year. If you’re in debt, panicking about finances and constantly worrying about money, never fear. I promise you, if you do the same things I did, you too can be financially secure by the end of 2011.
Sit Down And Figure Out Your Expenses – Most people have little idea of exactly how much money they spend every month on items they could live without. A latte here, a car wash there, a magazine or a bit of chocolate. It doesn’t seem like much at the time but, over a month, can amount to hundreds of dollars. Hundreds of dollars wasted.
That’s why, if you’re trying to become financially secure in 2011, you first need to figure out what your actual necessary expenses are and how much money you waste on things you don’t need. Then, instead of wasting money on stuff you don’t need, use that money to pay off your debts. Even an extra $100 a month is $1,200 a year, and a huge amount to pay off an existing credit card or bank loan.
Be Brutal With Cutting Costs – When you’re in debt and worrying about financial security, stop spending money on things you don’t need. It might seem like you need cable TV and to spend hours chatting with friends on your cell phone. Believe me, you don’t. For many, cable TV is anything from $60-$150 a month. Either get rid of channels you’re paying extra for but don’t need (my parents had all their extra movie channels disconnected, saving $60 a month), or if you really can’t afford it, get it disconnected completely. Libraries are free, and most have DVDs as well as books. Plus, you can now get so many TV shows on internet, why pay for them if you don’t need to?
Cell phone bills too are huge and most phone calls are unnecessary. Stop calling friends every day to talk about nothing. Instead, cut your calls down to a couple of times a week and use email instead. Cutting non-essential things like cable and cell calls can give you an extra $100 or more a month to pay off bills.
Stop Using Your Credit Cards – When I was in massive amounts of, what seemed like, uncontrollable debt, I stopped using my credit cards. Previous to this, I’d charge groceries, clothing and even lattes at my local coffee shop and, hopefully, pay them off at month’s end. Once I was in debt, I completely stopped using my credit cards and simply concentrated on paying off the balance I had. By doing this, I discovered I actually spent less money every month as, when I had to pay for my purchase with cash, that magazine or latte didn’t seem that important.
Have Monthly Fun Money – For most people, depriving yourself of everything so you can be financially secure doesn’t work long-term. You feel miserable, deprived and eventually rebel – blowing money on things you’ll regret as soon as you get home from the mall.
When I was struggling to get debt paid off, I still allowed myself ‘fun money’. For me, it was only $25 a month but just having that to spend made my life more bearable. In fact, I actually enjoyed the fun of having only $25 a month to spend on unnecessary items. I’d spend half of the month figuring out “will I buy some books, a new t shirt, some make up?” and then loved the time I spent shopping for them. Plus, it made me value and enjoy the few things I bought more than if I’d spent my usual hundreds of dollars a month on things I didn’t need.
Always Save Money First – Even when I was paying off debts, I still saved money every month. You never know when an emergency will strike or, if no emergencies, it’s money you can have in a fund to help make you financially secure. For me, because my debts were huge, I only saved 5% of my income, but that 5% was still $200 a month. Once I had $1,000 saved, I would use $500 of it to pay off part of a credit card balance then, continue to save. That way, I always had money in a savings account for emergencies, but also used it to help pay off debt when it got to a certain balance.
With just these five tips, if you’re strict and don’t cheat, you can be financially secure by the end of 2011. In fact, it’s kind of fun, like a game, to work out spending habits and to budget. It also makes you feel like, for the first time, you are the one in charge of your life. And that’s a wonderful feeling.