How would you feel if you were to wake up tomorrow morning knowing that you were financially independent – that you had enough money in savings to weather any emergency, that you were building a nice retirement fund and that you had zero debts? My guess is that you would feel pretty darn good. None of this is impossible but it all starts with developing a budget.
Why a budget is critical
It’s easy to get spooked by the word budget because it has such a bad connotation. When you hear the word budget you may think “financial straitjacket”. Plus, sticking to a budget takes a lot of work. But you shouldn’t think of a budget as a negative. You should think of it as a plan for managing your finances and eventually becoming financially independent.
Every little penny
The first step in creating a budget is to track all of your spending right down to the penny. This should include both your fixed and variable expenses. Fixed expenses would be your mortgage or rental payment, your car payment and any other payment you are required to make every month. All your other expenses would be variable as they would change from week to week or month to month.
Divide your spending in the categories
Once you know where your money is going in general, you need to determine where it is going specifically. You do this by dividing it into categories. This could include transportation, food, entertainment, medical expenses, clothing, transportation, housing, and debt repayment and last but certainly not least, savings.
The next and probably most critical step is to carefully review each of your categories and start chopping. Of course, you won’t be able to do much about your fixed expenses because they are, well, fixed. However, every other category should be open to cuts. You should be able to easily cut the amount of money you’re spending on food, clothing and entertainment. I have seen examples of where families have been able to cut their spending on food by as much as 50% simply by using coupons and taking advantage of special store offers such as BOGOs (buy one, get one). You might be able to cut your entertainment costs simply by eating out less, by going to fewer movies or by staying away from those clubs. And, believe it or not, you should even be able to cut your transportation costs by ridesharing, carpooling or using public transportation several times a week.
Sticking to that budget
If you find you’re having a hard time sticking to your budget, there are several things you can do that could make it easier. Some families have found that they can turn budgeting into a game. They set goals for the week such as keeping their grocery spending to $100 and then have a celebration when they meet those goals. You could give prizes to family members for coming up with the best suggestions for cutting costs and staying on budget. And be sure to reward yourself periodically for staying on budget. This doesn’t have to be anything lavish. It could just be a family night at the movies or a new movie on DVD.
Dealing with debt
While you might think of your debt as a fixed expense, it is not. We could consolidate your debts through a program of debt settlement that would save you thousands of dollars. Once we have settled all your unsecured debts, we would provide you with an affordable payment plan that would be much less than the total of your current monthly payments. In fact, your monthly payment to us would probably be hundreds of dollars less than the total of your current monthly payments. Call us today or fill in the form you’ll find on this page to get more information about debt consolidation done through debt settlement.
Develop a budget, get your spending under control, reduce or eliminate your debts and before you know it you will be enjoying financial independence.
I am an associate at National Debt Relief, which is a Debt Consolidation Company that has helped thousands of Americans facing credit card debt problems. We help with debt settlement, debt management, and other debt related financial crisis' facing consum