When it comes to stable finances and a debt free life any preconceived ideas about how things should be, as supposed to how they are, will be stumbling blocks. Having a happy and fulfilling life whilst living well within your means and saving prudently is achievable on more or less any income. This balanced way of living is arrived at by knowing your current situation and then making well considered changes to steer yourself free of debt and towards a better way of living.
If the way you live your life and spend money is not the result of clear decisions you have made then it is likely that your life will end up being something you are not happy with. What your expenses are, what you buy and how much you earn all form the end financial result. By changing aspects of your lifestyle you decide the outcome of not just your finances but how happy you are in life.
Without the process of choices being made you are trapped by the haphazard way you are living your life. You may also be unable to maintain a preferred course in life because every time something unexpected happens you are knocked off your feet. To begin the process of getting in control you need to know what your current situation is. Only by knowing this accurately can you see where action needs to be taken.
Compile an overview of your finances. Use bills and bank statements to list your incoming funds and expenses. Make a list of your debts and note the interest rates being paid on each balance. Take a note book around with you for a week or two and jot down all your cash purchases. When you put all this information together on paper or in a spreadsheet package you can see exactly what money you have and where it’s going.
The first large, positive and relatively painless step you can take is to identify and cut out wasteful spending. Many people assume that being financially secure means never having to think about what you spend. This preconceived idea about what it means to live free from financial worries is one which prevents people from achieving true financial security.
Wasting money drains your finances without giving you anything back. It may even be the case that your wasteful habits are masking other problems which are being left to fester and worsen. Making sure that your lifestyle isn’t a wasteful one will save you money and allow you to identify things about your life which are not ideal and improve them.
Examine all your purchases and identify any which were made as a result of loneliness, boredom, sadness or frustration. These purchases can all be cut out without detracting from your life. Take steps to counter the problems that pushed you to spend unnecessarily.
If you buy expensive clothes because you’re lacking in confidence then stop the shopping trips and address the problem directly. If you end up at the bar most nights of the week because you’re bored then think of ways to create a fuller life. If you feel unfulfilled ask yourself what you want from life and start working towards it.
Once you have addressed wasteful spending you can move on and address the next aspect of your lifestyle; your monthly expenses. Each month bills roll in; rent, grocery shopping, utilities and car payments. These expenses should fall well within your means to pay, i.e. your income. You should have plenty of money left over to save and pay back your debts. If this is not the case you have become trapped by your lifestyle.
Something that has made credit so popular and debt so common over the past few years is the prevalence of the idea that a lifestyle should be upgraded and expanded as far as a person’s finances and any credit they can get their hands on will allow. For a long time the idea that you can enjoy a lot for the consideration of a small monthly price tag was accepted by many people. The consequence of this course of action is that through interest payments the items bought are not just paid for once but over and over again.
Wanting to improve the way you live is not unreasonable but it’s important to make sure you go about it the right way. You need to be firmly in control of your lifestyle and upgrading the way you live should be the result of knowing for sure that you can afford to.
If your lifestyle outstrips your finances then you need to bring it down to size. Think about changing the location and size of your apartment or house to save money. Downsizing will also result in smaller utility bills.
Grocery shopping should be done with economy and not convenience in mind. Pick a cheaper store and buy according to a simple meal plan. Creating a grocery budget for each week and setting it aside is a great way to make sure you don’t spend more than you want to.
Another way you can adjust your lifestyle to get better finances is to increase your income. Overtime, a second job or doing some freelancing are all ways to bring in a little bit more money every month and shift your lifestyle to being earning rather than spending centred. Pledge to save something at least once a month. Even if you just put away a few dollars at a time the process of being aware of the interest you are earning, however small, will change the way you think about money.
Every month you undoubtedly use some of your money for entertainment and socialising. As much as we all like to enjoy ourselves it’s important to know that if you overspend in this area the only person you hurt is yourself. You will end up getting into more debt or running your finances down so low that you are faced with doing either very little or no socialising and going out.
Set yourself a budget for your fun money. Do this in consideration of the need to pay back debt. Once your debt is out of the way you might increase this budget a little bit and that can be something to inspire you to tow the line in the meantime.
Learn to assess upcoming events or purchases you want to make and choose one out of a selection rather than having everything. This prompts you to think about what is most important to you in life. When you do this often enough you realise that you can be happy doing less as long as what you do is what you want most.
Learning to adjust every aspect of your lifestyle in accordance with improving your finances is not just the key to preserving enough money to pay back debt, but to staying out of debt in the future. Make good choices about the way you live your life and it will get better all the time.