How do you Spend your Money?
The first step to achieving Debt Freedom is to control your spending. You need to spend less than you bring home. Becoming Debt Free isn’t Rocket Science and it isn’t easy. If you have debt, the only way you can pay it off is to pay towards the principle. If you just make the Minimum payments each month on your debt it will take a long, long, long time to be Debt Free. If you do not control your spending you will just keep creating more Debt. Managing your home finances is much like you if you owned your own business. If you have a Business you need to spend less than you bring in for sales or you could run out of money and go out of business.
National Personal Spending
The below percentages are from the US Department of Labor Bureau of Labor Statistics 2005 report. I have other percentages from other sources on personal spending. The report showed the following percentage of there Net Income.
Housing payments, repairs, furnishing, etc. - 25.9%
Utilities - 6.8%
Food at Home - 7.1%
Food eating out - 5.7%
Car Payments - 7.7%
Car Gas, Repairs, etc - 10.2%
Clothes - 4%
Health Care - 5.7%
Entertainment - 5.1%
Personal Insurance and Pensions - 11.2%
Donations - 3.6%
Personal Care and Misc - 7%
What are your expenses?
So how do your expenses compare to the above percentages? The first thing I suggest to my friends is to track your expenses. I have a form that I use, just contact me and I will e-mail it to you. I know everyone has different situations, so the above is just a starting point. The mail goal should be to get a control on our spending and then pay off our debt as soon as possible. Some people may have Kid Expenses, Pet Expenses, Child Care Expenses, Child Support Expenses, etc. I have seen many people have no idea that they were spending so much money. It is an eye opener.
Debt Freedom
Debt Freedom is a big step towards Financial Freedom. But controlling your spending isn’t easy. It won’t happen by just tracking it. We need to have goals and a plan. There may need to be hard decisions. Some people have had to cancel there Gym Membership, Cable, Internet, Cell Phone, etc. Some have tried to eat out less and go out less and stay in and rent a movie. Some people have had to get a second job for a while. Some people need support of a coach to help keep them on track. Things happen over time and the plan is always changing, for instance your car no longer runs and you need to go get a new car and have to get a loan. That will need to go into your budget and you will need to adjust some where else.
Married Spending Issues
Another advantage of having a coach to keep you on track is if you are married it is easier sometimes to have a third party giving suggestions. The third party only wants to help the couple reach the goal of getting debt free. Some spouses get offended if the other spouse tries talking about spending less and then problems in the relationship can start. Money is one of the leading factors to what lead to a divorce. When a third party is able to suggest that there needs to be changes, it is less personal and more planning and goal based.
I believe anything is possible, I believe anyone can reach Debt Freedom and Financial Freedom. But it does take work and not easy. Let me know your thoughts and ideas. Let me know your stories. I want to help others not worry about money. Have a great day.
Comments
i am hopping that with very hard work on Affiliate marketing, maybe i would be able to achieve Financial Freedom in 2 years time.::-
i dream about having financial freedom in the next 2 years or less`-;
i would like to attain my financial freedom before i reach the age of 30,:`
the thing is that financial freedom is sowehow difficulat to achieve and it requires a lot of work “
Well I definitely enjoyed reading it. This particular tip offered by you is actually quite useful with regard to correct planning.
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