Three Steps to Changing Your Financial Future
GET DEFIANT ABOUT DEBT!
“The borrower is slave to the lender.” So says the best-selling book in the world, the Bible. Isn’t that truth?! According to Federal Reserve statistics, the average indebted household has $16,140 in credit card debt. If a household only paid the minimum payments on that each month, they would essentially never pay it off. The new year of 2016 is a great time to deal with your debt! It is not easy, but it is possible and is really the only way to have financial freedom.
Why do we choose to burden ourselves with debt? Ron Blue (MasterYourMoney.com) says, “Some of the more common issues that lead to credit card debt include a lack of contentment, a lack of self-discipline, the search for security and the search for significance.”
So let’s deal with debt! Dave Ramsey suggests using the “debt snowball.” That involves listing all of your debts (except your mortgage) from smallest to largest and beginning to pay them off one by one. Pay minimum payments on all but the smallest debt. Sell things, work an extra job, do whatever you have to do to pay it off as quickly as possible. That gets your momentum going! Once you celebrate paying off that first one, add that money to the next one and keep going! (And, by the way, get rid of those cards and refuse to go into debt ever again!)
Defy your debt in 2016! You will feel such relief to no longer be ruled by debt. It may be a long journey, but the reward of financial freedom is well worth it!
GET BOLD ABOUT BUDGETING!
Most people’s initial response to the idea of budgeting is “UGH!” But it really is a positive thing that can change your finances and your life!
Budgeting is simply “telling your money where to go instead of wondering where it went.” It is making a plan for your money, so YOU are controlling it, rather than its controlling you.
Budgeting is a learning process. Dave Ramsey describes it as “spending all your money on paper, on purpose, at the beginning of the month.” You can access information on exactly how to make a budget at DaveRamsey.com, MasterYourMoney.com or Crown.org. Another great resource is EveryDollar.com, where you can create and revise budgets for free.
This is the year to boldly budget so you can make progress toward financial peace!
GET SERIOUS ABOUT SAVING!
Friends, we HAVE to be saving. According to polls, one third of Americans have absolutely no emergency savings. So if there is a job loss or crisis, it’s back to the credit cards or worse—advances from payday lenders whose objective is to trap people in a cycle of debt.
Monthly saving is crucial, even if just the tiniest amount. A little savings per month can go a long way! Ideally we save in three areas: emergency fund, allocated savings and retirement.
Your first step is to get $1,000 in the bank for emergencies. Have a garage sale, deliver pizza or do some childcare. Cut back on eating out, drop that daily coffee purchase and take your lunch to work. You can accomplish this first goal in a month if you are serious about saving!
Once you have accomplished that, you will ATTACK your debt, before returning to building your emergency fund. Check out “Five Ways to Grow an Emergency Fund” on Bankrate.com for more information.
Allocated savings is another important facet of saving. Expenses will arise for new appliances, a vacation, Christmas or a new computer. If we save for those things—even just a little—we will not get caught off guard and return to debt. My husband and I recently emptied out our “10th Anniversary” envelope to return to our honeymoon cabin, incurring no debt in the process, because we had saved.
And, finally, the third area of savings: retirement. According to the Motley Fool, Americans who save have median retirement savings of less than $60,000. Yikes! That is scary. This is an area in which I personally need to learn and grow. I encourage you to join me in reading Chris Hogan’s new book, Retire Inspired, to get motivated and educated about saving for retirement.
Defy debt. Boldly budget. Seriously save. Those three things may seem too difficult or even impossible to some, but I encourage you to at least accomplish these two baby steps in 2016: Stop accumulating debt and save that initial $1,000 emergency fund. Just those two steps will get you started in a new direction. You can do it!!! Dave Ramsey says, “You must have a game plan. If you aim at nothing, you will hit it every time.” In 2016, let’s make a game plan for our finances!
Shawnee music educator Tori Walker aspires to work for Dave Ramsey and blogs at Mom-in-Progress.com.