Steps to finanancial freedom
The first step in ensuring financial freedom is to have to first accept that indeed you are in a problematic state and commit to getting out of debt. You should be able to understand why it is important for you to get be financially sound. This is because the emotional commitment will allow for much needed discipline in sticking to the new way of life. Changing a lifestyle which seems comfortable for the benefit of the greater future is not easy. This requires sacrifices like cutting down on the lavish spending and this will definitely bring about some pain. You shouldn’t build a plan which is almost impossible to commit. A visual reminder can enhance this pursuit as it can help in the motivation. If you are saving towards a house, then go a step further and even get the picture of your goal. Put it even in your wallet to remind you whenever you are about to spend on.
List all your debts, balances, interest rates and minimum payment.
You need to have an accurate picture of how much you owe. Most people really don’t have a grasp of how much they are in debt till when they are far along. To know how long it will take to get out of debt you need to know how much the total amount is. List all the debts from the biggest to the smallest and tally the minimum payments so as to understand how much needs to be put up for paying the credit cards. Keep a tracker of this list and find joy when you reach a particular milestone.
Track down your spending
After making the initial resolve to pay up the debt, the next step is also crucial. You need to know what income you have and how its all spend. This will allow one to easily free up some of the money and aid in the repayments. Cut down on heavy spending and if possible reduce the monthly recurrent expenditure.
For substantial gain , look for big expenditures that are not aligned to your long term goals. Spending 300$ a month at Chipotle or Panera for work lunch is a big hit on your monthly income. Track down the wasteful recurrent expenditure. For instance the gym membership that you hardly attend. Possibly be practical and pay for per session. Also instead of buying expensive liqueur you can substitute for something cheap or even learn how to make your own mix. This will significantly reduce your wastage. Explore options for reducing expenditure through use of own home remedies for common issues instead of buying ready made packaged solutions which are usually expensive.
Come up with a reasonable budget.
Tally down all the income received per month and try to match to the expenses. Draft up the monthy income from the annual income. Come up with a monthly budget and if the necessary expenditure is more than 50% of the net income then it will be difficult to repay the debt in a faster way. This might prompt for further adjustments.