Once I made the decision to move out on my own a few years ago, I had to stretch my paycheck in order to pay for all of my bills. I had to pull up my adult bootstraps and pay for rent, food, utilities, student loans, credit card, car expenses and yes, my social life. I used retail therapy as a way to run up my credit card balances and I continued to go out with my friends when I should have stayed home. Restaurant visits, coffee dates, nail salon visits, and vacations. You name it and it was on my agenda. During this time in my life, I was terrified to log into my bank account and look at the available balance. I was scared to face the reality of my financial situation. It was much easier to throw out my bank statements when they came in and not pay attention to where all my money was going. In hindsight, I realize that I was being foolish because I was not taking care of the real issue at hand.
Like many Americans, I feared the truth about my spending habits. All the frivolous spending was catching up to me and I always feared that my account would be overdrawn. Whenever I thought my balance was getting too low in my checking account, I would pull out one of my credit cards and place the expense there instead. Credit card debt in the U.S. has accumulated to an all time high of $1 trillion. I knew that I had to attack this debt and fast.
The fact that I was fearful for the state of my finances was enough for me to want to change what I was doing. I realized that I owed it to myself to make wiser financial decisions. At one point in time, I felt that I deserved nice things, to pamper myself and to go away on nice vacations. Ultimately, what I deserved was to feel financially stable and to be free of the chains of debt.
If you feel like you are struggling financially then it’s critical that you take back control and know exactly where your money is going. In order to do this, I have listed six easy steps below to regain control and be on your way towards financial freedom.
Face Your Truth
The only way you will truly know how much debt you are in is to find out the exact number. You will need to open up those bank statements, check your credit card balance and log onto the student loan website in order to find the total amount due. Once you have this figure write it all down. The number might startle you or it might not be as bad as you thought. Either way, you now know and can move forward from this point.
Once I became serious about paying off my debt I created a budget and it has been one of the reasons why I was able to become debt free. You have to know where your money is going otherwise you will never be fully in control of your finances. Having a budget will allow you to see how much you are paying for everything and then you can find areas where you can cut expenses. Take a moment to think about all the bills you pay for extras such as cable, internet and cell phone service. Are you able to call up your service provider and get a discount?
I recommend you pay the essential bills that will keep a roof over your head, your utilities on and food in the fridge. After these bills are paid, then you can make payments towards your debt. You can pay off the debt by attacking the smallest debt first or the one with the highest interest rate. Choose a plan that works for you. The key is to pay off your debts as quickly as possible.
This moment in your life is not forever. The harder you work now to pay off your debts, the brighter your future will be. There might be times on this journey when you compare your situation to others and get down on yourself. Try not to compare your journey to the next person’s. People only show you want they want you to see. Remember why you started to pay off debt and allow that to help you through the tough moments.
Start Saying No
You can no longer make every social outing, go on all these vacations, continue to go out to eat and shop mindlessly. You might be worried that by the end of this you may no longer have any friends if you continue to say no, but your real friends will understand. You have to remember your priorities and that includes being debt free. So minimize your frivolous spending and keep an eye on the prize.
Find an Accountability Partner
Find someone that you trust and will support you along this journey. It can be a spouse, a sibling, parent, best friend, co-worker, fellow blogger – anyone you feel you can confide in and will keep you in check. It’s hard to be on this debt-free journey without someone who will continue to cheer you on when times get tough. Surround yourself with positive and encouraging individuals. Tell them about your wins, but don’t forget to tell them about your failures. You might motivate them to want to get their finances in control too.
If you have ever felt scared about your finances, today is the day to turn that around. Log into your bank account and take a hard look at where your money is going. It’s time to face your truth. Are you shocked at anything on your bank account? Notice any areas that you can spend less? Now grab that pen and paper and create a solid budget. Or get a fancy with it and release your inner spreadsheet nerd.