First Steps To Get Control Of Your Finances

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Start Today To Get Control Of Your Finances!

The first step to financial peace of mind and financial stability which leads to prosperity is to get control of your finances.

If you are like most people, you are spending money in ways that you are almost unaware of. If you needed to explain your current financial picture today to someone important like a banker the idea might send you into a cold sweat!

Don’t worry! You can take steps to get control of your finances and it can happen more quickly than you think. Once you really understand your money, then you can take steps to build a strong financial future!

Below is one method of getting your finances under control quickly. It’s the concept of a financial fast. This method is not for everyone but if you think it could work for you, it will put you in control of your spending very quickly.

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How a financial fast works

Cut out all expenses except those that you need to sustain life. I mean cut out literally, EVERYTHING. You can buy food and shelter. That’s it.

Otherwise, unless you have a debt obligation, or obligation that you have that you cannot get out of (things like insurance, medical & taxes), the expense goes. You can add it back in later. But for the time being, your job is to get rid of expenses, not see what you can keep.

It might take you up to a few weeks, or even a few months, to reset your spending habits in this way. The challenge is to stick with it for one to six months, or longer if you want to save more.

But before you do, ask yourself: Do I really need it? What are my alternatives? Can I make this purchase in a way that is more cost effective? Am I getting my money’s worth? What else could I do with that money if I don’t buy this item? Am I better off saving that money for something else later?

Give everything at least one day before you make a purchase, that way you have time to think about it.

Examples

Hair care:

I know of a person who spends over $500/month on hair care. Yikes! Who would do such a thing? To begin with I only spend about $150 a year on hair care, and yes, that includes haircuts. And I know that hair care can be done for much less.

Become a DIY (Do It Yourselfer).

What many people do is spend because either they can or they need to fill some time. Especially if you have time on your hands, do it yourself. About a month into my fast I ended up ripping everything out from under my sink, making more than a few trips to the hardware store, and fixed my garbage disposal myself. Was it messy and inconvenient? Yes. Was it a time suck? Yes. But I had only spent about $20 when all was said and done, and I felt a bit proud for fixing it myself (no manual or anything). What I saved was about $500

.- via About.com Money

Get Control of Your Finances in Small Steps

The Los Angeles Times interviewed Greg McBride, the chief financial analyst at Bankrate, and Jean Chatzky, the financial editor for NBC’s “Today” show and asked them to share some tips for getting personal spending and consumer debt under control. Here are some of their ideas.

Get a grip.

“Get a handle on the grand total,” McBride said, “How much [have] you put on the credit cards?”

Get real.

“Figure out how long it’s going to take you to dig out … and where you’ll be able to come up with the money,” Chatzky says.

Set reasonable spending and saving goals, and write them down.

“If you give yourself a goal that’s too ambitious,” Chatzky says, “it doesn’t happen, people get demoralized and the debt drags on.”

Consider dipping into your savings:

“The money in your savings account is earning max, 1%,” McBride says. “You’re paying a lot more [interest] on the credit cards. Knock out the credit card debt.”

And then commit to putting it all back.

“Outline how to replenish the savings,” McBride says. “How much can you set aside each pay period?”

Don’t blow it.

“The average tax refund is about $3,000,” Chatzky says. If you are expecting money back in April, consider paying off debt, investing, or saving for a personal goal.

Hustle.

Make extra money on the side to pay debt or save for goals. Think: freelance gig, EBay, Uber, Airbnb, garage sale, and in L.A., maybe movie extra? Be creative.
– via latimes.com

Which of these ideas appeal to you most as a way to get your financial picture under control?

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