Mistakes That Can Cost You Financial Freedom
you struggling to get ahead financially? Are your debts
constantly piling up? Maybe you're making some of these
mistakes unknowingly. These mistakes listed below will
help you understand where you may be going wrong and
how to get back on track quickly - helping you towards
your goal of becoming debt free.
1. Living Beyond Your Means
is the real cause of your worry and stress. If you are
spending more than you are earning, whose money are
you spending? It's the credit card provider's or the
bank's. The cost of this money is interest.
way out - Make a commitment to yourself only to spend
within your income limits. Maybe you could increase
your income (or cash in) by applying for more skilled
positions, selling some of your unused articles or assets.
Is the second car really a necessity? What about working
out ways to make your hobby pay for itself?
not find ways to reduce your spending? How much would
you save each year if you decided not to have the daily
coffee shop coffee? Why not make your work lunch each
day rather than buying it? Commit to only buying the
2. Paying Off Less Than the Full Credit
Card Balance Each Month
this debt under control and your life will be much easier.
If you are like many others and only pay the minimum
balance each month, the interest on the interest makes
those purchases so expensive.
way out - Find ways to put aside more money to apply
to the credit cards. It will take time to reach this
goal. However, if you don't make a start now you may
never pay them off. This situation did not occur overnight
and neither will the solution. But, by diligence and
commitment you'll get there.
3. Not Really Knowing Your Financial Situation
you can set meaningful goals and develop savings strategies
you need to know your financial situation now. The best,
proven and tested method by far, is by developing your
own personal budget. This is not hard to do. Just follow
these simple steps:
way out -
a)Find your latest credit
card statements. Write down all the unpaid balances.
b)Are there any other unpaid debts (not home or car)
then include these balances as well.
c)List out your (or family) monthly income. Only the
amounts "brought home". Include all types
d) Work out your monthly spending. List out where all
the money goes. Don't leave anything out.
e) Minus the monthly spending total from the monthly
income total and review the answer.
This will give you an initial idea as to whether you
are living within your means or on borrowed money.
4. Continually Adding to Your Debt
debt has got you into this situation it is critically
important not to add to the state of affairs and thus
make it worse.
way out - cut up the credit cards, keeping only 1 for
emergencies, or transfer
to a better credit card deal to reduce the interest
payments. Don't buy on impulse. Ask yourself twice or
three times before you buy anything "Do I really
need this?" before you hand over your hard-earned
money. Don't buy at the height of the fashion or fad.
Commit to never paying full retail for anything. Get
it on sale or negotiate a lower price.
5. Spending All Your Income
may sound OK to spend any money you earn but there are
risks attached to this strategy. How are you going to
pay for emergency items? What about major car repairs.
What about major electrical appliance replacement? Are
you going to pay for these on credit? How are you going
to save for a substantial deposit on the next car?
way out - Once you've prepared your budget you will
clearly see what you need to do to put some income aside
for other needs such are emergencies and repairs.
6. Spending Without Caring About Your Future
should be planning for your future
and financial security. There are always worries
lurking in your mind about how you would survive in
a financial emergency if you have no savings.
It can be very rewarding to see how quickly your savings
multiply over time with only a small investment each
way out - Take stock of your life and realise that tomorrow
won't look after itself. It needs your attention. Keep
some funds aside to put away for your retirement,
children's education costs, emergencies, holidays
and major purchases.
these 6 spending mistakes and you'll be well on your
way to financial freedom.
- The Consumers' Advocate.
Author: B. Hokin