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I know there was more than one occasion when the amount of debt I had seemed overwhelming, to the point where I felt financially paralyzed.
[Although the highest official recorded debt I had was in 2009 topping in at almost $800k, I am pretty sure I was even worse off financially before my record keeping days.]
For the longest time I took the ostrich head in the sand approach for dealing with my spiraling out of control finances and just hoped it would go away.
Spoiler alert: it didn’t.
What I lacked was a financial game plan and that made my financial journey all the more circuitous than was necessary.
Emma Cook, who is a recent graduate and freelance writer, asked if I would be willing to put one of her articles on this very topic on my site and, after reading her submission, I was happy to do so.
It’s easy to feel overwhelmed when it comes to thinking about budgeting, debt, and personal finances.
In some cases, conversations about money are deemed taboo—a topic you don’t talk about, similar to politics or religion.
Many people have so much debt that it causes helpless feelings that override any positive action they’ve taken.
Whether you feel overwhelmed about where to start or have debt you don’t know how to get rid of, you can find a way to empower throughout your journey to financial freedom—here are a few things to get you started.
Understand your financial history and debt.
Just because you don’t acknowledge debt does not mean it isn’t there.
If you want to change your financial future you need to look at your financial past.
Take a look at your spending habits and what triggers overspending.
Are you a stress spender?
Did you not have anyone to teach you how to budget?
Were you raised in a home where you witnessed your parents careless spending and didn’t feel the impact until you picked up the same habits and were out on your own?
Change isn’t possible unless you pinpoint the source of the problem.
Almost everyone has some debt—it’s nothing to be ashamed of.
It’s important to have a clear grip on exactly how much debt you have. Keep track of what debts you have and the interest rates for each.
Try to prioritize the debt with higher interest rates and keep track of what you need to do month-to-month to get it behind you.
Track your spending.
You can’t make changes or work towards financial freedom if you don’t know where your money is going.
Track your spending, along with your income and recurring expenses to determine if you are making the right financial decisions.
Print your bank statements, download a budgeting app, use an Excel spreadsheet, or get out a pen and paper.
The important thing is to hold yourself accountable for everything you choose to purchase.
You may be surprised how much you are spending in certain categories and how much you can actually cut and save if you are just aware of where your money is going.
Investing is a powerful way to keep yourself secure for the future, especially when it is time to retire.
Maybe you want to create an income property.
Maybe you already have a home and you want to invest in an appliance protection plan to save money on last minute home repairs and maintenance.
Explore any type of safe and secure investment options available that will allow you to create an additional source of income for the future.
Once you have taken a look at your spending you may be surprised how much you can actually save by cutting in a few small areas.
Set up to save and invest the difference you discover automatically.
If you don’t see it in your checking account you won’t be tempted to spend it, and by automatically investing in yourself your money will be working for you and not against you.
Even if you can only start small, it’s incredible how much just $100 a month can grow for you over time.
If you have a 401k at work set up for a percentage to be automatically deducted and invested every paycheck.
Start small but start today so you will have a nest egg when you retire.
Set financial goals for 5 and 10 years out.
Set small goals at first, contributing to your 401k or saving each month for example.
But look to the future for your long-term goals and put a plan into action now to get there.
Are you just out of college?
Know that you will need to set up and be contributing to a 401k in the next five years.
In your late 20s?
Think about how the future will look if you decide to have children and add to your family.
Want to own a house?
Start saving now so when the time is right you will be financially prepared and ready.
Talk to a professional.
Many people don’t want to talk about their personal finances and don’t understand the importance of saving, investing, or budgeting.
Consider hiring a financial advisor to help you set goals and get on track.
Determine what financial freedom looks like to you.
You need to know what you are working towards, and having and writing down a plan and goals will help you achieve it.
Do you want to work for yourself?
Save enough to retire early?
Working towards that house with a yard and a white picket fence?
Want to be debt free in your life?
Determine what financial freedom looks like to you and start working towards it.
Author Bio: Emma Cook is a recent graduate and freelance writer taking time to explore her passions and expand her writing portfolio. Whether it’s home life, mental health, or seeking financial freedom, her goal is to empower others to live their fullest life and her strategy is writing.
If you would like to read some more of Emma’s work, please check out her growing writing portfolio.
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