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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.
Explore Investing.
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.
Start saving.
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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-Xrayvsn
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Great post! Resonates with me in so many ways. It really is the small behaviors sometimes that make the biggest impact on our finances. The $100 saved a month example is a great example. $100 a month may seem like a lot but break it down into $50 every two weeks when you are paid and it’s feels even more manageable. At the end of the year that money you barely missed is now an extra $1200 in your savings. This is how I have had to trick myself into saving and I have to say saving money gets so… Read more »
Small behavioral changes start becoming habit and that is the key. Once you are used to it it becomes easier and easier to do so. Thank you for dropping by and commenting Andrea
I have said this many times but I think we are doing the world a disservice by not teaching these subjects in school. Looking back from the sober age of 42, I wish I had these lessons at 22, or even earlier. Now my folks were good examples for the most part, but there was a lot there they did not know. The very idea of early retirement never crossed my mind, but then I never thought about this age let alone 10 or 20 years from now. I say that thinking that the much higher college debt levels that… Read more »
Well said GenXFire. It floors me that finance is not part of a mandatory high school education and at the very least college. Some high schools are starting to implement it (I know my daughter’s private school includes it in the curriculum) but it is still not standard.
I never had any formal education in finance and because of it made a lot of mistakes. I was able to recover because of my income but a lot only have one shot to get it right and don’t.
I totally agree, GenXFIRE. The financial education I had in grade school was a competition to see who could make the most money trading stocks over a 30 day time period. (We used newspapers, old school.)
If this is the financial education, we’re better off without it.
Now only if we could have the FIRE community create a curriculum. That would be something I could get behind. Budgeting basics, saving, and investing. What a different nation we’d have!
— TDD
That’s funny DD. I was in a gifted program and we had the stock game as well in that class. Started out with 10k and at end of the month see who made the most. I actually made a killing by putting it in penny stocks (not a strategy I would do now. Lol). I think I ended up with $350k in 30 days and this was on the early 80s
we had the exact same thing. in my case, it was in the 8th grade and we were learning about the 29 crash. this was a history class, so there was not enough about the rest of this.
what I can promise is that I will teach my son all of this, and try to share it with my nephews and the like.
I am sure the next generation will be very appreciative. That’s the one thing the advent of the internet has done for a lot of people is the dissemination of good info (along with some bad ones too so you have to take everything with a grain of salt). But stuff like FIRE was unheard of in the past (and even if people practiced it it would be in localized pocket with no chance of spread like it does these days). Definitely interesting times. 🙂
Great point. Past results do not affect future results unless it comes to…. financial historical results haha. No matter how well you come out ahead by the end, you will at least be influenced by your past financial decisions.
Financial freedom gives choices and options for people. Great thing!
Well said. Having options is the biggest benefit of being financially free.