Celebrate Freedom - From Debt: 10 Steps to Financial Freedom

Celebrate Freedom - From Debt: 10 Steps to Financial Freedom

With Independence Day as its iconic holiday, July is inextricably linked with the concept of freedom. While the month represents national liberty and a respite from the busy schedules of the school year, it provides an ideal opportunity to begin freeing yourself from the burden of financial trouble. The command to not spend more than you earn may sometimes be easier said than done. If you are struggling to keep your financial cushion inflated, consider implementing some of the following 10 steps:

1. Pay with cash whenever possible and cut up nonessential credit cards. Shopping with credit cards may give you an inflated sense of your budget. You may need to be strict with yourself about spending and limit the frequency with which you shop or dine out, but financial security will be a much greater reward than your daily latte.

2. Eliminate credit card and other interest-accruing debts as soon as possible. Once you have caught up with your debts, start amassing a savings. When many people receive a paycheck, they devote it to paying bills, purchasing essentials, and indulging in leisure activities. However, if you immediately channel ten to twenty percent of your paycheck into a savings account, you are less likely to use it for expenses that could live without. Even if you are unable to save ten percent of your income, any amount, however insignificant, that you can afford to save will steadily begin to accumulate.

3. Stay informed about interest rate fluctuations and look for opportunities to refinance loans .

4. Keep a meticulous record of all of your expenditures. While this task may seem daunting, it is the best way to give yourself a clear picture of how much you are actually spending. Use the information to develop a realistic budget to which you adhere religiously. 5. Embrace the power of coupons and do not be afraid to ask for discounts. Small savings will add up, and you may be surprised by how many vendors will be willing to negotiate their rates.

5. Stay Busy. You probably noticed that you will spend more money if you are going to the mall just because you are bored. Or browsing online stores on the internet. Try to have a hobby, or ho to the gym, or cook something at home instead of spending money on something that you do not need.

6. Create additional sources of income. Sometimes it's not easy to simply increase your income at your day job. So think of some of you additional skills? Can you photograph? Are you a musician? Can you tutor kids? Can you sell on ebay? Can you write blogs for someone? The possibilities are endless, you just need to brainstorm a little

7. Make it automatic. Set up automatic withdrawals from your account for utilities, car payments, HOA and other recurring payments. This way you don't have to stress out every month about give your money away. You won't even notice it if it's automatically withdrawn from your account.

8. Avoid paying fees if possible. Make sure you are paying your bills on time. There's no point in paying additional fees and interest. Also, look at other options where you can save on fees: ATM withdrawals. Either look for your own bank ATM or just take cash with you in advance if needed. Buying concert or movie tickets in advance online can save you some good dollars. It might be just a few bucks, but if you add them in the end of the year you can have a very nice sum of money.

9. Make a budget. You don't have to pay hundreds of dollars for a complicated software. Just use www.mint.com for example. Or simply write down all your monthly spending on an Excel spreadsheet. At the end of each month look at your spending and were your money is going to the most. This will help you to buy thing more consciously next time.

10. Always pay more than your minimum payment towards your debt. If you only pay a minimum amount you will grow old before you pay it off. For example if you have a $1,000 debt on your credit card with an APR at 18%, it will take you 13 years (!!!) to pay it off. And your total interest amount will be at $1,115.41. This is more than you even borrowed. Imagine how much worse it can be with larger loans.

Hope the above 10 steps will help you get rid of your debt and celebrate freedom - from debt!