Perhaps the most distressing reality I ever faced was sorting through my bills one December. I noticed that the CREDIT CARD I always did my Christmas shopping on still had a $2000 balance. How could that be when I hadn’t charged on it for a year? Plus, I had only charged $1200 of gifts and expenses on it. This looming, ghostly shadow of DEBT was collecting webs of fees and finance charges that followed me year after year! What secret path could I follow to escape DEBT VALLEY and never go back? Start Saving!
With all the bustle of holiday spending, businesses making severe cuts to keep doors open, people working every hour to keep their jobs, fears of falling off a Fiscal Cliff…who can really pay attention to how much DEBT we owe? It isn’t like we can ever pay everything off! Much less expect to grow a SAVINGS Account. Had I really been that financially clueless as to what money I owed? Yes! Remember, that was several years ago. I decided to get brutally honest with myself and NOT spend money I did not have, even worse, money I was going to be making a year from now!
Many consumers are in Debt Valley, circling a financial desert hoping money will miraculously drop from the sky to cover monthly obligations. The only path out of the desert is to simply SPEND LESS THAN YOU EARN. Not exciting, and certainly less enticing. Spending less than we earn automatically creates a cushion for Saving.
How can we even afford to think of saving money now? To the contrary, HOW can we afford NOT to think of saving money now? Let’s redefine “Saving.” Our culture has taught Savings backward from a consumer’s perspective. First, we pay all our bills, obligations, and buy gizmos. IF there is anything left over, we slip it into a savings account. We let everything squeaking at us take our money first. The squeaky wheel gets the oil. Something is always distracting us enough to pull our last dollar to meet its appetite. We leave with our pockets empty and more in debt every month. As consumers, we are enticed more toward the glamour of ownership than self-denial. We cave in to credit card temptations just to be able to say “I HAVE one of those.” In reality, we do NOT have them, they HAVE us. Check your next Credit Card statement. Unless there is a ZERO balance, your purchases still belong to the Bank. How do we Reverse the Curse of Debt where The Squeaky Bank gets the GOLD!
CHANGE POSITIONS, CHANGE PERSPECTIVE!
1. First step: Promote yourself from Consumer to Producer. You no longer will be making purchases. Your job will be finding every job and loose dollar and directing it to Paying your Savings, FIRST! This means you have to PAY SAVINGS out of your income before any other money. Think of it as Direct Deposit of your paycheck right into the Savings Fund. Require that you maintain a certain monthly balance. Only designated, priority expenses may pull from that fund: mortgage, auto, utility, secured and unsecured bills. Only a predetermined dollar amount on monthly groceries and necessities should be extracted.
2. Hire yourself as Finance Manager for your household. Who should know better than you where your money goes? Your job description is to:
- Monitor Cash Flow in and out daily, weekly, monthly, annually (Income vs Expense)
- Predict changes in spending for short and long term strategies (Clothing, seasonal activity fees)
- Set financial guidelines that reduce household financial risks. (Dollar limits)
- Establish strategies for cost reduction of overall spending patterns (Eliminate wasteful spending)
- Analyze cultural impact and financial influences (Purchases contrary to values)
- Forecast Financial benefits of successful spending. (Every Dollar On Purpose)
Basically, establish and keep a realistic spending plan, or budget. Thinking of ourselves as Producers rather than Consumers places us in command of our money. We “Pay Ourselves First!” With our hard-earned money safely deposited in an account behind a pre-determined limit, we’ll not be so quick to spend it. Couple that with the GPS-Goal Powered Spending plan for Every Dollar On Purpose, very little of our savings will Leak out into frivolous payment plans. Keeping a Future Goal posted in sight will help us remember the value of delayed gratification. Remember the Golden Rule?
He who has the Gold, RULES!
For a solid, step by step system read this link for “Managing your way OUT of Debt.”
Here is a sample Statement to show charges, balances, monthly finance charges, and the “Deceptive” Minimum monthly payment!”