Jack Canfield’s Success Principle #59
Spending too much can prevent us from achieving financial success. When our debts outweigh our savings, our focus turns to consumption, rather than wealth. Today, Jack provides some helpful tips for mastering our spending.
Keep track of expenses.
Recording every purchase in a notebook or on the computer for one month can be eye-opening. We may not think we’re over-spending, but this may reveal something surprising.
Joe and I did this a few years ago, and we discovered that we were spending a fortune on fast food and restaurants. While a dash through the drive-up window or Starbucks may not seem like a big purchase, all those little receipts can really add up over the course of a month, a year, or a lifetime.
Start paying cash for everything.
If we pay cash for everything, we become far more aware of the limitations of our stash. A debit card or credit card causes most people to overspend, because they have no clue what their balances are.
Joe and I began using Dave Ramsey’s envelope system a few years ago. It has given us control over our spending like nothing else has. The system is simple. Using My Total Money Makeover online, we figured out how much we make and budgeted how much we wanted to spend. Then, we created an envelope for each expense category, such as groceries and gas.
Now, I go to the bank once every week with a check made out for the amount of cash that we will need. The cash goes into each category’s envelope. If an opportunity to spend money comes up, and there’s no cash in the envelope, we don’t buy at that point.
Reduce the cost of your lifestyle.
We can live the type of lifestyle that we desire without paying top dollar for it. I recently bought some beautiful designer clothes at a Goodwill Boutique. It’s a second-hand shop that specializes in upscale goods. Our daughter goes to the opera, the ballet, and off-Broadway shows for just a few dollars with an Enjoy the Arts card that she paid $35 to obtain. We can all save more by shopping for discounts, using coupons, and buying many things second-hand.
Take steps now to become debt-free.
Jack suggests the following five steps for getting out of debt:
1) Stop borrowing money.
2) Don’t take out a home equity loan to pay off credit card debt.
3) Pay off your smallest debts first.
4) Slowly increase your debt payments.
5) Pay off your home mortgage early.
Cutting up every single credit card is crucial to getting out of debt. At the same time, saving for emergencies is a necessity. Otherwise, every time the furnace breaks or the car needs repairs, there is no cash on hand.
Dave Ramsey makes these same suggestions for reducing debt, but he recommends taking on an additional part-time job and creating what he calls a Debt Snowball.
We have been using the extra income Joe makes from a part-time job to pay off debts. With each small debt paid off, we take that payment and add it to what we’ve been paying to reduce the next bigger debt. In this way, the amount of money snowballs, until the cash available for debt pay-down is huge. We aren’t quite finished, but we’re getting closer to living debt-free.
As I mentioned yesterday, Dave Ramsey’s Financial Peace University is a great place to learn money management. Dave makes all of these suggestions and more. You can find a financial coach or class near you by going to www.mytotalmoneymakeover.com.
As with any lifestyle change, money management adjustments take perseverance. James 1: 12 (NIV) reminds us, Blessed is the man who perseveres under trial, because when he has stood the test, he will receive the crown of life that God has promised to those who love him. Having financial security is a blessing, and one that is worth pursuing in our quest to thrive.
Buy a notebook or set up a computer file to track every single expenditure. Begin noting everything that you spend money on, no matter how small it is. Save your receipts throughout the day and record them every night. Don’t wait until the end of a month to write down the expenditures. This will only leave you feeling overwhelmed. Pray for God’s guidance as you work hard to reduce your debts to achieve financial peace.