Debt does not respect your gender, race/ethnicity, age, status, religion, or socioeconomic position. Debt will attack and consume any man, woman, Latino, German, young, mature, single, widowed, Catholic, Hindu, upper-class, or lower-class person that allows it.
Being female, black, 30-ish, divorced, Protestant, and of the questionable-class, I was not exempt from the attack of debt!
...more than three years later, I am blessed to say that I've reached a "milestone" of debt-freedom! Translation --> my only remaining debts are student loans and mortgage.
Here's the journey I took that may benefit you...
1) Pay tithes no matter what.
I sincerely believe in the benefits and blessings associated with being a faithful tithe payer! Although it was tough at times, and through His help, I have never omitted paying tithes since I started my first job at the age of 15. I attribute my favor-filled life directly to obeying this statue, and nothing of myself! My Father/Pastor often reverses the slogan, "I can't afford to pay tithes," with "I can't afford not to pay tithes."
2) Make a budget.
You need to track a) what's coming in, b) what's going out, and c) what's coming up that may be infrequent (i.e. due annually versus monthly)! I have a homegrown Excel spreadsheet that does the trick, but there are a plethora of sophisticated tools you can use. Expenses on my spreadsheet are ordered by due date, which speeds up step 4.
3) Be continuously aware.
I monitor my primary account daily! It only takes 60 seconds to review online. The main purpose is to have an EXACT understanding of where I am financially. Relying on human memory or approximations is very risky! I know this may seem OCD-ish (which I definitely have), but your conscience typically won't let you overspend after viewing your fleeting balance within the same day.
Secondly, I have quickly disputed/resolved merchant errors that could have had a negative domino effect... had I waited to receive my monthly statement to verify transactions... which we usually shred or toss before reviewing.
4) Balance weekly.
I compare my budget (spreadsheet) to my actual activity (online banking) weekly! On the spreadsheet, I log "PD" next to items that have been paid, "SCHED" next to items that are scheduled (or mailed, if you still use stamps), or highlight the cell yellow if the payment has not yet been scheduled.
Very quickly, I'm able to see ALL monies accounted for. Translation --> spent but temporarily showing in the bank account. This my friends is the culprit of overdrawing your account!!!
NOTE: Considering only 32% of Americans have a budget, performing steps 2 - 4 is a major accomplishment!!! Keep going...
5) Look ahead.
I make note of expenses that will come due in upcoming months... ensuring I'm not caught off guard. This becomes particularly important when you need to carryover funds from month to month to cover larger, upcoming expenses (i.e. property taxes, tuition, childcare enrollment, etc.).
In my spreadsheet, I name each tab by month. I maintain the same format each month, but update due dates, amounts, and other information as applicable. I maintain a rolling, 3-month view into future months.
6) Prioritize payments.
This would ideally be done within step 2, but realistically it was too cumbersome to tackle early on. I had to get into a regular groove following steps 2 - 4 before tackling "prioritization". Hence, I will address this topic in a future blog entry :) Sorry guys, but I don't want to overwhelmed you!
7) Be committed.
Consistency and persistence is the key!
Do these steps require effort? Yes.
Do these steps seem mundane? Yes.
Do these steps appear to be rocket science? No.
In 2014, there were 909,812 non-business bankruptcy filings within the U.S. (includes chapter 7, 11, and 13). And in 2013, there were 1,038,720.
Do you have other magic steps to financial freedom? I'd love to hear from you!
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