Famed billionaire investor Warren Buffett once said that if you find yourself in a hole, the first thing you must do is to “stop digging.” It may sound basic, but every day, people with massive amounts of consumer debt continue to dig themselves deeper into the red by spending as if there’s no tomorrow. If you know you’ve been over-spending, you must vow to end negative spending habits. This is crucial to fixing your finances. Let me put it another way: if you’re serious about chucking your credit card debt, you have to put an end to frivolous or excessive spending – starting today!
So many of us tend to make empty promises to ourselves and others: promises that we’ll spend less and save more; promises that next year we’ll get our act together; promises that with the next promotion or the next bonus or the next money that comes in we’ll make good use of that cash – anything related to whipping our finances into shape. It especially happens at the beginning of the year. Have you ever made a New Year’s resolution concerning your finances? More to the point, if you have such a resolution going forward, chances are you’ll need all the help you can get to stay on track. The December holiday season is the time of year that many of us tend to overspend – leaving us with big credit card bills, and the equivalent of a shopper’s hangover that lasts well into the following year.
For those of you determined to better manage your money, you don’t have to live a life of deprivation in order to get into the black. The best way to turn your financial resolutions into lasting changes is to take some concrete steps that won’t cramp your style, but will definitely improve your personal finances.
Here are some ways you can do just that:
- Create a realistic financial plan
A proper financial plan provides you with a snapshot of where you are today – in terms of assets and liabilities, and your current cash flow. It also outlines your short-, medium- and long-term goals, such as saving for a down payment on a house or taking a dream vacation. Finally, a well crafted financial plan should include a number of “must do” items, such as you must start contributing to your IRA or you must pay off your Visa bill.
Don’t make the mistake of thinking “If only I could stay out of the mall, I could get my finances under control.” Staying out of the mall may be necessary for you die-hard shoppers who need to change your surroundings and avoid too much temptation. But getting your finances in order is not necessarily, and certainly not exclusively, about will power. It’s about creating such an awesome plan of action that you don’t want to deviate from it because you can clearly see all the benefits of having a financially sound household. After all, which of the following circumstances is most appealing? Scenario #1, in which you and your spouse are always bickering about money and you have to live paycheck to paycheck, or Scenario #2, in which you’ve lived within your means, and your money squabbles all but disappear? When you need motivation, remember that by sticking to your resolutions, especially your newly-created financial plan, you’ll not only save yourself big bucks, you’ll ultimately have financial freedom, and far less worries and stress about money.
- Make this money resolution: “Before I buy something, I will think about why I’m spending. I will spend money only for the right reasons.”
Next – Day 2 Make a resolution to “stop digging.” (Part 2)
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