From Deficit to Neutral
Knowing your financial status is the most critical stage on your journey to proper financial management. From last week we learned that deficit is where your monthly expenses far exceeds your total income and hence you either have to borrow or you consistently live an impoverished life at the latter end of the month.
More often than not anyone who is in a deficit financial status stage has debt and poor financial habits. The focus of today's post is to help you get out of deficit and step unto the level of neutral. Here are a few guidelines.
Draw a budget and list your expenses
The first step towards getting out of deficit is to calculate exactly by how much you overspend your income by listing every single thing you purchase in a small journal. Add up all your purchases and expenses and compare it with your total income.
For guidelines on how to draw a simple budget, refer to my post on budgets.
Be frugal
After you get an idea of exactly how much difference there is, the next step is to initiate a SUPER FRUGAL living plan.
Take the expenses list you made earlier and go to work on it. Group the items into three segments. They are needs, wants and luxuries. Now this is the place where extreme discipline and commitment to a better financial future must be at its strongest. Needs will be the bare necessities, wants will be the little comforts and luxuries will be cut off. Remember, you need to be as merciless as possible in order to remove the luxuries out of your life. This will save some cost and reduce your expenditure.
Do this gradually and progressively until you are able to reduce your expenditure to the level of your income.
Remember this is not going to be a comfortable journey but the destination is worthwhile.
For a lot more ways to reduce your expenditure and save money, get my book SMART MONEY.
Dave Ramsey said, " begin to live as nobody will, so that you can live like nobody can.
...........to be continued.
Knowing your financial status is the most critical stage on your journey to proper financial management. From last week we learned that deficit is where your monthly expenses far exceeds your total income and hence you either have to borrow or you consistently live an impoverished life at the latter end of the month.
More often than not anyone who is in a deficit financial status stage has debt and poor financial habits. The focus of today's post is to help you get out of deficit and step unto the level of neutral. Here are a few guidelines.
Draw a budget and list your expenses
The first step towards getting out of deficit is to calculate exactly by how much you overspend your income by listing every single thing you purchase in a small journal. Add up all your purchases and expenses and compare it with your total income.
For guidelines on how to draw a simple budget, refer to my post on budgets.
Be frugal
After you get an idea of exactly how much difference there is, the next step is to initiate a SUPER FRUGAL living plan.
Take the expenses list you made earlier and go to work on it. Group the items into three segments. They are needs, wants and luxuries. Now this is the place where extreme discipline and commitment to a better financial future must be at its strongest. Needs will be the bare necessities, wants will be the little comforts and luxuries will be cut off. Remember, you need to be as merciless as possible in order to remove the luxuries out of your life. This will save some cost and reduce your expenditure.
Do this gradually and progressively until you are able to reduce your expenditure to the level of your income.
Remember this is not going to be a comfortable journey but the destination is worthwhile.
For a lot more ways to reduce your expenditure and save money, get my book SMART MONEY.
Dave Ramsey said, " begin to live as nobody will, so that you can live like nobody can.
...........to be continued.
The world of finances can be confusing for people who are new in it. There for they need to obtain experience and the best way to do it is to take some advices from the ones that have already established themselves as professionals.
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