Steps on How to be Financially Debt Free

Happy New Year 2010  Everyone.

After listing down my goals for new year 2010 about how to improve my family time.  I am thinking of how I can grow my finance or improve my money matters for this year.

Looking back 3 years ago when I was so much in debt and having problems with my finances. I can say that I have grown so much now.  I am now completely financially confident.  Free of debts on which I cannot pay.  Free of high interest rates (or should I say in our country what we called 5/6).  I have freed myself from all my debts.  I don't have to worry and spend sleepless nights thinking about how I will be able to pay all my debts.  The debts I had before almost broke my family apart (but that's another story). Now, I am so much financially in control.  Thus, I am so much in control of my LIFE.   But the path to freedom is not easy, it took me a lot of courage, patience, confidence, self control, willingness to learn and take effort, and prayers to be free from all of it.  

How did I do it?  Well, you must have a PLAN and plans have a series of steps.  The following could be some of the steps you could undertake to help you little by little to be financially in control.

1.  Evaluate your income and expenses.
Make a breakdown of your monthly income and expenses.  Compare your income vs. your expenses. 
Are your expenses higher than income?  Then, you need to do something about it.

2. Cut down your expenses.
Find a way where you can minimize your expenses.  Eliminate unnecessary expenses.  Stick to the basics.
Do not spend too much on food or other items that you can live without.  Focus on needs first then if you are financially free then you can focus on your wants.  If you could cut down on extra house bills such as cable or phone bills then do it. This might just be temporary.  Always remember your goal is to be financially free of debts so that you can be in financially control later on.  Take note - No pain, no gain.

3.  Allot a budget for payment of debts.
The key to being financially in control is no debt at all.  So, you must first pay all your debt (zero is the best). Allot more payment to your debts which give you higher interest. If you cannot pay all your debts now, pay it in a way you can afford but not so little that the interest would be more than the payment.  Meaning to say, pay more than the minimum amount required to pay.  Make a timeframe on when you will be able to pay all of your debts.  Month by month, create a system that will enable you to see how much you still have to pay and when you will have zero debt.  If you owe money from a person. Talk to that person or to your debtors if there is a way that they can reduce the interest. Tell them of your plan to pay and how much you can pay.

3.  Stick to your budget.
When you have establish your budget, stick to it.  Don't overspend.  Spend only what you have.  If you spend more on what you allot, you will be in big trouble. Stick to the payment of your debts because you have made a plan out of it.  This step will take a lot of self control.  Evaluate your budget every day or every week to see if you have followed it. You will have to be patient in making and reflecting about your list. This is an important part of your plan. Give some time for this because it will help you a lot. This will also remind you of your financial goal.  If in case you overspend, you have to adjust the other items in your budget. During the first few months that you are sticking to your plan,  you can make a list of your expenses every day on a notebook to see if it is effective then summarize the daily list into monthly list. 

4. Control your WANTS.
Focus on your needs.  Do not indulge yourself to a shopping spree if you are still in a big debt.  Control your wants.  Don't think now that you deserve it because your aim at this point in your life is to be free of debt.  You deserve to financially free and confident but first you must WORK on it.

5.  Buy items with discounts.
When you have made your list of things to buy, always look for items which offers discounts.  You can also cut some coupons of the items that are on your list. 


6. SAVE, SAVE AND SAVE.
If your budget would now allow you to save an certain amount then do it.  Open a savings account then later on invest on some certificate deposits.  This is the start of building your financial life.

7. Believe in yourself.
Believe that you are capable to be in control of your money.  Believe that you can change and improve your money affairs. Believe that you can be free from all debts and manage it well. 

8.  Prayers, prayers and prayers.
You might not believe this but the reason that I was able to continue my finance path is because I pray a lot.  I pray that I would be guided and would always make the right decision. I pray that I would be comforted from all my miseries and lighten my load.  I pray that our family would be blessed and protected.  I always pray that I would be financially blessed.  I could say it has really worked for me.  I believe in the power of  PRAYERS. It is really powerful.

The above steps are the basic steps to be free from any debts and improve your financial life. 
In my next blog, I can give some ideas on how to continue your path to financial freedom. 
This is just the beginning... Good Luck and May you be blessed always.