How Controlling Your Expenses Can Lead to Financial Freedom

Financial freedom can be achieved through a combination of will power and an understanding of how you are going to achieve it. By doing some simple math and committing to stay within the guidelines that you will lay out for yourself, financial freedom will come to you instead of you looking for it month after month.

Without being too self critical, consider where your monthly income is spent. You don't want to hurt your own feelings at this point but you do want to consider whether you are spending your money wisely. If you expect financial freedom to come your way, you'll have to prioritize your expenses or, better put, take control of them.

Your first step is by living below your means. How are you supposed to figure out what your means are? Well, you have to determine your expenses on a weekly basis and make sure that there is still a positive number in your bank account after. Then leave whatever amount you still have in your bank account and build on it weekly but still purchase the necessities you'll need. This step can be sort of humbling to some people as they will have to give up some of the luxuries that they have become accustomed to. Without living below your means though, you'll never work towards your goal of financial freedom.

Next is having an active savings account. Active meaning money is going in every week and staying there to draw interest. Some would suggest 40% of your weekly income should be invested into the savings account but as little as 10% might be a more realistic number and a better goal to strive for. The actual percentage rate really depends on each individual. Remember though, that the more you can put into the savings account, the faster you can work towards your freedom. The savings account should only be considered for use for special circumstances such as a medical emergency, a child's college fund, investment or household emergency. Maybe your hot water heater finally gave up and you need to replace it. That would qualify for a savings account withdrawal. A new plasma television, on the other hand, can be lived without.

The last category to discuss is eliminating debt. Nothing will keep financial freedom from coming your way better than irresponsibly using credit. Having a dozen credit cards in your wallet, all maxed out, and paying the the monthly minimums is a sure way of keeping yourself locked up in debt. Take all of your credit cards out of your wallet and lay them on the table in front of you. Choose two or three that you'd like to keep, mainly the ones with the lowest interest rate and monthly fees. Cut the rest of them in half and dispose of the pieces in different trash cans to avoid identity theft. Now, place all of your monthly credit card statements in front of you. Pull the ones for the cards you decided to keep and set them aside. Once again, some would suggest paying down the card or cards with the highest interest rates your paying monthly. If you can afford to do that, proceed that way. If you can't, choose the one with the lowest amount of capital owed and start paying the minimum payment plus, at least, 10% of the capital owed. The next month you'll notice the interest came down as you paid on the capital. Once again pay the interest plus 10% of the capital and add in the difference in the interest charges. At the same time, you'll be paying on all of the other cards and when you get the first paid off, move onto the next. It won't be long and you'll find you'll be able to tackle two at a time and so on. This isn't a quick fix so be prepared to take it one month at a time but before you know it, you'll be able to pay down on the cards you wanted to keep and begin using them again. Just practice some responsibility when charging to them and you should be fine.

Using this three step process probably won't be easy to get used to if your lifestyle is used to alot of luxury items. But if you want success with your plan, you'll have to stick to your goals and commitments. Somewhere down the road, financial freedom will come your way. You won't have to look for it, you just have to commit to helping it find you.

*Financial Freedom - Take control of your expenses, Bizcoach.org