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TRACK EXPENSES
First Oden began documenting every penny she spent. Once she realized she was spending a large amount of money on books, she started frequenting the library. She also learned that her habit of making impulse purchases and not planning for expenses like car maintenance, vacations and doctor's appointments led to her pulling out a credit card to pick up the slack.
PLAN SPENDING
Once she knew exactly how much she was spending, Oden created a spending plan in which she set aside a certain amount each month for the unexpected and for larger purchases she wanted to make throughout the year. She also stopped making impulse purchases unless she had extra money in her budget to cover them. "Whenever I'm tempted, I think about the impact that spending could have on my situation," she says.
TARGET DEBT
Oden used a software program to determine how long it would take to get out of debt. Each month she posted the debt totals on the wall, along with target dates for paying them off. "I'm more motivated to see the debt go down, not to see it go up," Oden says. Since she started the plan, she has shaved off about $5,000 from her debt and manages to save an additional $100 per month. She has also applied her new financial habits to developing her business, Solutions 4 Life. "If I blow money in my personal life, I'll blow money in my business," she says.
As Oden discovered, changing your financial future is a matter of adjusting your mind-set. Once you decide to make a change, you're only a few steps away from beginning to create wealth. Here's how you can do it:
10 TIPS TO ACT ON NOW!
ADMIT YOU HAVE A PROBLEM.
"It's really easy to see you need help when your checkbook says zero and you still have a pile of bills," says Christopher M. Pirtle, a financial planner from Peake Financial Group in Silver Spring, Maryland. However, if you're struggling to make your mortgage payments or you're living paycheck to paycheck, you need help. Invest in some sessions with a financial planner or read as much about money management as you can.
PERSONALIZE YOUR SPENDING PLAN.
Figure out where your money is going and where you want it to go. Write down all of your daily expenditures, then create a spending plan that reflects your personal values. First decide how much you have to spend each month, then list all the necessities such as mortgage or rent, utilities and loan payments. If there is money remaining, decide how much will be designated for the extras, paying particular attention to those items that mean most to you. "I have clients who say, 'I've got to go to the movies at least twice a month,'" says Fulbright. "They have planned for that in their budget."
USE FINANCIAL SOFTWARE.
You don't have to figure it al out n your head. "Get financial software so you car track your expenses and budget and do it on a monthly basis," says Pirtle. "You should be able to generate a personal profit-and-loss statement each month."
DUMP THE DEBT.
"It's very sexy to talk about investments but if you are loaded Gown with debt and haven't tackled that first, you may start an investment program and have to tap into it because you don't nave an emergency fund." says Vicki Brackens. a MetLife financial planner in Syracuse, New York. Choose one debt to focus on and make minimum payments on the rest. If you focus on the debt that carries the highest interest rate. you'll pay less in overall interest charges, but if you tackle the smallest one first you'll get a psychological lift from paying off a bill in its entirety sooner.
SET SHORT-TERM MEASURABLE GOALS.
"You need to break your objective down into a manageable time period." says Brackens. "For example. 'Over the next three months. I want to pay off my Sears card.' " Once you've achieved that goal set another one. That way you'll know right away whether your clan s working or not, and by achieving goals quickly, you are more energized to continue working your financial plan.
DELAY GRATIFICATION.
Put purchases off until you have the cash available in your budget to pay for them. "It's very simple to charge," says Fulbright. "Many people pull out a charge card as opposed to saying, 'Do I need this item right now, or can I wait until next month?'"