Stop Living Paycheck To Paycheck

paycheck to paycheckI ran across a great article written by Mary Beth Storjohann at Workable Wealth, about breaking the cycle of living paycheck to paycheck.  In the article, an estimated 1/3 of all US households are living paycheck to paycheck.  It’s pretty scary, but very easy to see and/or understand why.

People, especially middle-class workers, continue to live right up to their means.  What’s worse is, most also continue to rack up debt in the process.  Once the debt overcomes them, they have an incredibly hard time ever getting ahead.

I remember these days myself and that’s why I enjoyed reading her article because it reminded me of all the things I actually did right to get myself out of the hole and ahead for good.  Take a look at her article HERE.  Follow these simple, easy to understand guidelines and stop living paycheck to paycheck for good!

Check out other related blogs on my site at Middleclasssuccess.com

 

 

 

 

No Pets = Lots of Extra Cash

dogs and moneyFor all you animal lovers I don’t want to sound harsh, because in all reality I really do enjoy pets myself.  Outside of the companionship they bring, the truth is, most are expensive to own and maintain.  I didn’t really see this until after I’ve lived without a pet for several years now.

Most of my life I’ve owned a dog.   Although I really love dogs, now that I haven’t had one (or any other pet) for about seven years now, I’ve seen some huge savings in the process.  Food, vaccinations, vet bills…it’s really crazy how much money we spend on our pets.  Most people I know really spoil their pets too, spending tons of money on them buying toys, treats or luxury items to treat them like another child in the family.

At my work I know a few people that own horses.  After I started learning about owning a horse, I couldn’t believe how expensive they actually are to own.  Feeding them alone costs a small fortune!  Boarding them, vet costs with vaccinations or special care….holy crap!  The money they spend on these animals is unbelievable.   It’s like a small mortgage to own and maintain these animals.

Even for dogs, every time any of my family members travel they normally board their dogs and pay hefty sums of money to have them taken care of.  You can easily rack up hundreds of dollars for boarding your dog just during a short vacation.   For me, I really enjoy the fact that I can go on vacation any time I want to and don’t need to find someone to take care of my pets or resort to paying to board them.

I imagine I’ve likely saved hundreds or even thousands of dollars in the past seven years, by not owning a pet. Nothing against pet owners, I just continue to look for ways to make/save extra cash.  The way I see it is, no pets equal lots of extra money for me to invest or pay down debt.  It’s a win-win situation!

 

 

 

I Save Tons Of Money By Being Healthy

exercise_money_tstock

I can honestly say that I’ve saved tons of money, year over year, for staying healthy and eating well.  I regularly exercise and eat well with home cooked meals and a Paleo style diet.  To me, when it comes to living frugally, staying healthy is a big part of my plan.  I haven’t been to a doctor in years, so no co-pay visits, no billing from the insurance companies….most importantly, no meds!

How many people do you know that are constantly sick?  If it isn’t a cold or sinus issues, it’s stomach problems, or some other health issue.

I see people like this everyday, especially at work.   A lot of my co-workers eat really bad and have no energy, or are just not motivated to stay active.  This is especially true at an administrative job, where you seem to get stuck behind a desk all day long.    I see co-workers eating fast food every day for lunch; taking in tons of sugar with junk food and soda, gaining more and more weight, then they wonder why they are sick all the time.   I just sit back and watch and appreciate the fact that I haven’t been sick even once this year or last year for that matter.  Obviously I’m not super human, but when I do catch a bug, I can quickly shake it and will be back to 100% in a matter of a few days.

Outside of my interests with my finances and investing, I love working out.  I’m a personal trainer and enjoy exercise as one of my passions.  Of course the way I look at it, both of these hobbies actually go hand-in-hand.  If I keep myself in good shape and take care of my overall health, I stay away from the doctor and save tons of money year over year.  I can imagine I’ve literally saved thousands of dollars over the past several years (in comparison to most people I know), by just maintaining my health.  I feel better than I did 10 years ago and I’m in a lot better shape.

I actually get the best of both worlds….good health and significant savings.  Both of which play a big part in my future goals.  I plan to live well and enjoy life to the fullest as I age.  Staying in shape, maintaining my health AND stashing away all that extra cash I saved in the process to reach my financial goals.  It’s a win-win situation!

Look good, feel good, live a long healthy life and stay away from the doctors office.  No meds, no insurance bills, tons of money saved in the process!   Get active, stay active, eat clean and live well.

 

Retirement Savings In The US, A Sad State Of Affair

no-retirementDue to the fact that pensions seem to be a thing of the past, workers today are forced to rely on self-directed savings plans for their future retirement funds.

As millions of people are approaching retirement each year, how are forecasts looking for average American worker and their retirement savings accounts?

Among recent articles, one particular piece from the Financial Times (UK) really stood out to me.  According to the author, in one New School study of US Census data, people aged 50 to 64 in the bottom three income quartiles, or 75% of all adults in that group, averaged less than $28,000 in total retirement savings as of 2011.  And a sizable 77% of those aged 50 to 64 in the bottom income quartile didn’t have a penny of retirement savings.   The rest were not much better, with 66% of the second quartile, 41% of the third and even 22% of the highest having zero in retirement account dollars.

Other studies, including a 2013 survey from the Employee Benefit Research Institute, found similarly grave results for soon-to-be retirees, with 43% of workers aged 55 and older reporting they had saved less than $25,000.

The author also points out another issue that continues to sabotage future retirees accounts, is the continual trend of dipping into accounts for loans or early withdrawals.   A survey of 4,100 workers from the Transamerica Center for Retirement Studies found nearly a 1/4 had taken cash out of their accounts already, most often paying heavy penalties in the process.

These statistics reflect a sad realization that a high percentage of American workers will be unable to sustain current standards of living in retirement.  This is especially true as more people are living longer on average.  This will undoubtedly put a heaver strain on Social Security, as their last (or only) resort of income to support themselves.

It’s interesting to see articles come out of the UK related to issues, such as retirement for US workers.  It seems to give a more realistic and unbiased perspective, in my opinion.  All in all, it’s just another sad reminder that most Americans are not disciplined when it comes to their finances. Most, simply do not plan at all.  How many people do you know that don’t want to think about, or even discuss retirement?   It’s amazing to see patterns of massive spending, with no real consideration for their future financial standing.

I believe most middle-class people, simply think it will all just work out somehow and they will find a way to get by.  Even if that means working in their 70’s or 80’s, if they are lucky enough to have good health (that’s another thing most people don’t even account for, good health).

Obviously this trend can be changed with the right mindset and dedication to financial goals.  Let’s not allow ourselves to fall into one of the statistical categories mentioned above!  Start saving today, be aggressive and disciplined in your financial goals and don’t be one of the those middle-class folks that are “hoping” things will just work out.  Plan accordingly and later in life you will thank yourself!

Retirement: Will You Have Enough Money To Live On?

retirement  Planning for retirement is most often overlooked.  For some people it’s a complete afterthought.  Oddly enough, most people simply think they can rely on Social Security (SS) to get them by in their retirement.  To me this a very scary proposition.  Why in the world would anyone think that SS is going to allow them to live the type of lifestyle they are accustomed to when they actually do stop working?  It doesn’t make much sense to me, so I hope it at least raises the same question for you.

So when you do retire, how exactly are you going continue to support yourself?  I sure hope you have some additional income streams that can allow you to live the type of lifestyle at least close to where you are today.  In all reality you should at least have three or four different income sources to keep you afloat.  Some of which should be continually earning more money, even while you are drawing down on the account.

So let’s look at a few ideas for these income sources:

1. Social Security.  Yes, we already mentioned this one and it should be a source of income for your retirement (assuming you had been paying into the system).

2.  Savings account.  Hopefully you have a healthy savings account built up, if not start working on that now.  This account won’t give you hardly anything in return at the current interest rates, but it is liquid cash that you absolutely need to have at your disposal.

3.  Personal retirement account (IRA/401K).  If you haven’t already started at least one of these accounts, you need to think about starting one as soon as possible.  Research the tax implications/benefits of each type of account and decide what is best for you.  Generally speaking, you either pay taxes on the money going into the account up front or later when it is withdrawn.   Both account types are great for building wealth long-term.

4.  Personal brokerage account (taxable account).  Open a brokerage account with a reputable online broker, such as Ameritrade, E*Trade, Scottrade, etc.  Buy stocks, bonds, mutual funds, etc.  Pay taxes on capital gains and build wealth through dividend reinvesting with good solid dividend paying companies.

5.  Real estate / rental properties:  Create a consistent income stream through rental properties.  Build equity in real estate properties and have your renters pay down your mortgage.  Hopefully by retirement time there is no mortgage, so the rental income is pure profit.

There are obviously many more ways to create income sources, but these are 5 simple things that you do to start planning for your retirement right now.   If you manage to secure all five of these income sources successfully, you will have nice income streams to keep you afloat during retirement.  Of course, it’s all about how much you spend that really dictates your success long-term.  Analyze your spending habits closely, especially going into retirement. If you haven’t done so already, eliminate all debt and roll-on into your glory years without any liabilities.

I also found an interesting article from MarketWatch called with 5 tips to help you retire early.  These are some simple tips that can help you reach your goals in retirement, that also reiterate many of the past blog topics we have covered on Middle Class Success.com.   Spend wisely, save relentlessly, and build wealth.

10 Steps To Get Ahead And Create Long-Term Wealth, Part 1

In my blogs I’ve discussed a lot of ideas on ways to get ahead.  For most of us working-class folk, we need to look for easy, creative ways to squeeze out extra money from our paychecks and find a way to build some wealth.  When you’re strapped for cash, it’s incredibly hard to find a way to get ahead of the game and get out of that financial rut that everyone seems to find themselves caught up in.  This website is dedicated to help people find ways to get ahead and break out of the “blue-collar” mindset that seems to keep working class people locked in to unending debt and a feeling of hopelessness of ever creating any wealth.

I want you to understand that you can get ahead, and you can create wealth a little at a time.  You have to be patient and you have to be persistent.  More than anything you have to change the way you think about money and your spending.

I was fortunate enough to make an acquaintance with a co-worker that actually changed the way I think about money for good.  This guy is truly the “millionaire next door” or in this case the “millionaire in the next cubicle”, I call him.   I never imagined a guy like this ever had any money.  He drove an old, beat up car, didn’t dress fancy, and didn’t look or act like he had any money at all.  After I really started to get to know him and he opened up about money and how to actually use it to make make more money, I really started to understand.  He truly changed my prospective on money for good.  Since meeting him and really starting to understand money and how to manage it, my finances have turned completely around and are heading in an upward trend month over month, year over year.

It’s truly amazing how much you can accomplish when you have a different mindset about something and really focus on your goals.  This applies to really anything in life, but for me it was all about my financial future and setting the stage for long-term success.  Now I know that it is possible for any working class stiff like myself to create an environment for financial success.

Below are some of the steps I’ve learned that can help you find a way to get ahead for good.  Remember, stay focused and keep your sights set for long-term success.  One step at a time, little by little, you will succeed.  Here are the simple but effective steps to take control of your financial future:

Step #1:  Set your financial goals

You need to set some financial goals and make yourself accountable to stay on track.   As I mentioned, It’s all about changing your mindset regarding spending and saving.  Your goals will help you stay focused and help you make financial decisions as they arise.  Your goals should be really personal and mean something to you, so you really keep locked-in on them.  I make a point to create goals every New Year’s Eve and write them down on a piece of paper.  I stick the paper in a jar and stash it away, so at the end of that year I go through all my goals and see what my progress was.  It’s amazing how much you actually accomplish when you set your mind to it.  It’s also fun to look back and see how things change in just one year.  I now have my wife and kids doing the same thing.  It’s a fun family activity to look at all our goals every New Year.   Just make sure you make realistic financial goals….don’t shoot for the moon.  Make goals that you really think you can accomplish, you will be surprised how good it makes you feel to make and/or exceed each goal.

Step #2:  Set a budget and track every dollar you spend

As I’ve mentioned in some of my other blog posts, you can’t possibly get ahead if you don’t know where your money is going.  Some people don’t even really know how much money they have coming in!   It’s really important to know what you have coming in and what you have going out.  I like to use a free online budgeting program called Mint.com.  This program is very easy to use and you really can track your money coming in and going out, as well as your spending trends of all your accounts.  You must set a budget or you will never be able to accomplish your goals.  If you don’t want to use a program like Mint.com, then you can simply create a budget on a pad of paper.   You just need to start with your gross (take-home) pay, then track each and every expense so you can account for every dollar you spend.  Then you will truly understand what you have left over.  The bottom line is, you ultimately need to spend less than you earn.  Spending less than you earn is the only way you will be able to free up some extra cash to start building wealth and/or pay down your debt.

Step#3:  Eliminate debt

Once you have your budget tweaked correctly and you know exactly how much money you have left over after paying all your expenses, start paying down your debt.  The best way to get ahead and stay ahead is by not having any debt. Eliminating debt gives you the cushion you need to cover any unexpected plans or life changing events.  Life is so much easier and less stressful without debt, so this is a high priority on your list.  Eliminate all debt!  Start with credit cards or small loans.  Pay off the smallest or highest interest debt first.  Put a large portion of your resources towards this task.  Once you eliminate the first one, take the money you saved from that payment and put it towards the next debt to knock that one down.  Keep going with this routine until you have eliminated all small loans and credit cards.  Keep one credit card for emergencies only and don’t get in the habit of ever using it for any other reason. Now start new goals for bigger loans, like car payments or a home mortgage for example.

Step #4:  Build your savings up

You may have noticed in step #3 that I mentioned to put a large portion of your available resources towards debt.  I didn’t say put all your resources towards debt.  You absolutely need to create a savings account right along with paying down debt. This account is needed to cover any unexpected expenses at any given time.  Put whatever you can in your savings automatically every payday.  Always pay yourself first!  I learned this a long time ago and I never looked back.  Once I paid myself, I found ways to cover everything else and looked back to realize that my savings continued to grow month over month.  Make sure you put money into a bank that offers you easy access to your money 24/7.  This account needs to be liquid and fully accessible in case you have an emergency.   Build up your savings account to your own comfort level.  Financial experts recommend that you have at least three months of expenses saved up in your account.  That would be a great goal, but for now shoot for at least $1000.00 and keep building from there.

Step #5:  Review and analyze your expenses

Once you have your budget working well and know where all your money is actually going, start looking at each and every expense closely.  You need to decide if you really NEED that expense.  Obviously some things like utilities are a given (even though there are a lot of ways to save money on heating and electric bills), but look at extra things like our TV service.  Do you really need four high definition TV’s in your house?  Satellite TV service is really expensive!  Take a look at your programming, do you really need to have 250 channels including HBO or the NFL package?  These are obviously extra services you don’t NEED.  How about your home phone?  Do you have a cell phone, if so, why do you need a home phone?  Cut down on all these services and save hundreds of dollars each year!  Well, you get the point, take a look at each and every expense and see where you can cut corners to free up some extra cash.  You will be surprised how much you can save.

Stay tuned for part 2 of this article for the rest of my tips on getting ahead for good.  It’s so important to start right now with these steps.  If you really focus on your goals and getting ahead, I know you will get there!

 

 

10 Steps To Get Ahead And Create Long-Term Wealth, Part 2

Continuing on from my previous post, “10 Steps To Get Ahead And Create Long-Term Wealth, Part 1”  here are the next five steps that I’ve personally used to help me get ahead and create an environment for long-term financial success.  I want you to understand that you can also get ahead and start building wealth.  Keep the process simple… your finances can be as complicated as you want it to be.  For me, I like everything in my life to be simple, so I use very simple methods.

As I keep things simple, I continue to educate myself, as you will see in Step #10.  There are so many resources out there at your disposal.  Step #10 will touch on some of them that I’ve found useful.  This website is dedicated to try and inspire people that are in the same situation as I was, just trying to find a way to create some wealth with limited resources.  I’ve learned so much in the past 10 years, I only wish I could have started the process earlier. Still, the key to long-term success is starting now, no matter what point in your life or what your current finances are.  Start now and secure your future for yourself and your family.

Continuing from Part 1, here are the next five steps that have worked for me:

Step #6:  Be conscious of your spending 

Evaluate every purchase and decide if you really NEED to make the expense.  Living frugally is really the key to creating an environment for long-term financial success.  No matter how much money you earn, if you make good financial decisions you can definitely get ahead.  The good majority of people I know that are struggling with their finances have done so because of bad financial decisions, over and over again, then they wonder why they have no money and live paycheck to paycheck.  Remember, being frugal and controlling your spending is a true mindset and lifestyle that you have to implement in order to get ahead with limited resources.

Of course, living frugally doesn’t mean that you have to totally deprive yourself completely.  We all have hobbies and different interests that cost money.  You also need to treat yourself with a reward occasionally, you earned it!  Just be smart about your expenses and really think about each purchase.  After I changed my mindset on accomplishing my financial goals, I soon realized that material things just weren’t important.  Just ask yourself, “will buying this help me make my goals”?  Most people simply don’t think about spending money, they act impulsively, then when the reality sets in with their spending it just gets them down and depressed.  Again, it’s all about making good choices.  If you do this, you will come out ahead and the money you save by living frugally will help you secure your financial freedom for good.

Step #7: Setup automation on your accounts

In earlier steps, I mentioned always paying yourself first before your expenses.  Once your budget is totally tweaked and you fully understand how much you have coming in and going out, you can setup automatic transactions for deposits to your savings or investment accounts.  This way you make sure money is funneled into your accounts, so you get paid first.  Then you can also setup automatic payment transactions for your expenses.  It really helps to have a system down to make sure you don’t forget to pay a bill.  Automatic transactions eliminate the human element, which really helps from potentially paying late fees if the payment is accidentally overlooked.   You can setup automatic payments for just about everything.  It just simplifies the process and helps you manage your budget better.

I also use an EXCEL spreadsheet for all of my bills every month.  I mark off each bill or financial obligation once I see it clear my checking account, just to make sure I didn’t miss anything.  Do what works best for you, but keep it simple and efficient so it makes it easier and less stressful to deal with every month.

Step #8:  Fund Your Retirement

Step #8 goes right along with Step #7.  Pay yourself first!  Your long term-wealth building is just that, long-term!  It takes time to accumulate wealth, especially with limited resources.  If you don’t already have a retirement account, you need to start one now!  Time is on your side and it will take many years to build up a significant amount of wealth to live on in retirement.  I’m not a mathematician, but the basic numbers from my Social Security (SS) benefit tell me that I will need much more income to live on in retirement.  If you haven’t done so already, take a look at your potential SS benefit and really think about how much money you will need to live on.  If you think that you are going to make it on SS and live the way you currently live, you’re in for a real shock.  Do the math and really think about this, it won’t be hard to see that you will need different sources of income to keep you afloat…especially if you live 20 to 30 years after you retire.

At a minimum, take a look at your employer and see if they offer a 401K plan.  If so, do they offer matching funds?  If they match your deposits up to a certain percentage, take advantage of that, it’s free money!  If they don’t offer a 401K, you can start your own IRA account.  There are lots of good options, so do your homework and see what works best for you.  If possible, have one of each going and utilize them for different tax purposes long-term.  I also highly recommend opening a taxable account with an online broker, such as Ameritrade, E-Trade, Sharebuilder, etc. I am a huge fan of dividend paying stocks.  With a brokerage account you can buy good dividend paying stocks that pay you to own them.  You will be amazed how much you can accumulate with a good dividend stock portfolio.

We will take a closer look at these different types of retirement accounts in future blog posts.  Visit my website for more on this subject later.

Step #9:  Earn extra money

Once you have your budget set and fully functional, you may realize that you still don’t have any money left over. At this point, you may need to simply find ways to earn extra money.  The best way to push your financial goals over the hump is to bring in more money.

Maybe you can find a promotional opportunity at your current job?  If not, maybe you can work with your employer to ask for a pay raise.  Most of the time employers don’t realize how important you really are to the organization until you bring it to their attention. If you are highly valued as an employee, you might be surprised that they will do whatever it takes to keep you.  If not, maybe you can look at switching jobs and finding a better avenue for future advancement opportunities somewhere else?  If you are happy where you are, maybe you can just consider working a second job?  That may be the answer to help you bring in that much needed extra money each month.

You should also look to get rid of stuff around the house to free up some extra cash.  I’ll bet if you look around the house, you’ll find plenty of stuff that you can get rid of that you really don’t need.  Put your ads on Craigslist, it’s free!  You could also sell stuff on eBay with online auctions.

Getting extra money selling stuff you don’t use or need around the house can really help you get a jump start.  I can honestly say that I’ve used Craigslist successfully for everything that I’ve tried to sell.  It works great for advertising your stuff and won’t cost you a dime.  You might also find local papers in your community that you can advertise your stuff for free.  Do some research and look for the best alternative to paid advertisements in your area.

Step #10:  Learn as much as you can about money and finances in general

Educate yourself and learn as much as you can when it comes to money.  There are so many good resources for this, including on-line blogs like this site, books and financial newspapers or magazines.  You can go to the public library in your community and check out books for free!  Knowledge is power, the more you learn the better off you will be. Remember I said that I prefer to keep my finances as simple as I can, I also keep this prospective when reading new books or articles.  I take whatever I can from each type of material and implement what I believe would work for me. Every book I’ve read has given me different perspectives to consider.  Some offer great information or ideas that I really find valuable.  Either way, it’s all really a continual learning process.  I find that reading and researching financial books and topics help to keep me focused on my own goals in creating long-term wealth.

Getting a grip on your finances and building wealth can be overwhelming, stressful or even intimidating at times.  That’s why I really like to keep things as simple as possible.  Learning different perspectives from multiple resources can be beneficial, but ultimately finding what works best for you is the key to your own financial success.

In summary:

Use the 10 steps I’ve outlined here (part 1 and part 2) to help you get started on your journey to taking control of your finances for good. Stay focused and persistent with your goals.  Make good financial decisions that will put you in a position for long-term success.  Use addition income resources to build a security blanket account to cover unexpected expenses, then use anything left over to start using your money to make more money.  Do your research and continually educate yourself.  Once you change your mindset about your finances, you will actually break the mold of the typical blue-collar worker and get ahead of the game for good.  Best of luck to you!

Disclaimer:

We are not professional financial advisers.  All of the information presented on Middle Class Succuss.com is for informational purposes only.  Our goal is to try and help as many people get control of their finances and create an environment for long-term success as possible.   Please continue to do your own research and/or consult with a financial professional to make the best possible decisions for your own financial future.

Wants Versus Needs

We all WANT different things, big homes, fancy cars, whatever it may be….but do we really NEED this stuff?  When it comes to sticking to your budget, it’s so important to really think about this question.   It’s really worth repeating over and over…do I really NEED this?

If you are going to be successful long-term you need to really think about every purchase and decide if it’s something that you absolutely need.  I remind myself of this all the time.  Do I really need a new big screen TV?  Well, the truth is in this case, I definitely don’t need a new TV.  It’s killing me too, especially with the Super Bowl right around the corner!  But again, I just had to take a look at my budget and just realize that it’s not a smart move right now.

Every year I look around the office at work and notice how many people continue to buy new cars every couple of years.  It’s amazing how far in the hole a new car can put you.  Obviously we all really should have reliable cars, but to purchase a brand new car?  It’s really not a good move for your long-term financial goals.  In all reality, it’s so much better to go out and find a nice, clean, well-taken-care-of, used car.  It will save you thousands and thousands of dollars over the life of the loan, in most cases.  I just can’t stand the idea of paying a car loan for years, it’s just such a waste of money.

Remember, the goal here is long-term financial success.  When it comes to big purchases, you really need to think it through and understand whether or not you really NEED to make the purchase.  Staying on course with your investments and savings will get you ahead and keep you ahead.

So, next time you are looking to buy something really ask yourself if you absolutely need to make the purchase.  I realize we all have to have spend money on fun things or hobbies, just to keep our sanity sometimes, but when it comes to cutting corners on your budget you need to think it through.  This is especially true when you still have not established a financial cushion with your savings account.   This must be done first before you get to a point where you can start dropping cash on material things that you likely don’t need to have.

Stay focused on building wealth and forget about wasteful spending on things you really don’t need.  Once you get to a good comfort level, you will be able to pay cash for those things that you just can’t live without.  Just make sure it’s cash…no loans or credit cards!

 

How Do You Measure Financial Success?

measure

 

Financial success could mean just about anything, if you ask any given person.  So ask yourself the question, what does financial success mean to you?   Is it reaching a certain level or amount of money?  Becoming debt free?  Having a few extra bucks in your pocket at the end of the month?

All of these examples could be good measures or goals of financial success.   For a lot of working-class people, just having extra money left over after bills and your financial obligations are paid every month, is truly success.   At this level, money left over is your way to start saving and investing in your future.  As you progress in this system of money management, your financial goals start to change to new levels or larger amounts incrementally.

Depending on what level you are at with your own finances, you should always have goals. Your first two goals should be:

1. Eliminate small debt.  Focus on credit cards or loans.  Pay them down, one at a time, and don’t use the credit cards again.

2. Create a security blanket savings account.   You must have an “emergency” savings account saved.   Shoot for a balance that gives you a comfort level to cover the majority of issues that arise, then continue to add whatever you can every paycheck.  I mentioned savings account, because this account has to be liquid or readily available to handle unexpected expenses.

These two goals actually work together, because as you pay down debt you will have extra money left over to increase your savings account.  Just make sure you stay disciplined and focused on stashing this extra money.  Eventually you will get to a comfort level in your savings account where you can easily handle any expenses outside of your normal budget and you won’t need to use any credit cards.  Once you get to this point, I would consider this a huge success for most people.

When it comes to credit cards, it’s a good idea to keep one credit card account open and available (once it’s paid off), to be used to handle emergency and/or unexpected costs that exceed your savings account level.   This card must only be used for this purpose!  Hopefully you will not run into this situation often, as it will unfortunately set you back.

So, what is your measure for financial success?  No matter where you are in your own  financial situation, there is always room for improvement.  Set goals and make your own measures.  Track them and stay focused.  Work on your monthly budgets, closely monitor your spending.  I suggest using a great budgeting tool called Mint.com, it’s free and really easy to use.  You can link this program to all your accounts, both savings & checking, and all debt accounts etc.  You can then setup each category of spending and input a budget amount.  Monitor the budget amount for each category monthly and adjust accordingly.  It will take a few months to really understand where your money is going.  Once you get this system tweaked, you will know exactly how much you are spending in each particular category.   It’s amazing once you actually see where your money is going, the realization sets in and you’ll know where you did well in your spending and where you went wrong (exceeded budget).

Stay focused on monitoring your budgets every money and you will be amazed how much progress you can make once you set you mind to this task.  You will know exactly where you can “tighten the belt” and cut back.  Evaluate each area closely and determine where you can save money.  Put anything you have left over in your savings account until you reach a good comfort level.  Once you made that level, it will be time to start finding other areas of investing to actually make money on your money.

Financial Stress

financialstress

When it comes to stress, is there anything worse than financial stress?   The pressure of paying bills, putting food on the table, or even just hoping that you have enough money left to put gas in the tank of your car to get to work that week… wow, it can just be overwhelming at times.  I’ve been there myself and it’s a terrible feeling.  I remember looking at my checking account and stressing over the fact that I only had $30.00 left to last until payday.  It really changes your prospective on things.

For me, I knew I had to buckle down and squeeze out every dollar I could to make it until I got paid.  The stress it creates to be down “to the wire” like that, is incredible.  It was times like this that I knew I would be crushed if any type of emergency were to happen.  I always told myself that I would get ahead and create a cushion, just for that reason.

I’m sure you’ve had times where you can relate.  Financial stress puts an incredible burden on a relationship also.  There is nothing worse than fighting over money issues.  It’s sad because we seem to get caught up in these types of situations and somehow forget how truly lucky we are to just have each other and appreciate all the good things around us.   How many good relationships have you seen go down in flames because of financial issues?

How do we turn the table on this type of stress?  As I mentioned earlier, we work to create a cushion and save enough money to create an emergency fund.   In my opinion, you need to save and maintain a minimum of $1000.00 in your savings account.   You need to have at least this amount saved to cover a good majority of the issues that arise, and you need to have it in an account where you can quickly and easily access it.   That’s why It’s best to have this money in a bank savings account.  Better yet, set a long-term goal to have one month’s pay in this emergency fund, that would give you a nice security blanket!  You will also need to start funneling money into other areas where you can actually get a decent return on your money, but for now you definitely need to have a savings account available first.

I assume (and hope) that you have a decent medical insurance plan.  When I mention “emergencies”, I am really implying the majority of the issues are financial emergencies.   Medical emergencies are a whole different animal, but either way, having money available for whatever reason is critical.

Once you get the cushion you need, the stress level will dramatically drop.   This is the start of your financial success and the first stage to getting ahead of the game.  Stay focused on this task, then start funneling money into other areas or investments.  One step at a time, first thing’s first, get that savings account established then you can start looking to make some money on anything that’s left over.   More articles to come on that!