When you have your finances under control, you will have more time for fun and leisure activities.
"When you have no bad debts, you're free."
Having bad consumer debt (think credit card debt, personal loans and any other debt that has not been incurred for business or for investing) is like being in jail. You're a slave to your lender. Interest upon interest upon interest is dangerous. This type of debt (bad or consumer) is the type of debt I am referring to here, and the type of debt that you need to avoid. Some of the top ways of getting out of debt follow.
At least 10% of all you earn each week is yours to keep. Money I have saved this week.
Step 1: Pay Yourself First
Before you pay anyone, you must set aside a certain percentage of your income into a high interest savings account without any emotion involved. As Warren Buffet says: "If you don't know how to manage your emotions, do not expect how to manage your money well." A general guide is to put aside 10% of all money that comes into your hands, and then use that money to invest in an income producing asset that appreciates in value. When you appreciate yourself, more money comes to you to appreciate. Every quarter review this income and increase your savings by another 10%. You will be surprised at the amount of extra abundance that comes your way. After all you need to be rewarded for your hard work and service, you earn't it. You will be surprised that you will have sufficient funds to meet your other financial obligations.
Saving some loose coins, and am about to put them in the money box.
Step 2: Save your Coins
Get into the habit of only spending your notes, and you will begin to see a profound difference in your finances that will only grow over time. You might ditch that extra coffee that you think you need, yet you don't really need, and then deposit those coins into a money box at home. Many people have been able to deposit an extra $20 - $200 a month at the bank just by this money saving activity alone.
Credit cards are temptation only when they are used unwisely.
Step 3: Cut Up Those Credit Cards
Only if they incur interest upon interest as a result of consumer debt. Credit Cards are not a gift; (nothing is free) they are a loan that must be re-paid. If you are able to use your credit cards as a 'convenience' tool, meaning that you need to use the credit card for business or travel purposes and to earn some rewards points; ensure you already have the cash on hand and use your credit cards as a tool to serve you. Use them like cash and transfer the purchase amounts immediately or within your cards interest free period. If you can't do the latter, chop them up. Credit cards with rewards points incur the highest rates of interest.
List down all of your expenses and work out how much you need and can realistically spend each week or month.
Step 4: Create a Realistic Spending Plan
This is like a budget. Take a notebook and list down all of your essential and necessary expenses such as rent/mortgage, food and clothing - our needs and write them down. This should also include your savings as per step one. Then put the weekly amount spent next to your needs. Then list your wants, and any income left over after having your needs met goes to your wants that include fun things such as entertainment. That way you will know how much you're allocated to spend on such an activity by not going without your fun. Self employed people (entrepreneurs, freelancers and business owners) and casual employees need to create an extra buffer of cash beyond their savings to account for income fluctuations. That way you can't spend more than you earn. It is astonishing to see the number of people who spend way more than they earn, and hence rely on their credit cards for survival. No wonder why the world's credit card debt balance is astonishing.
Step 5: Focus on Feeling Great
If you happen to be in debt, focus on abundance. Focus and direct your energies on the things that make you feel great, and therefore the things that don't make you feel so great (debt and financial struggle) will begin to melt away.