Steps to Building Your Financial Freedom

If you're like any one of us out there, you're probably growing more and more reliant on credit cards, loans and other sorts of debt, which can be quite a problem as you work to pay it off – after all, it's not going away anytime soon unless you do something about it.

As the bills keep coming in and companies start to call your home, you start to wish you could do anything to just make this debt go away and become entirely self–sufficient.

Thankfully, even in these dire financial circumstances, the most debt–plagued of us can still make it out from this unfortunate situation and gain the financial freedom they need to give themselves peace of mind.

In this article, we'll be going over several ways in which to make yourself less reliant on borrowed money and learn to stand on your own. You'll be able to size up exactly how much you owe, pay it off, and find ways to live without needing to accrue debt.

Organizing Your Finances

First on the list should be finding out what you're up against. Sit down and start writing down every financial fact about yourself, including annual income, tax deductions, any credit card and loan payments, insurance premiums, food, gas and grocery bills, even entertainment spending – anything that either makes you money or costs you money. Be completely honest – every single penny that you spend should be factored into this list, so you can make an accurate appraisal of your spending habits and what your money goes to.

Once you have this list, add up the amount of money you make in a year, and also figure out the total expenses that you have on an annual basis. How much of a disparity is there? Just how reliant are you on credit cards? How much of your money goes to things that you don't actually need?

If you're spending a lot more money than you're making, it's no wonder you're in debt – you have to be able to know where your problems lie, and organizing your finances is what helps you do that.

Making More Money

You might be looking at the list you've just created and are wondering exactly how to pay for all this stuff when you don't have the money. You may even find that, no matter how much you cut down on your expenses, your current income isn't cutting it. The only solution, therefore, is to make more money. Obviously, the first step in this process is to either advance in the job you have now, get a pay raise, or look for another job that will pay you more money. Try asking for a raise at your job, or look at positions within the company that are higher earning. Update your resume and contact information, and secure references if you want to apply for another job.

In addition to that, you can do odd jobs for your neighbours, sell some of your belongings that you don't need to thrift shops or eBay. You could even hold your own garage sale if you want. Do whatever you can to generate some more income so that you can pay for these expenses that you incur.

Skip that Daily Latte!

When looking over the list of your expenses, be sure to look at the things that qualify as necessities – rent, taxes, utilities, insurance, and the like. Once you do that, look at how much more money you spend on stuff you don't need. Of course, you need food and gas, but do you have to spend as much to get them? And what about those entertainment costs, and the hundreds of dollars a month you spend at specialty coffee shops trying to get your daily fix?

Try to cut down on entertainment first and foremost – if you're slowly sinking into credit card debt, you don't need to take a trip to the movies every week, or continually buy CDs and DVDs.

After that, look at how much gas you use. Is there any way that you can plan carpools or lessen the number of trips you make? Perhaps there's another gas station close to your area that typically provides a better price on fuel.

Also, if you can start planning your meals and rely more on leftovers, you can start cutting down the number of times you go out to restaurants, as well as minimizing the number of groceries that you buy that just end up getting thrown away. And, most importantly, just get your coffee at home, instead of wasting your money on the overpriced, overly processed stuff you get at coffee shops – it's not helping your finances at all.

Each of these things might not add up to much on their own, but if you can successfully manage to cut down costs to what you absolutely need, you might find you have a lot more room to manoeuvre when dealing with your finances. What's more, you could even locate room in your budget to squeeze in that latte every once in awhile – just try not to make it every day.

Financial Goals

One of the best things that you can do for yourself is to set financial goals. After all, it's all well and good to cut down on your expenses, but if you don't have a goal in mind, you won't be as inclined or motivated to follow through with your plans.

Start small when contemplating these goals – it can be something as simple as cutting your debt down to a certain percentage in a set period of time. Once you find that you can accomplish that, you'll start to feel a lot better about your financial situation, and you can start to set your goals higher.

Soon, you can eliminate your debt entirely, and once you've finished with that, try to work on realistic financial goals to attain, such as beginning to invest in the stock market or buying a house or car.

Try to set time limits and deadlines for these goals, so that you're more motivated to finish them quickly.

However, try not to do too much at once, because then you're just setting yourself up for failure, and you won't get anywhere fast. Just take it one step at a time, and plan your larger goals in phases that you can easily meet, so you can feel the progress taking shape and allowing you to keep your momentum.

Financial Freedom

Given all of these suggestions and paying them proper attention, you should be able to get the financial freedom that you deserve.

Look at your complete financial situation, what you spend and what you make, and try to get it so you actually have money that you didn't spend at the end of the year.

Once you do that, you can start to gradually work off your debt, and, before you know it, you won't owe anyone anything.

Imagine it; no more paying interest, no more frantically avoiding calls from collectors or your credit card companies – just simple, honest financial freedom that gives you the ability to live without having to spend what you don't have. It can be quite a satisfying feeling, and it's something that you can definitely experience given the right motivation and proper restraint.

All the best,