Get Out of Debt
The first step to becoming financially independent is to get out of debt. Make a list of all the debt you are currently carrying. Start the list with the smallest debt and end it with the largest debt. Pay off the smallest debt as quickly as you can by doubling up on the monthly payments or adding an extra $20-$50 to the payment each month. Once the smallest debt is paid off, cross it off your list and start tackling the second debt. Pay the required monthly amount plus the amount you used to pay on the smallest debt each month. Move on to the third, the fourth and so-on until you are debt-free. In the meantime, continue to make regular monthly payments on all debts and never increase your debt except in a case of emergency.
Live Below Your Means
Anytime you have to go into debt to make a purchase, you're spending tomorrow’s prosperity today. Learn to live below your means and pay cash for all purchases. Cut up all credit cards except one, and use it for emergency purchases only. Keep that one credit card in the freezer to symbolize putting a ‘freeze’ on your spending, so it will take an effort on your part to retrieve the credit card and use it, giving you time to consider the debt before making it.
Learn where the bargains are hiding. Various dollar stores offer health and beauty aids at about half the price of department stores. Food, cleaning supplies, toiletries, pet food and even clothing can be purchased at dollar store chains around the country at bargain prices. Services like haircuts, manicures and massages can be had at a fraction of the cost when you visit a career school and have a student perform the services. Outlet stores are also another great place to find bargains on brand-name goods and apparel.
Bartering for goods and/or services is an age-old way to get what you need without spending a cent. Consider what marketable talent you have, like tax preparation or small engine repair, and offer to trade your services with friends and neighbors for the services they can provide that you need. Look online for local bartering groups so you connect with like-minded people who are also working towards being frugal and financially independent.
When payday rolls around, pay yourself first. Put 10% of your income into a special interest-earning account so that while you're paying down debt, you are also increasing your savings. If taking 10% off the top stresses your monthly income too much, consider taking on a part-time job. You’d be surprised how quickly working just a few extra hours a week to earn $100 will help you reach your goal of living frugal and being financially independent.
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Guest Post Disclosure: Joseph Rodriguez writes about everything related to financial education.
His recent work is on the top 10 online accounting degrees.