My goal with starting this blog was to hold myself accountable for getting out of debt. When that goal was reached I could track building my wealth.
Frugal to Survive
So, for the past couple years my frugal way of thinking was led by a need to survive or scrimp to pay off debt. Being mindfully frugal allowed me to save money that was redirected to paying down my debt faster. I sold some of my stuff on eBay and Craiglist so I could just stick to my budget and to find some wiggle room from living paycheck to paycheck.
The 3 Tips to Paying off Debt:
- Create a Budget
Getting out of debt requires a plan. Creating a budget is your roadmap to a debt free life.
- Live Below Your MeansMost people give up on their budgets within two months because they find it hard to acclimate to living within plan and/or it’s boring. No one said it would be fun.
Don’t become a sorry statistic, before giving up on your budget consider a few things. One, reevaluate your budget to see if you strapped yourself too thin; make a bit of wiggle room (yes, you still need to eat). Two, find some frugal blogs to discover small ways to save big (like packing your lunch for work). Three, come to the realization you need to hustle some side jobs for extra cash to help dig you out of your debt trap.
- Create an Emergency Fund and Snowball your DebtUse Dave Ramsey’s 7 Baby Steps to get the personal finances in order. The first two steps are key when climbing out of debt.
Currency (getcurrency.com), a service of American Express. Check out my recent articles, 6 Tips on Eating Out With Kids and Staying Sane, Don’t Wait Another Day to Plan Your Retirement. Trust Me., and Setting Up Your First Budget.
Frugal to be Rich
Although, I still have debt my way of thinking is slowy evolving into frugal to be rich. Which is ironic because I wanted to be rich and spend lavishly – like Hollywood show, Lifestyles of The Rich and Famous.
Now, I find myself being mindfully frugally so that I can maximize my retirement account or put more cash into my savings account.
I can see it now, pitching a show called, The Lifestyles of the Thrifty Millionaires. You think Hollywood swoop up my idea? Not likely. 😉
You see, becoming a millionaire recycles The 3 Tips for Paying off Debt and takes it a few steps father.
Here are 5 Tips to Become a Millionaire:
- Create a Financial PlanNot only is creating a budget a road map for a debt free life, its also a road map for creating wealth. Now is a good time to add annual goals, too. Some goals to include are financial goals for 5, 10, and 20 years ahead; like saving for a house or being able to pay the children’s college tuition.
- Live Below your Means (Frugal)Don’t give up on frugality now! Just because you have money to spend doesn’t mean you need to start buying designer clothes or a big flashy house. To continue living below your means creating extra cash flow to save.
- SaveThere is no secret here if you want to build a million dollars you need to save. By making more money than you consume, allows you to put the remainder sum into a high interest savings account or investment vehicle. I wonder if I’ll become a stingy saver like multi-billionaire Walmart founder, Sam Walton. He drives a 15-year old truck.
- Make you Money Work for You (Invest)Time to put that hard earned money to work for you. Open an investment account and diversify those stocks. You can commonly expect returns up to 10 percent on investments held for the long term.
- Consider Starting your Own BusinessWhile it’s possible to become a millionaire by working full-time for someone else, there is more wealth to be earned becoming an entrepreneur.
Thomas J. Stanley, author of The Millionaire Next Door, found that two-thirds of the millionaires are self-employed, with 75 percent of them entrepreneurs.
I am on this total frugal kick right now. Bare with me as I spill my frugal thoughts into my posts. I have been doing things like washing out my Ziploc bags, washing my clothes in cold, cooking with more whole foods, borrowing movies from my friends and drinking tea or water with my meals.
This paradigm shift from frugal to survive to frugal to be rich is a nice change. It is fun knowing I saved $3 by making coffee from home versus buying it at my local coffee shop. And now that I can stretch my money arms, I am beginning to combine the steps towards reaching my goal to becoming wealthy. Steps like being frugal to save money to invest into starting my own business.
Frugality by itself will not make you rich, but by consuming less you are creating more to save. By making the steps work together you can reach your goal towards becoming debt free or building wealth. Please, do not give up on your financial goals! I know reaching them will be completely worth the hard work!
(photo credit: r.i.c.h. via Flickr)