There Are Three Types Of Spending We Do

Category: Finance.

Getting out of debt gives you a euphoric feeling, positively liberating. The good news is, with the three principles outlined in this article, you can turn yourself in the direction of financial independence and take control of your future.

It s a feeling you want with all your heart. That euphoric feeling will coming around sooner than you think. You read that correctly. Before we get started, let s get started. The hardest part of any project is often just getting started. We can get overwhelmed by the scope of large tasks. There are 101 reasons for procrastination, ranging from fear of success to fear of failure.

It s too much, it s daunting, and we get daunted. You don t have to start making calculations, you don t have to start working out budgets, you just have to take a piece of paper, a calculator or a software program, and sit yourself down at a table. So here is the Pre- 1 A step that will get you started: set yourself up. Once you re there, going forward becomes easy. Just getting set up isn t that threatening, so we can do that. So many big things in our lives take literally 10 minutes, but we invest them with far too much worry and therefore never get to them. And once we ve gotten set up, we ve created the momentum to carry us to the fulfillment of our goals.

Principal number 1: Know Everything. OK, now let s look at the three principles. You ve heard the saying, "knowledge is power. " It is especially true in getting out of debt. It is simple mathematics, and the more detail you have, the more control you have. You have to know exactly how much money you earn, how much money you spend, how much money you owe. Gaining knowledge activates the brain.

When you give a computer a task to complete, the computer keeps on working at it until it gets done. Our brains work very much like a computer. So, too, when we give our brains a job, they can perform amazing feats. It seems like it happens automatically. By knowing every detail of your finances, you will be giving your brain the job of finding a solution to your situation. Stay on top of the details of your situation, and you ll find the answers coming almost by themselves.

Great people don t fear failure. Principal number 2: Spend Importantly. They actually appreciate it as a great teacher, so they can improve in the future. We either do not pay attention to how much we spend, or we just lose control of it. Most of the time our debt is a result of a failure of our spending systems. Let s face it, credit cards are a very mixed blessing. Let s look at this in more detail.

Most often, we spend huge amounts on things that are neither necessary nor important. There are three types of spending we do. The second type is for those things that are important, but not essential. First, such as groceries, there are necessities, medical costs, clothing and shelter and so forth. They might include piano lessons, membership at a gym, dinner at a restaurant with your family, and other similar expenses. These are luxuries, plain and simple: a Caribbean cruise, a TV set the size of a small skyscraper, the fanciest sports car, at the casino. you get the picture. The third type are those things that are neither important, nor essential.

Notice which category is usually the most expensive. By eliminating spending in this area, at least until you are solvent, you will help yourselves greatly. Yes, the third type. I will add that it is a good idea to give some money to charity, whatever little amount you can afford. It gives you a proper perspective on the value of money. It may not make sense at first glance, but giving charity does something very important. Even if you give just a few dollars, you will come to view money as something to be used for important purposes, not to be squandered on unnecessary things.

Just as getting set up is the easiest way to get started on any object, making smart rules for how you spend is the easiest way to control your spending. Principal number 3: Make It Easy for Yourself. The main culprit here is temptation. If we make it harder to spend, temptation will fade away. If spending is too easy, temptation has a lot power over us. For example, if I left my credit cards at home, and only had a few dollars in my wallet, I would not be tempted in the least to buy that beautiful new suit in the window.

Similarly, when I have three credit cards, and two of them are within my spending limits, temptation is much greater than if I only had one credit card and I was already at my limit. I wouldn t even miss it! Making it easy for yourself means keeping yourself as far away from temptation to overspend as possible. If you don t buy those oversized cookies, you won t have them and you won t be tempted by them. Effective diets happen in the supermarket. That s why you should never go shopping when you re hungry. Use only cash for essentials, close down superfluous credit card accounts.

Make rules that will keep you from spending on anything that is beyond your budget. Make it easy to stay the course. As you proceed in your journey towards solvency, make sure that you stick to these three principles. Putting It Together. Constantly review your progress and keep" knowing everything. " This will allow you to create and implement a surefire plan for getting out of debt for good. Good luck!

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