Freeing yourself financially

I believe financial freedom begins with discipline. To be financially free doesn’t necessarily mean being rich, it means being in control of your finances. It’s taken me a long time to get this. Dealing with debt and cutting down has taught me a lot. I’m still learning by the way and this is why I share what I learn.

Debt is spending more than your earn. Debt is taking more than you give out and that’s not a good sign. I’ve been in debt so deep that it made my life miserable but it also taught me to stop and pay attention. We all want financial freedom, I know I do and I’m on the road to it. What I didn’t understand at the time, is that it begins with discipline. It begins with understanding how you use money. It’s no good spending now hoping for things to be better because even if things get better, that money will be used to cover what you spent before, so the cycle will never end regardless of how much more you make. If you don’t keep tabs on the spending now, you’re not going to do it later when you have more money. You often hear about people who are millions of dollars in debt and you wonder how they got there. The same way you do when you earning little. It’s the same principle, same action just in different sizes.

Four weeks ago my microwave blew up. It bothered me because I thought I needed it. Someone said to me to get a cheap one for £30 but I didn’t want a cheap one. To be honest I wanted an all singing and dancing microwave that I’d seen in the Argos Catalogue. I remember my daughter being devastated that she wouldn’t be able to have melted cheese on her bread. I mentioned this to a friend at work and she smiled and said, put it in the grill. ‘DUH!’ why hadn't I thought about that? The first week without a microwave was a challenge, it’s amazing how you become so dependent on something and you forget how to use the stove. But in the second week I began to realise that food tasted better cooked, my jacket potatoes were fluffy on the inside and crispy on the outside. They tasted divine, nothing like the jacket potatoes I’d done in the microwave. By week three I was really beginning to enjoy making our food over the stove. And I must admit that right now I don’t really see the point in having a microwave. I won’t really be using it for anything.

You’ve got to ask yourself the question before you buy anything if it’s a need or a want. I wanted a new fancy microwave but I didn’t need it. We’re doing just fine without one. Warren Buffett said; Don’t buy more than what you ‘really need’ and encourage your children to do and think the same. I love this and I put it to use at Christmas. My daughter wanted an Xbox kinect for Christmas. I would’ve loved to have bought it but it wasn’t in the budget. Instead I got her the Harry Potter Lego bus which was second on her list and which she loved. I remember asking her why she felt she wanted, not needed the Xbox. One of the reasons was that some of her friends had one. This is not a reason to get an Xbox, I said to her, you have to want it yourself and not be influenced by what your friends have. I’m lucky that she understood this and she thoroughly loved her Lego bus and the other presents she got from family and friends. I could’ve easily bought that Xbox the very next day. It’s funny because the very next morning I walked into Sainsbury’s and right at the entrance was the Xbox kinect on sale for Christmas. I must admit I was tempted but when I worked out everything included what we needed for that month; it just wasn’t a good decision. We still had the best Christmas without it.

I carry around a little note book in my handbag and make a note of every penny I spend. It might seem OTT but it’s made me become conscious of what I spend. In the past I would swipe my debit card all over the place not taking any note of the balance. I would estimate it and even check my online banking balance. But sometimes the amount on your balance doesn’t show immediately. So it gives you the impression you have more money than you actually have. I started recording my spending after I received a letter from my bank stating I was overdrawn. I make a note of every single penny, even if it was £1 for a tea or 85p for a biscuit at Gregg’s. When you do this, you will begin to notice a pattern. You see, £1 in one day might not seem like much, but £1 every two days, in thirty days that’s already £15. The pence begin to add up. I began to see where the money was going. This is important, because you will see where all your money is going. Once you do, you can do something about it.

Another thing I did was to carry money in my purse. Carrying plastic can also give you the impression you have more money than you actually have. There was a time when I would only withdraw what I needed and when that was finished that was it. You can do it with your groceries. Go online to see what you need, caculate the total then withdraw the exact amount and leave the plastic at home.

Some people will disagree as they say it helps build your credit record. Maybe. Credit can be good if it’s going to produce more money in the long term, for example starting a business. But credit just for credit sake isn’t a good idea. I sit here today still paying off a credit card I’d taken out with my partner five years ago. It makes me mad but it’s one of the things I’m still trying to get rid of, which isn't too far off now. But never again! We live in a world that lives off debt. People are complaining about government cuts but I honestly believe that this has to happen. We have to stop spending and gain some control over our debts. I’m doing this every day, being conscious about my finances. Once you start gaining control of your finances you will feel more energy and you will use that energy to create more money into your life. You will begin to give rather than take and earn your money. I’m learning that with my writing. Slowly but surely extra income is coming in that I’m actually earning and not borrowing. With controlled spending you won’t fall into the debt trap.

I will end this with another quote from Warren Buffett

Stay away from credit cards. Money doesn’t create man but it’s the man who created the money.