When it comes to our finances, we all want to feel in control. But for many of us, that isn’t the reality. We feel like we are constantly treading water, trying not to drown in debt and bills. If this sounds like you, don’t worry – you’re not alone. Millions of people are struggling with the same thing. But luckily, there is hope. Financial expert Dave Ramsey has a plan to help get us back on track, and we’re going to show you how to make some simple changes so you can start seeing results.
Create a Spending Plan:
The first step to gaining control of your finances is creating a spending plan. This may sound daunting, but it’s actually pretty simple. All you need to do is figure out how much money you have coming in each month, and then track where every penny goes. This will help you see where your money is going and where you can cut back.
One of the best ways to do this is by using the envelope system. This is where you physically put cash into different envelopes labeled with your expenses. So, for example, you would have an envelope for groceries, one for gas, and one for your entertainment budget. This system can help you stick to your spending plan because you can only spend what’s in the envelope. Once the cash is gone, you’re done spending for that category.
If you’re not a fan of carrying around cash, there are plenty of apps that can help you track your spending. Mint and EveryDollar are two great options that are free to use.
Stick to the Budget:
The first step in taking control of your finances is creating a budget. This may seem like a daunting task, but it’s actually not that difficult. Start by listing out all of your income sources and then all of your expenses. Be sure to include everything, even the small stuff like coffee or lunch out with friends. Once you have everything down on paper, you can start to see where your money is going and where you may be able to cut back.
Ramsey recommends the 50/30/20 rule when it comes to budgeting. This means that 50% of your income should go towards essentials like housing, food, and transportation. 30% should go towards things like entertainment and debt payments. And finally, 20% should be saved for things like retirement or an emergency fund.
If you find that your expenses are higher than 50% of your income, don’t despair. It may take some time to get there, but slowly start working on ways to lower your bills. You can do things like shop around for better car insurance rates or see if you can get a cheaper cell phone plan. Any little bit helps and over time, those savings will start to add up.
Protect the Four Walls of Home:
Your first priority should be to make sure your basic needs are met. This means having a roof over your head, food on the table, and clothes on your back. Once you have these things taken care of, you can start working on getting out of debt and building up your savings. Ramsey recommends setting aside $1000 as an emergency fund, so that if something unexpected comes up, you’re not tempted to put it on a credit card.
Start by cutting expenses. One of the easiest ways to free up some extra cash is to take a close look at your spending and see where you can cut back. There are likely areas where you are spending more than you need to. Ramsey recommends looking at your housing, transportation, food, and entertainment expenses. See if there are any areas where you can reduce your spending. Even small changes can make a big difference in your budget.
Bring in more money. If you’re serious about getting control of your finances, you may need to bring in some extra income. This can mean getting a second job, starting a side hustle, or finding ways to make money from home. Any extra money you can bring in will help you pay down debt and build up your savings.
Don’t Go Further into Debt:
The first step is to stop making things worse. If you’re already in debt, the last thing you want to do is go further into debt. So how do you avoid this? Start by taking a close look at your spending habits. Where are you spending money that you could be saving? Are there any unnecessary expenses that you can cut out?
For example, if you’re eating out multiple times a week, try cutting back to once a week. Or if you have a gym membership that you never use, cancel it. Every little bit helps, and by making some small changes in your spending habits, you can free up extra money to put towards your debt.
Once you’ve identified some areas where you can cut back, it’s time to start making a plan. If you’re not sure where to start, Ramsey’s website has a great tool that can help you create a budget.
Have an Emergency Fund:
One of the most important things you can do for your finances is to have an emergency fund. This will help you cover unexpected expenses without going into debt. Ramsey recommends saving up $1000 as a starter emergency fund. Once you have that saved, you can start working on paying off debt and building your savings.
To save up your emergency fund, start by looking at your budget and finding places where you can cut back on spending. Maybe you can pack lunch a few days a week instead of eating out, or cancel that gym membership you never use. Every little bit helps, and the sooner you can save up $1000, the better.
Once you have your emergency fund in place, you’ll be able to breathe a little easier knowing that you have a cushion for unexpected expenses. And that’s a great feeling.
Use Cash:
One of the biggest changes you can make is to start using cash instead of credit or debit cards. This may seem like a small change, but it can have a big impact. When you use cash, you are more aware of your spending because you can physically see the money leaving your hands. It also helps to set limits – for example, you may only take out a certain amount of cash for groceries each week. This will help you stay within your budget and avoid overspending.
Attack Debt:
One of the most important parts of Ramsey’s plan is Attack Debt. This means getting rid of all your debt, starting with the debts with the highest interest rates. For many of us, this can seem like an impossible task. But trust us, it’s not as hard as it seems. And once you start seeing results, you’ll be motivated to keep going.
Here are a few tips to help you get started:
– Make a list of all your debts, starting with the one with the highest interest rate.
– Attack the debt with the highest interest rate first, while still making minimum payments on your other debts.
– Once the debt with the highest interest rate is paid off, move on to the next debt on your list.
As you can see, Attack Debt is a simple but effective strategy for getting out of debt. And once you’re debt-free, you’ll be well on your way to financial freedom.
Avoid Temptation:
One of the biggest obstacles to getting our finances under control is ourselves. We are constantly bombarded with temptation, whether it’s ads for new clothes and shoes, or the latest gadget that we just have to have. It’s hard to resist these things when we see everyone else around us buying them. But if we want to get ahead financially, we need to learn to say no to ourselves.
One way to do this is to unsubscribe from emails from stores that you are tempted to spend money at. This way, you won’t see their sales and deals, and you’ll be less likely to make a purchase. You can also delete any apps on your phone that allow you to make online purchases, and unsubscribe from any social media accounts that show you ads for things you don’t need.
Another way to avoid temptation is to carry cash with you instead of using a debit or credit card. This way, you’ll only be able to spend what you have on hand, and you won’t be tempted to overspend.
Give Dave Ramsey’s plan a try, you might be surprised at how quickly you start seeing results. And once you’ve got your finances under control, you’ll finally be able to breathe a sigh of relief and enjoy the peace of mind that comes with it. So what are you waiting for? Get started today! Implementing even just a few of these tips can make a big difference in your financial wellbeing. Give them a try and see for yourself. You won’t regret it.
