Money is like food. It can do good, and it could do bad. It all depends. If you can control and practice proper diet and exercise, then you will attain optimal physical fitness. If you can control your money by proper allocation and spending, you will attain optimal fiscal fitness.
Normally, I would write articles on exercise and fat loss. But, I found out that if you are out of debt (or in the process of getting out of debt) then you will be financially stable and fiscally responsible. There are a lot of similarities between losing weight and getting out of debt.
When you start to continually practice habits to lose weight and get yourself healthy, those habits will permeate into other areas of your life including your financial well-being.
From my own personal experience, when I lost weight and got into shape, I notice that I started to practice similar habits to get out of debt. Thus, there was a strong correlation between physical fitness and fiscally fitness. Here are some ideas that I found to help me get out of debt:
• Learn to live on a pre-planned monthly budget. You should plan a month ahead of time on how you are going to spend your income.
• Try to use specially marked envelopes to pay for your regular expenses. You can mark the envelopes as Groceries, Gas, Personal Money, Restaurant, etc. You want to minimize a general miscellaneously marked envelope (e.g. Misc. expenses) because you want to be specific on your spending.
• When you go to the grocery store, you should stay on the outer aisles. The outer aisles have the vegetables, fruits, dairy products, etc. The expensive (and not healthy items) such as cookies, sodas, chips, etc. are in the inner aisles.
• When you go to the grocery store, you should use a list and stick to the list. You should minimize bringing your kids during grocery shopping because they may add items into your grocery cart. Also, you should not do grocery shopping when you are hungry.
• You should eliminate (or at least minimize) eating at restaurants. You can set a goal to avoid restaurants until you paid off all your credit cards. Personally, I found out that this was one of my largest monthly expense.
• You should use only cash (even minimize the usage of a debit card). There is a stronger emotional attachment when using cash than just sliding a credit card. Cash will empower you to spend wisely.
• When paying off your credit cards, you should pay the smaller balances off first (rather than the higher interest rates). Personal finance is more personal than finance. It is more emotional than logical. You need to have an emotional victory by paying off a credit card. It will elevate your fiscal fitness.
• Keep an emergency cash fund of $1000. You can start off with $500 then build it to $1000. This is to be used for emergency purposes only such as insurance deductibles, etc. Shopping at the mall for those “great sales” does not qualify as an emergency.
• If you are leasing a car, you should check and see if it makes sense to get rid of that lease. Leasing is fleecing you out of your hard-earned money.
• A house is not necessarily an asset. It may not be feasible to many people to buy a house. As a real estate broker, it would be profitable for me to sell houses to people- even those who cannot afford it. The reality of the situation is that many people cannot afford to buy a house. There are so many other expenses associated with a house including property taxes, insurance, home owner’s association fees, etc.
Getting out of debt is key to getting into maximizing and optimizing your fiscal fitness. The principles that enable and empower you to lose weight and get into shape are similar to getting you into fiscally fit and fiscally strong.