Become Debt Free - Starting at the Beginning

Excerpted from
Become Debt Free One Paycheck at a Time
By Kimberly A. Griffiths

Before venturing into this book, consider how much time you spend each week on formulating a successful financial future. Paying bills, finding envelopes, purchasing stamps, and mailing checks are functions performed just to maintain your current standard of living. Although these steps are crucial, they don't set a stage for creating a path of financial solvency. Beyond monthly bill management, how much time do you set aside each week for improving your financial well being? If your answer is that you don't, you're not alone. Now, how much time each week do you spend watching your favorite TV shows? Like most people, on any given day you probably know more trivia from watching your favorite game show than how much money you have in your checking account.

If your energy were focused on money management, you would become an expert with your personal finances. What I'm suggesting may not be the way you would like to spend your free time, but all things considered, wouldn't it be a relief to finally be in control of your finances? Of course it would! From now on, every time you receive a paycheck, the contents of this book will explain the necessary steps and provide you the know-how needed to move towards solvency. It will take some time, especially initially, but I promise it won't be any more time than you spend watching TV.

SAVINGS: This folder is specifically intended for short-term savings. This slush fund is particularly helpful when an unexpected repair or medical bill occurs. The extra cash may also be used for the niceties of life such as going to the movies, eating out, etc. This is how you will begin saving for a new outfit, the latest gadget, vacation, etc.

If you're anything like me, budgets, like diets, only work for a while. However, being financially fit (or physically fit for that matter) demands consistent action. As the title of this book suggests, you have already assumed that I won't ask you to go on a traditional budget. I think it's more important to discover what your spending habits are. Then, determine the best approach for solving the problem instead of fixing the symptom.

The prospect of eliminating your debt can be quite daunting. However, I figured out the best way of reaching big goals without being overwhelmed is to break the goals down into monthly, weekly and daily steps. The goal is then reached by taking small, manageable steps. That is, if you want to be debt-free in one year, what action must you take monthly, weekly and daily to get there? It's important that you are passionate about the goal, but more importantly, if your plan is realistic and progress can be measured, you will achieve your goal! Knowing WHAT your goal is, i.e. to be debt free, is the difficult part. EXECUTION of the goal, i.e. breaking it up into manageable parts, is the easy part of goal making.

I had about 20 colleagues and friends review this book at length before publishing it. I have to tell you that the next step was loved by some and hated by many. In order to know where you're going, you need to know where you are today. With this logic in hand, I have determined that most of my acquaintances who struggle with debt also struggle with getting their arms around their present situation. Call it denial or call it procrastination, but most of the people in my small sampling who have problems making ends meet do not typically have their bills organized. My next suggestion may not be easy, and it may take an entire afternoon, but you'll appreciate your progress in a few weeks once you've completed this challenge. Ready? Here goes-Collect every single bill you received in the last twelve months... EVERY single bill. In order to know how to plan, you will need to know what the costs of your average fixed bills are on a pay period basis. If you are unable to locate all your bills, perhaps you have twelve months worth of cancelled checks from your checking account statements that can be used for the upcoming exercises. Hang in there, I promise that this will be the beginning of becoming debt free.

On the following worksheet named "Master Ongoing Bills Log", determine how much you spent on each and every bill category for twelve months and get an average of what you should expect to pay every PAY PERIOD. In other words, if your annual electric bills total $600, you will divide this number by the number of paychecks you receive each year.

$600/24 paychecks* = $25.00

The average amount you figured for each category is the money you will need to set aside every pay period. This list will be your master list for the next year. You will be referring back to this list each and every paycheck. We are so accustomed to thinking of our personal budget in terms of months because this is how we've been conditioned by the frequency of how our creditors bill us. Now, however, you will be discovering that when you arrange your finances in terms of the timing of your paychecks you'll be on the road to positive cash flow! This is the key concept of the One Paycheck at a Time system for getting out of debt. Pay your bills on your timing cycle, not when your creditors tell you.