“Being broke is a temporary situation. Being poor is a state of mind.” –Mike Todd
You’re in over your head. I’ve been there, too. If I can give you one encouragement, I’d say look around. Almost everyone else has been or is currently there with you.
You don’t have to stay there! Many of us are no suffering from the financial hangover of Christmas on Credit.
Some of you owe thousands on a bunch of credit cards and can barely make the minimum payments. You probably owe thousands in student loans which loom over your shoulder like some villain ready to snatch your paycheck as soon as it direct deposits into the bank. If you’re like most, you barely have enough money in your account to pay rent let alone set some aside for rainy days. You may want to buy your own house someday, and even have kids, but financial freedom doesn’t ever seem possible.
Before we get to the how, or even why you should read this article, watch this quick clip from one of my favorite movies, The Pursuit of Happiness:
Will Smith’s character nails it when he says, “Don’t ever let someone tell you you can’t do something, not even me. Alright? You got a dream, you gotta protect it. If you want something, go get it. Period.”
You’ve probably internalized as a truth that you will never get out of your financial mess. It’s too deep, and would hurt too much to be truly free. Maybe your friends or even spouse agree that your mess is just too big.
Well, our purpose here on The Drunk Millionaire is to help you believe that you can have financial freedom. We’re not trying to sell you anything. We’ve been where you are and want to show you how to be debt free, you can live on less than you make, and you can, eventually, start building wealth.
Because if you have financial freedom you can achieve any dream you have. Hopefully that’s enough of a reason for you to say, “I’ve had it!” Once you’ve reached that point, you can begin to change your life towards freedom.
I spent the first year of marriage as a Graduate Student while my wife was a teacher. We weren’t making bank. Things were tight, but after I graduated, I decided that if we really wanted to live our dream we needed to be debt free. After I graduated and got a job, we lived on nothing, and paid off my student loans and credit cards in a matter of months. Trust me, if we can do it so can you.
Living and dreaming are two different things – but you can’t do one without the other. – Malcolm Forbes
To be free you have to grind. We don’t offer a get-rich-quick scheme because there are no tricks. It’s really a simple formula, but you have to fight for the motivation to fight for your future and that of your family. The following steps are simple but if you follow them you are guaranteed to have financial freedom. To become financially successful you have to change your mindset. Suit up; it’s time to fight.
Step 1: Get Organized.
The single greatest tool for getting your financial house in order is to start a budget. Nearly everyone in financial duress has never consistently done a budget. If you don’t know what you owe, how much you owe, or how much money is going out, how can you win? We have a whole page devoted to the budget process.
Step 2: Pay Off Debt.
When you get paid and all your money goes to pay off debt, how can you buy the things you want? You put them on credit cards and go further into debt. When you’re in debt, you have no ability to save and you live your life at an elevated risk. If something bad happens, which it will, how will you pay for an emergency if you’re in debt up to your eyeballs? Start with the smallest debt, paying the minimum balance on all the larger debts and work your way up until you’re free. We have a whole page devoted to paying off debt.
Step 3: Live on Less than You Make.
While you’re getting your financial act together, stop buying crap that you don’t need. In fact, have a garage sale and sell your stuff. Downsize your car. Trust me, you can get better stuff later, when you’re finally free. We want you to have your stuff, we don’t want your stuff to have you. Live on as little as you possibly can for a while, and shovel everything that remains towards the debt.
Step 4: Disaster Fund.
As you’ve already probably experienced in life, bad (expensive) things pop up without warning. You need a disaster fund to help prevent you from going back into debt when these emergencies pop up during your trek towards financial freedom. We have an entire page devoted towards the why and how of the disaster fund.
You’ve made it this far, so you must be devoted to this dream of financial freedom. Join The Drunk Millionaire for support throughout your journey. If you fail, don’t quit. Most people hit roadblocks during this uncomfortable process, but you have to keep going. I promise you, the pain is worth the freedom.
Did you decide to take the plunge and become debt free? Share with us in the comments below, we’ll do our best to help you stay accountable.