Sunday, April 10, 2016

Eliminate Debt Clouds From Your Financial Forecast

If debt clouds are looming on the horizon, odds are you will be under water when the storm comes in.  I believe the key is to understand how these clouds form and learn how to keep them out of your life.  Your desire to spend more than you earn gives these clouds a chance to form.  Curb your spending and you end up with sunny skies.  If you're really serious about a better financial forecast for your future, I recommend you try the envelope method.  It works.  You can call it your financial storm relief fund.  Here goes:

  1. You need an envelope.  Write something on the outside that describes what it's for, like "emergency fund," "storm relief fund," or "step #1 to financial freedom."
  2. Spend the next 30 to 60 days of your life filling the envelope with cash.  Your goal should be to reach $1,000.  Do not raid the envelope under any circumstances unless you are experiencing a real financial emergency.
  3. Lock up your credit cards.  You no longer need them.  Your envelope is your new umbrella to protect you when the next storm hits.
  4. Replenish the envelope after every emergency.
  5. Redirect the money you once spent on credit card debt to an investment account.  Leave it alone.  Watch it grow.  
Congratulations!  You have just improved your chances for a sunny financial future, free of debt clouds.  Please share this story with a friend.  Have a great day filled with plenty of sunshine.

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