5 Keys To Becoming Financially Fit (Part Five)

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How Can I Go About Becoming Financially Fit?

In Parts One and Two we looked at tracking expenses and the importance of finding out where your money is going. You cannot control what you do not track, so listing every single expense for at least a month is absolutely critical. I gave some examples of minor changes that you can make that will all help to save you money. None of those will be real game changers, but each little bit helps and when they are all added together it can amount to quite a savings on our way to becoming financially fit.

In Part Three we dove into savings and how that is an integral part of becoming financially fit, and why having 6 months of expenses ahead is as good (maybe better) than having income insurance. In Part Four we looked at credit cards, and when to use them and how. Now in Part Five, we are going to tackle debt and basically wipe it out on our way to becoming financially fit.

Becoming Financially Fit By Tackling Debt

Debt can be a huge negative force if you let it build up to the point where it is consuming most of your resources just to pay the interest on it. This appears to be less of an issue in today’s financial climate with the interest rates being so low, but historically that hasn’t been the case and a return to higher rates is inevitable. We want to make sure that we are well on our way to becoming financially fit long before that happens. A key part of our strategy is to address and ultimately to eliminate debt.

The biggest negative about having debt is the strain that it puts upon you’re your mental well being and how you perceive yourself. Eventually, as the debt piles up you get the very real sensation that you are literally swimming in it, and it is getting harder and harder as it pulls you down. Eventually you just want it to stop and go away. By becoming financially fit we are going to make sure that it never gets to that level through a two pronged assault on debt.

becoming financially fit

The First Step

The first step is to take on no more debt. Don’t use any more room on your charge cards and pay for everything as you go. Some people find that converting to a cash system, or using only a debit card without an overdraft, is the most effective way to do this. Pay all your bills on time. Don’t incur late charges, additional interest or extra fees. If you cannot pay for it, don’t buy it. It can’t be simpler than that. You cannot expect your electric company to understand that you can’t pay them in full because you just had to have a night out with your friends, or that your car had a flat tire that couldn’t be fixed. It isn’t their problem, its yours.

Tackling The Debt You Have

Let’s tackle the debt that you have. If you have a mortgage, a car loan, and three credit cards or thirteen credit cards, the strategy to becoming financially fit is exactly the same. List all of your debts with the outstanding balance, monthly payment, minimum payment and interest rate arranged in a small table. Total up all the becoming financially fit1payments and all the minimum payments. For example, let’s say your total payments are $1000 and your total minimum payments are $450. Make the minimum payment on all debts except the one with the highest interest rate. Pay all of the remaining money you have allocated to payments ($550) towards it. Continue this approach every month until the card with the highest interest rate is paid off. Once it is paid off, do not deduct the payments you would have made on it from your total you are paying each month, but rather use it to tackle the card with the next highest interest rate. As you work your way through your debts. the amount of total minimum payments will decrease, but the amount that you are directing towards your most expensive debt will increase.

Some would recommend cutting up your credit cards as you pay them off and I think that should apply, except for two. Keep two that have the most credit worthiness. That would be two bank cards, not store cards and definitely not loan company cards. You never know when you will need them and they do serve a purpose for making larger purchases. See the previous post on credit cards and their use. Conduct as much of your business as possible in cash or with a debit card and stay current on your expenses. Wait until you can afford something before you rush out to buy it. Trust me, the deal of a lifetime comes along about every two weeks. Becoming financially fit isn’t just a quick one time exercise, it is meant as a lifelong habit.

Tomorrow we are going to look at the single biggest secret of the rich and the way they use the secret to keep them rich. Hardly anyone that isn’t a millionaire does this, and almost everyone who has a million or more does it. It is the most powerful thing you can do to become not just a millionaire, but filthy rich.

Till Next Time….

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Sigrid McNab

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Email: sigridmcnab@gmail.com

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About Sigrid McNab

Sigrid McNab is the author of #1 Amazon Best Seller, speaker and the CEO and Founder of sigridmcnab.com. Sigrid specializes in blogging, attraction marketing, and generating highly qualified leads. Sigrid teaches people how to build a successful online business.

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6 Responses to “5 Keys To Becoming Financially Fit (Part Five)”

  1. Hale Pringle Says:

    Hi Sigrid,

    Fascinating as always.

    You might want to talk in a future post about stress reduction. Probably the number one cause of fights and stress in a marriage and in life is financial issues. As you reduce the dept load, the stress reduces right along with it. “How are we going to pay for that?” probably causes more sleepless nights than any other question I know.

    Thanks Again,
    Dr. Hale
    Hale Pringle recently posted…Making Facebook Play Nice with Your Blog PostMy Profile

    [Reply]

    sigrid Reply:

    Great suggestion Dr. Hale. So many fights and stressful situations, never mind the sleepless nights!, are linked to worries about money.

    [Reply]

    Reply

  2. dagmar wichary Says:

    excellent post.I think I will do that

    [Reply]

    sigrid Reply:

    I am so glad that this was helpful to you Dagmar. Have a super day!

    [Reply]

    Reply

  3. dagmar wichary Says:

    Thank you Sigrid,this is a wonderful post

    [Reply]

    sigrid Reply:

    You are so welcome Dagmar…

    [Reply]

    Reply

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