Financial Freedom – Part 2 – Devising a Plan and Sticking to It

To get the full story, read this post FIRST.
Not too long after I hit rock bottom, I was in casual conversation with one of my brothers and we began to discuss financial independence and how to get started.  Although exposed to this information before (my Dad was a banker), I wasn’t ready to fully receive it until then.  I developed a financial plan
 and took charge over my charge debt.  Two years later, I had completely paid off all of the debts I owed on my cards.  I had a nice stack in my savings, and I made sure I lived well within my means.  I still had my setbacks – minor splurging, unexpected expenses, etc., but it was NOTHING compared to what I had been delivered from.  Did I stop using my cards?  Of course not; I wanted to “build my credit”.  Did I monitor them better?  You bet I did.
For the next couple of years, any money that I accumulated in debt charges, I did my best to pay them off.  I took trips with my girl friends, I went out and partied like a rock star, I even went to China.  I did all these things, but my savings still wasn’t always transferring to my checking because I wasn’t saving enough.  I was ballin’ out and tapping into my savings while doing so, defeating the whole purpose of saving in the first place.
One of my best friends and I started talking about financial woes.  We weren’t broke, we just weren’t financially where we wanted to be.  So we sat down, together, and vowed to hold each other accountable for checking our spending.  We made goals on how much money we wanted to save for the year.  We set rules on our spending.  We decided to set limits on how much money we would use for “us” per month.  How did we do this?  We used the “6 Months On, 6 Months Off” approach.  For six months we were on a very tight budget that included the following:
  • Pay all bills before paying ourselves (that included paying Tithes first)
  • Shopping limit was $50 for anything other than a necessity (i.e. clothes, shoes, make-up, parties, trips, etc.)
  • Only eat fast food/restaurant food once a month, not to exceed $20.
  • After mapping out how much we would spend on necessities (i.e. groceries, gas, etc.), we only kept that allotted amount in our checking accounts and all the extra cash was to be deposited into our savings.
Note: We did have an exception – our birthdays (they happen to fall into the “6 Months On”, timeframe)
The next six months, we were able to spend as we saw fit, with no limits on what we could and could not spend.  Unbeknownst to us, we had created a plan that gave us six months to build a habit of keeping our finances in check.  Once a habit is formed, it can be hard to break, and we were depending on keeping this habit for a lifetime.  So that next six months, although we had given ourselves “freedom”, we weren’t reckless with our money.  After all, we still had goals that we set for ourselves and you can’t reach those goals if you’re spending all willy nilly, right?
Did it work? Yes, it helped us tremendously.  Did we cheat? You bet ‘cha.  But truth be told, it really helped us save and cut back on frivolous things that we know we had no business purchasing. By the end of the year, we had saved our savings goals and made really good progress toward keeping our spending in tact.
Because I knew HOW to save and was successful at it, I could then put what I knew into practice and do better for myself.  One of my goals was to enter the next year with no debt whatsoever, and I accomplished that goal.  Now, every year no matter how much debt I manage to accrue, I pay it off before January 1 of the next year.  I put myself in the position to do so.  I learned how to prioritize my finances and tackle debt to eliminate it.
Every year, I make it my mission to devise a financial plan that I can stick to.  I strive to save more money than I did the year before, so that in itself causes me to sit down and revise whatever I did the previous year.  I am getting way better with my money, and as I continue to learn, hope to share some tips with you on how to achieve financial freedom!