Moving Forward – Debt Elimination
“Choose your profession and your debt wisely,” a fellow Koindanomics member once said. We are going to show you how to use free tools to help you calculate and eliminate personal debt.
If you find yourself ready to take control of your finances, the first step will always be to address your debt. Not to invest. This might seem counterintuitive at first, but let’s think of it this way.
The problem with debt is that the money you pay in interest, penalties, and fees on top of the initial amount owed accumulates at a rate faster than you can make money with your labor. Think about the cost of the last fee you paid. Did you even make that amount of money in a single day on your job after taxes were taken out?
In order to take control of your finances, you will need to achieve three objectives:
- Eliminating your debt by any means necessary
- Increasing your investments
- Building an emergency fund
Luckily, there are incredibly aﬀordable tools available to empower you to achieve these objectives. To eliminate your debt, it is imperative that you track your expenses and spending habits with a third-party software application. You should never trust your memory or your monthly bank statements. When you have an application tracking every little purchase you make, you will be absolutely mortified by your spending habits. However, it will empower you because you’ll become more conscious about what you’re spending.
The software that we recommend is a conscious spending plan called YNAB. It’s an acronym for You Need a Budget.
Forget cash in envelopes. This software was actually designed to mimic a person’s natural spending habits. That’s why it has been such a success among so many users. Unlike other budgeting software, it DOESN’T want you to budget your money based on what you expect to earn in a month. Instead, it makes you budget your money AS YOU RECEIVE IT. Typically, the average person spends money as they receive it and treats themselves with rewards as soon as they see money hit their account. This pattern of behavior is also what makes most people broke. They start unconsciously spending money on phantom expenses like coﬀee and other quiet “nickel-and-dime” expenses.
Rather than telling you to be responsible and deny yourself your rewards, it encourages you to give every dollar a responsibility or a job. It is very important that you recognize this way of thinking about the software; otherwise, it will be very confusing for you to operate. Instead of working against your behavior, it works with it to make you aware of your behavior and gives you the flexibility to adjust throughout the month, but still stay on track with your financial goals.
Ready to start eliminated debt? Sign up for YNAB by using the link below and receive your first month for free: https://ynab.com/referral/?ref=niVvPiwwLf2qu9dt&utm_source=customer_referral
After setting up your account, watch this quick tutorial to get familiar with how the system works. https://www.youtube.com/watch?v=xPVEB759gkU
YNAB is a tool that lets you see where you are overspending on a granular level. Knowing where you are overspending in finite detail is great, but sometimes you can’t see the forest because you’re focusing on the trees. The next publication will show you how to set up a personal financial statement using Google Sheets. This is going to give you an overview of your budget as a whole so you can see where you are overspending and depleting your long- term wealth. When you use a combination of a personal budgeting tool in conjunction with a personal financial statement, you will be equipped to implement a plan of action to redirect your money into the right vehicles that will grow your wealth.