Get Rich Slowly Has Great Advice!

This post over at Get Rich Slowly is just great. If you think you can’t get ahead and don’t have any extra money to save think again.  How I escaped living paycheck to paycheck is a fabulous post. Here’s an excerpt, but read the whole post and put it into action. It can and does work!

The points that are made are dead on. But you know I’ve a huge supporter of budgets and using the debt snowball. Give it a read and take it to heart.

 

But how do you start generating this surplus? How do you escape from the paycheck-to-paycheck pit? Here are some ideas that worked for me — one or more of them may work for Gillian. Or for you.

• Start a savings account. For years I resisted the idea of opening a savings account. “Why should I?” I said. “I don’t have money to save. I barely have anything in my checking account!” But when I finally did open a savings account three years ago, a funny thing happened. I started finding money to stash there. It wasn’t much at first — $20 here, $75 there — but in time, it made a difference. Before long I had developed the savings habit.
• Pay yourself first. The best way to begin your escape is to save first, before you do anything else with your paycheck. I know this can be difficult. You worry that you won’t have enough for your bills, for gas, for food. But the danger is that if you don’t set the money aside first, you’ll just spend it. Have a small amount — $25? $50? — automatically deducted from your paycheck and placed into savings. Chances are you won’t even miss the money.
• Spend with purpose. You may want to consider a budget. Budgets aren’t scary, and they’re not difficult. Some people find them liberating. There are a variety of computer budgeting tools available, including:
  • PearBudget
  • YNAB - You Need a Budget
  • The ever-evolving Get Rich Slowly budget spreadsheet by Stephen Popick.

  A budget can be handy, but even if you can’t bring yourself to use one, you should know where your money needs to go.

• Draft a spending plan. I don’t keep a budget, but I do create a financial plan every few months. It’s nothing more than a quick financial snapshot showing my income and expenses. I also list upcoming major outlays. This helps me keep my financial goals in mind as I go about my daily life. It’s easier for me to decide not to buy the latest Spider-Man comic when I remember that I’m saving for a trip to Europe.
• Attack your debt. These methods are great, but if you really want to free up cash, pay off a debt. I recommend using a debt snowball to tackle your obligations one after the other. But if your goal is to ease financial pressure ASAP, you may want to try a slightly different approach. Pay off your debt with the smallest balance, but instead of rolling the freed cash flow into the next debt, use it to establish a savings buffer.