14 Steps to Get Ahead
Are you sick of living paycheck to paycheck, always on the brink? I’m positive you can change that! Here’s how:
14 Steps to Start Getting Ahead Financially
1. Track Expenses for 3 Months
You might cringe at the thought of tracking your expenses, but the reality is you cannot effectively control your cost of living unless and until you know where your money is going. Guessing doesn’t work—we all guess low and wrong. You don’t have to track your spending forever—though it wouldn’t hurt—three months is enough to shock yourself into reality, which is likely what will happen when you see how you’re really spending your income.
2. Take Steps to Cut Your 3 Largest Fixed Expenses
Cutting out the lattes is not going to get you very far. Focus on cutting your biggest expenses to get the biggest bang for your frugal buck.
- Generate income from your house
- Downsize (how about a tiny house?)
- Live with roommates
- Sell your car (see Drive Less, below) and buy a good bike or scooter
- Re-shop all of your insurance
- You should have ditched cable years ago
- No costly vacations until your high-interest debt is paid off
3. Adopt a Healthy Lifestyle
A healthful lifestyle doesn’t just make obvious sense, it’s also cheaper, both in the short and long term. A devotion to sloth and Super Sized , processed, and pre-packaged meals is more expensive than cooking at home and will begin costing you big time in healthcare costs when you pass the half-century mark, if not sooner.
- Eat homemade meals
- Move your body
- Stop your bad habits (smoking, drinking, gambling)
- Learn about mindfulness
4. Get Your 401(k) Match
If your employer is offering to pay you more in the form of a 401(k) or other match, for jebus’ sake, take the money!
5. Take on a Side Gig
You need to earn more money. I don’t like part-time jobs because 1) the hourly pay usually sucks, and 2) you don’t control scheduling. Cultivate a side gig that you manage that takes advantage of a skill, talent, or passion. Dedicate the cash to debt payoff first, then savings. Do you like to garden? People will pay for that. How about being an Uber driver (if you decide to hold on to your car) or otherwise tap into the sharing economy?
6. Ask Your Boss How You Can Advance, Take on More Responsibility, and Earn More
Make clear to your employer that you want to contribute more at work. The more you contribute, the more you will earn. Many employers will pay—in part or full—for an employee’s further education or training, if that training will add to the employee’s value to the company. Take advantage! Once you boost your value to employers, the benefits—permanently higher income—persist for your entire career.
7. Drive Less
Many of us think about our cars costing money only when we fill the gas tank or pay the insurance bill. According to AAA, driving even a small car just 10,000 miles per year costs $0.58 per mile. That’s the number you should bear in mind every time you’re considering turning the key. That five mile round trip to buy bread probably cost more than the bread! If you relocate to cut your fixed expenses, choose a spot where walking, biking, transit, and carsharing are convenient.
8. (Almost) Never Buy New
Buying new is for suckers. Do your shopping at thrift stores, Craigslist, and garage sales.
9. Hang Out with Frugal People
Choose friends (and a partner!) with a strong tendency toward saving, not spending. Avoid people who think having fun is impossible without spending a lot of money. Think back on the most fun times you’ve had in your life. I bet you’ll realize that there’s no connection between spending and ‘funning.’
10. Pay Cash
Taking on high-interest debt to pay for stuff makes getting ahead needlessly tough.
11. Sign Up for a Debt Management Plan
If a chunk of your budget is going toward payments on high-interest debt, your first priority must be paying off this financial ball & chain. For most people most of the time, a Debt Management Plan is the best way to attack high-interest debt. Other options include debt settlement, consolidation, and balance transfers, but only if you take care to do these properly. Once your high-interest debts are repaid, face reality: if you can’t handle credit cards, have only one with a $1,000 or less credit limit. Read my Simple Guides “Be Debt Free!” and “Settle Your Debt in 10 Easy Steps“.
12. Ignore the Joneses
Set long-term goals for your family, then ignore what others are doing. Trust me: when you’re debt-free and have money in the bank, all your free-spending friends will be envious and wonder how you did it.
13. Optimize Your Credit Score
Even if you have no debt and no plans to borrow money, your credit score matters. Luckily for you 🙂 , I’ve written the most awesome resource available to help you easily optimize your credit score: “Raise Your Credit Score the Right Way“.
See all that stuff lying around your home that you never use? Sell it, donate it, trash it. Use the proceeds of this one-time purge to 1) pay off debt, and 2) add to savings. Then make this mantra your screen saver: Buying stuff I don’t need on sale does not save money.