Managing your personal finances can be tough especially when you make barely enough. However, with some good personal finance management skills, you can make sure that you leave behind debt and stay financially fit. Good habits regarding your personal finances need to be started early when you’re young so that you need not resort to consolidation every now and then when you rack huge amounts on your credit cards. Credit cards are the root of all financial problems in the US and if you can get a grip on your personal spending behavior, it is not very tough for you to lead a safe fiscal life. Read on to get yourself familiarized with the few personal finance tips that can help you beat your credit card debt blues.

1. Setting your financial priorities: It is nearly impossible to achieve every financial goal that you’ve dreamt of. Therefore, you need to identify a few goals and also determine why they matter to you. Try to focus on your goals and be prepared to meet conflicts on your way to achieving them. Put time by your side and check how you can make your money grow and multiply. Stash your money in interest-earning savings account and invest it in stocks and bonds. If you’re young, take greater risks to gain maximum returns in the long run.
2. Crafting a frugal budget: How to bring your spending under control must be your next initiative. They’re the only practical way to get back a grip on your spending behavior and make sure that you spend less than what you make each month. Identify your present spending level, your gross monthly income and craft a frugal budget. Frugal does not mean pinching your pennies but it means eliminating all the unnecessary expenses and making the most of money.
3. Learning the basics of banking and saving: Money kept in a bank account is always safe and in order to save money and let it grow, you need to have an inkling of the basics of banking and saving. Open a savings account with your bank and become a financially responsible person. Save at least 10% of your monthly income and drop it in your savings account. You can also tie your checking account with your salary account so that you stay sure about the amount that is being deposited in the savings account.
4. Planning your retirement: With the present economic conditions in the US, you must spend more time in planning your retirement than in planning your vacations. If your employer offers a 401 (k) account, make sure you contribute money to this account irrespective of the matching contributions of your employer. This is just another way of investing money and you can easily get tax benefits through this account.
5. Checking your health insurance coverage: Check the health, auto and life insurance policy so that you do not pay more than what you need. If you have an auto insurance comprehensive coverage and your car mostly stays inside the garage, you can easily cancel this coverage to save money. This way you can contact your insurance company and cancel all such coverage that you feel in unnecessary.

Ineffective personal finance management will provide you with nothing but financial trouble. You may find yourself accumulating huge amount of debt and running to consolidation companies for seeking debt help. Follow the above mentioned steps to manage your finances and beat the financial hangover.

If you’re not familiar with the debt snowball, I’ll give you a quick tutorial. The basic concept of the debt snowball is to take an extra $200 per month and apply it to the debt with the lowest balance. After the first debt is paid off, you then take the $200 plus the amount that you were paying on the first debt to conquer the second debt. Then one day you find that you are debt free!

Some of these ideas are a little crazy, but getting out of debt is a crazy thing to do (at lease that’s what the American culture will tell you.) To Achieve something crazy, you have to get crazy.

So without further ado, I present 7 ways to financial freedom:

Quit Smoking
I know you love smelling like charcoal, but cigarettes are expensive. Smoking a pack a day at $4 bucks a pop adds up to a tidy $120 a month.

Cut The Cable
Cable can be a big expense. My cable bill, which includes phone, internet and television, is nearly $130 per month. Cutting cable will get you well on your way to having an extra $200 per month.

Eat At Home
Even cheap restaurants can be expensive for a family of 4. You’ll be doing well to get out of there for under $40. Cut that weekly trip out and you’ll save a nice $120 per month.

Loose Your Cell Phone
Do you really need it? Your gut reaction is yes, but unless you were born after 1985, you’ve probably lived the majority of your life without a cell phone.

Skip Starbucks
This one hurts me. I love my grande mocha lattes which come in at $3.34 with tax. One of those a day adds up to just over $100 per month. In my book, that’s a lot of money for coffee.

Drop The Paper
Do you really need your morning paper? You can watch the news for free on television and you can read it online at Google News.

Take a Second Job
Who wants a second job? Well you do if you aren’t willing to cut some expenses to find your $200. If you can’t cut expenses you have to increase your income. Look for something small and simple. Try delivering papers (it’s not just for kids on bicycles,) doing some yard work for neighbors, or getting a part-time job at McDonald’s. You may have to suck up some pride, but it will be worth it in the end.

There are literally hundreds of ideas to reduce expenses. If you’re really serious about becoming debt free then either use one of these ideas or think up your own and get started on the debt snowball!

Do you like your [tag]credit cards[/tag]? Do you use them for a lot of your [tag]spending[/tag]? Do you carry a [tag]balance[/tag] on your cards each month?

Let’s just start with some numbers to get our brains in gear. The average American has around $9,312 in credit card [tag]debt[/tag] (USA Today.)

It doesn’t take long to accumulate that. Some holiday shopping, a few nice restaurants and a family vacation will rack up the credit card debt quickly. Doesn’t seem like much?

Now what if we only pay the [tag]minimum payment[/tag]? The minimum payment on most cards is typically 2% of the total balance. That puts our starting payment right around $185 per month. Keep in mind that this amount will decline as the balance declines. For our calculations we’ll use an average credit card rate of 13%.

Alright, if we were to only pay the minimum payment on our credit card, we would pay the last bill 291 months from today. That’s 24 years and 3 months away! Our final [tag]interest[/tag] charge? $10,087.94. So our vacation just doubled in cost!

Now it really gets extreme if you have a high interest rate on your credit card. I’ve known several people who pay 18% interest or more. At 18% it will take just over 41 years to pay off! Thats a mind numbing 494 months away! On top of that the total interest charges soar to $25,263.76
Wow. Those numbers amaze me. However, at the same time they are very sobering. It’s sad how many people are [tag]hurting financially[/tag] and some don’t even know it. If you are in this group please take a look at Reducing Debt With A Snowball or contact me.

My number one purpose of this site is to help people see their financial situation and then show them how to escape and get to a place of [tag]financial freedom[/tag].

There are 3 simple steps:

1st – List all of your debts. Place the bill with the smallest balance at the top of the list, the next smallest next and so on.

2nd – Find an additional $200 per month. Where do you find $200? By getting crazy! You really want to get out of debt? You’ve got to be willing to do something crazy to get out of debt. Trying to find $200? Cut the cable! Cut the cell phones! Get rid of the newspaper! $4 for coffee? Cut it! Do whatever you need to do to find that extra $200 per month.

3rd – Begin applying that extra $200 per month to the minimum payment of the first debt on your list. Once the first one is paid off, apply the amount you were paying on the first debt to the second and so on until all of the debts are paid off!

Here’s a nice fat example with some numbers that will blow your mind.

Making the minimum payments on these bills will take 120 months (10 years!) to pay off. Using the debt snowball it will only take 21 months! That’s a difference of 99 months! That didn’t blow your mind? Look at this – Invest that $1110 for the remaining 99 months at 12% and you end up with $186,569.86! An extra $200 per month gets you debt free and enough money to buy a decent house in most places! You think that’s worth getting a little crazy? I do!

Each of us is a manager over whatever resources that we have. The word manager comes from the Greek word oiknomos. Oiknomos is translated as manager, overseer, one who has charge of the affairs of the household, an office of trust and confidence. So each of us are responsible for the resources that we have. We are overseers and officers of our businesses. You have a business and you are its manager!

As a manager, you have two decisions. The first option at your disposal is that you can be wasteful. You can disperse, scatter, squander, and waste your financial resources. The majority of us seem live this way. Over 75% of Americans live paycheck to paycheck. Paycheck to Paycheck! Who wants to live this way? I know I don’t! If you are in the majority that does live from check to check then you are on the right track by coming to this blog. Stay with me and I can free you from that prison! The average American has $38,000 of consumer debt (that’s not including the house) while the average household income is only $40,000 per year. That is insanity!

Alright enough statistics. If I don’t have you convinced that the majority of us are wasteful yet then stick with me. Read through each of these next few points and raise your hand if any of them fit you.

1) We don’t plan for the future. Imagine opening a business with no business plan! Who would do that? It would make absolutely no sense! If that makes no sense then why do we run our own ‘personal businesses’ that way?

2) We are unable to track our spending. We spend so foolishly on so many different things that we are unable to track our spending. We live our lives without a budget. Our paycheck comes in and at the end of the month we have no idea where it went.

3) We spend foolishly. We’re a bunch of grown up 5 year-olds. Heh, offended yet? (cue whiney voice) “I don’t want to save my money. I want my vacation now.” -Or- “I want a new car. This one is old and it smells funny.” ect.

So we have the option to spend foolishly. Hopefully I didn’t run you off. Come back tomorrow and I’ll show you your other option as a manager. You have a business. You are the manager. You can be wasteful or you can be….continue on to part 2