3| Reduce Spending

Step 08: Reduce Spending (Minimize Expenses)

If you had to choose only one step/action out of all the steps to do, and eliminate the others, the action you need to keep is to reduce your spending. This one thing will likely have a bigger impact on your personal finances than any other.

Live below your means.  Learn to want less.  Spend less than you earn. Regularly review your spending plan for opportunities to save money. Be ruthless in cutting.  If it doesn’t hurt, you’re not saving enough.  Identify Your Wants vs. Needs.  Little purchases add up.

Step 09: Compare Purchases to True Hourly Wage

Determine your True Hourly Wage – Tax and Location Adjusted. This is a basic business metric every business tracks – and you should too.

If you’re thinking of buying a $1,000 television, you should know how man you need to work before you can buy that TV.  Is it worth 100 hours of your life to have that model? 300?  500?  How many hours does the $5,000 model require?

Step 10: Eliminate Debt (Minimize Liabilities)

Limit or eliminate borrowing of any kind.  Get and stay out of debt.

Eliminate credit card debt.  Practice responsible credit card use.  You need only one or two credit cards. Credit cards should be paid off each month.  Never carry a balance.

Use ‘Debt Snowball’ or ‘Highest to lowest interest rate’ methods.  Both work.

Minimize or eliminate depreciating assets (car, boat)