How to Get Out of Debt and Stay Out of Debt

In this final instalment of “The 6 Reasons We Spend Money”, I want to talk about what is, for many of us, the most important type of thing we ever spend money on.

Before we get started, if you missed the first five instalments, you can see them here:

1: Weekly Expenses 
2: Non-Weekly Repeating Predictable Expenses 
3: Product Purchases 
4: Repairing Things 
5: Replacing Things 

 Here is the final expense type: 6. Major ‘Once In A Lifetime' Occurrences. These fall into two groups: 

1. Larger Life Goals
These are the big events that make life worth living. You want them to happen and you have a clear time frame in mind. They include:

  • Retirement
  • An overseas holiday
  • Big dreams and desires, like learning to SCUBA dive or getting married

Even though these are the most important things most of us will ever do, it's easy to miss out. It takes focus and time to save up, and if you don't manage money on a week-by-week basis, you'll never afford those once-in-a-lifetime treats. This is where having a Spending Plan and a Spending Planner on your team makes so much difference. You get to choose the life you want, and then you create the plan to make it happen and work as a team to get there!

2. Unpredictable larger expenses
Next to big plans and lifelong dreams, we have unpredictable one-off expenses. These are slightly less fun, but even more crucial.

For example:

  • A major car repair bill
  • A medical emergency
  • Your child's future university education

These are things we'll all have to face, but many of us fail to prepare for because they don't fit into our daily budget well. Having a contingency plan makes these unexpected events much easier to handle.

Best of all, if the unexpected event never occurs, your contingency money can simply flow into another part of your overall plan. It's a win-win.

How To Succeed With 'Type 6' Expenses

1. For your larger life goals, here's what I recommend:

  • Set aside some time one weekend to sit down with your family and have a dream session. What would you love to do or have? (Here we are talking about goals that are once in a lifetime, so dream big! Every BIG holiday I took with my children was planned more than a year in advance and once it was decided we all pulled together to achieve the goal.)
  • Once chosen, work out what your goal is going to cost and then break it down to a 'per pay' amount and have the money transferred into a special account set up just for the goal. In every case in my family we all then started to look for ways to bring the money in faster and to cut costs so we could add more to the savings pool faster! Even the kids will get onboard with this and their few dollars might not be much help, but they will be significant to them and they will learn the value of setting goals and then working towards achieving them.
  • Be flexible and open to compromise. The excitement of the goal will also most likely make it okay to go without some of the things that without the goal were seen as 'essentials'.

2. For the unpredictable life events (that may never happen but you want to have an emergency fund in place just in case), you should simply save an amount from each pay packet to build up your chosen slush fund target.

For example:

  • Save the equivalent of three months' income as a buffer. Keep it readily available, but never touch it unless there's a crisis (like losing your job). Every money mentor I know recommends this.
  • Once your buffer is in place, start a second pool of money for less serious unexpected events.
  • Check out Bodo Schafer's book and audio series ‘The Road to Financial Freedom' where he dedicates an entire chapter to this topic and how your wealth foundations begin right here.
  • Start small and work up. If you feel you simply can't afford to save at all, just start with something really small to get the habit started (even $5 a week will do) and then gradually increase it.

Don't Be Smart, Be Wise

When it comes to managing spending for big events (or anything, in fact) — it's better to be wise than smart.

While ‘smart' is about knowing lots of facts, ‘wise' is about applying that knowledge and predicting what will happen before it happens.

To me, that's what money management is all about. Understanding the 6 different expense types we've talked about will help you to develop financial wisdom, recognise each expense type for what it is, and prepare for each of them before they arrive.

Taking control of all six is liberating — and will set you on the path to financial freedom and comfort.

Success With Money

If you're wondering if you will ever get to live out even just a few of your dreams do not give up. You deserve financial success as much as anyone else does and my system has helped thousands of people achieve it, so why not you? 

Take Control of Your Finances

If you can take control of your spending by making some of the little changes above, you'll put some breathing space between you and your money stress, allowing you to relax and start building a stable financial future for your family. If you just can't get your head around that and/or you are tired of money stress and have decided it's time to take control, talk to a Spending Planner to find out how you can break the cycle. BOOK A FREE CALL

You have nothing to lose and lots to gain. Spending Planners are non-judgmental professionals who are trained to help. A short relationship with a Spending Planner will provide you with tools and training that will benefit you for the rest of your life!            

To find out more about becoming a Spending Planner, CLICK HERE

Creating your own personal Spending Plan will be one of the best things you ever did.

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