Taking Small Steps to Financial Freedom – Part 2

February 11th, 2008 | Stacey | Debt Management, Financial Independence, Financial Freedom

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In the first entry about taking small steps to financial freedom, we discussed your money management techniques and the reasons you spend money. By determining your weaknesses and financial habits, you can get greater control of the cash you have. Before you can even create a budget or gain a direction, you need to understand the reasons why you spend money or get into debt.

The next small step to financial freedom still does not include a budget or paying off your debts. Once you establish the underlying reasons why you got into debt in the first place, you need to assess the amount of actual trouble you are in financially. In other words, the time has come to assess the damage you’ve done to your finances by getting into debt. We often pay our monthly bills without knowing the full extent of our debts – in fact, it often seems less painful somehow this way. However, we remain in the dark when it comes to our financial status and that’s very dangerous place to be.

Grab a sheet of paper and a pen and just start writing down the amount of each debt you have. Once you have a complete list assembled, tally the amounts of your debt to get the grand figure of what you owe. No matter how terrifying this amount seems, remember you can find a way to get out of debt and reach for the financial freedom you want. Knowing the full amount of your debt helps you to fix this figure in your mind to motivate you and keep you from going deeper into debt.

Tomorrow we will discuss the next of the small steps to financial freedom so you can get out of debt and become financially free in the future.