Your Money_ The Missing Manual - J. D. Roth [37]
You can learn more about Financial Peace University at www.daveramsey.com/fpu/. For a first-hand account from somebody who completed FPU, check out http://tinyurl.com/FPUsteps.
Start Now
It's not getting out of debt that's important—it's the freedom that being debt-free can bring you. When you're chained to the shackles of credit card payments and student loans, your choices are limited. You feel trapped in your crummy job because you can't afford to quit.
Debt can feel so overwhelming that you think you'll never escape, but the good news is you can. It'll take hard work, but you can do it. Although debt repayment can seem daunting at first, it won't take forever.
The most important thing is to start now. Waiting to get out of debt is a fool's game—it doesn't help anything. Begin with baby steps if you need to, but do something. For starters, turn the page to Chapter 5, where you'll learn ways to cut your spending.
Tip
The toughest part of taking control of your finances is getting started. I recommend setting aside a single day (a "Money Day") to tackle all of your financial chores at once. To learn more, head to this book's Missing CD page at www.missingmanuals.com.
Part II. Laying the Foundation
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Chapter 5. The Magic of Thinking Small
"Be industrious and frugal, and you will be rich."
—Benjamin Franklin
Frugality. Thrift. Economy. Whatever you call it, the idea is the same: using your money and resources carefully. If you don't spend mindfully, your hard-earned dollars slip through your fingers and it's hard to get ahead. By being frugal, you make conscious choices that'll help you live well tomorrow and today.
As you'll see in the following pages, you can be frugal and still wear nice clothes, dine out on occasion, and buy new things. Frugality means making the most of your money by focusing on everyday expenses (as opposed to big-ticket items, which you'll learn more about in Chapter 9) and recognizing that small amounts matter. It's a skill that anyone can hone, and it lays the groundwork for sound financial habits throughout your life. This chapter explains why it's important to cut costs on the small things—and suggests strategies for doing just that.
Tip
To commit fully to changing your lifestyle and embracing frugality, you have to keep your goals in mind. (Hop back to Chapter 2 for a refresher on goals.) If you lose track of why you're making sacrifices, frugality will become a burden and you won't stick to your plan.
Why Frugality Matters
Thrift is nothing new. In fact, it used to be fashionable—you were admired if you watched your nickels and dimes—but that's no longer the case. Over the past 50 years, frugality has gained something of a bad reputation.
Many people equate being frugal with being cheap. But there's a difference: When you eat stale crackers with your soup for lunch, you're being frugal. When you serve stale crackers to your guests to eat with their soup, you're being cheap. You cross the line when your habits affect others, not just you.
Part of the reason thrift fell from grace is that there's no profit in it. Nobody's going to run a Super Bowl commercial to promote being careful with your money, or shell out for a magazine ad campaign that tells you not to go into debt. If you want to be thrifty, you have to advertise to yourself (see the box on Old-School Tools).
Even though there aren't any big corporations to sing its praises, frugality is an important part of personal finance. Packing a sack lunch may only save you a buck or two each day, but when you make many small changes over months and years, they really add up.
Here are a few reasons it's important to develop thrifty habits:
Quick wins. As you learned in Chapter 4, the two ways to improve your cash flow are to reduce expenses and boost income. Both are important, but reducing expenses offers the quickest results. It takes time to find a new job or to ask for a raise, but you can start being frugal right now.
Lots