Name each dollar
More money won’t help you
You get a raise every year and you’re still broke and deep in debt. Your tax refund came through, and for some reason, two weeks later, you’re broke again and racked up more debt. You are one check away from financial disaster. What are your options? What can you do?
You can get a second and third job. Chances are you will spend that money too. Go ahead and start a business. Do you have the time and patience to learn a business and make it successful? What business will you start? Will it be offline or online? Will your spouse or partner agree? Do you have the money to really invest or will you listen to some guru and get deeper into debt with a company you don’t understand? Oh yeah, you’re still broke.
More money will not solve your problems. Most people get raises and windfalls and still live paycheck to paycheck. Athletes and entertainers make a lot of money and end up broke. More income is not a problem solver. Name each dollar is.
I overcame the debt
I beat the debt by naming every dollar and creating a monthly budget. He owed the IRS, the state franchise board, student loans, personal loans, business loans, and credit cards. I decided that I was going to be debt free. I even put #DebtFree2014 on my Instagram photos. I picked up the book The Total Money Makeover by Dave Ramsey. I read it 5 times in 7 days and implemented everything in it. That was November 2013.
In January 2014 I joined Financial Peace University and in 9 weeks I paid off all my consumer debt and saved over $12,000. I only owe student loans. To this day I continue to dedicate 20% of my income to pay my debts. January 31, 2015 I will be debt free.
How did I do this in such a short time? Naming each dollar. I got control of my money and became its owner. Money will no longer control me. I will no longer be a slave to debt and bill collectors.
It will take you about 90 days to get used to living on a budget. When I made my first cash flow plan (budget), I saw that I had an extra $500 to pay off my debts. After 90 days I had an additional $1,100 to pay off my debts. I did all this with the same income.
Follow these 5 principles that I used to name each dollar.
Naming every dollar
Principle One: Decide to be in control
I made the decision to take control of my finances. Decide now that you will control your money and become debt free. You can join a Financial Peace University class in your area. Search online or pick up a book. Decide and take action.
Principle Two: Change Your Thinking
Money is amoral. It is neither good nor bad. It is used to exchange goods and services, so put aside all emotions and feelings. Get rid of the myths and opinions about money.
Go from being a spender, debtor and skeptic to become a spender, saver and frugal investor. Become a master of your money. Make your money start working for you. Make your money pay off debt and build wealth. Force it to grow.
Principle Three: Monthly Budget
Oh, the dreaded word of budget. It makes you feel restricted. Well, sorry, get over your fear of restrictions. Every successful business and person has a budget. Look at your bank and credit card statements for the last 3 months. Find out where your money goes. The last 90 days is a snapshot of your monthly expenses.
This could be exciting or a horror story when you find out where your money is going. Some people are surprised when they find out the amount of their debt payments. Others are surprised by the $1,200 they spend each month at restaurants. People also find that they are in a negative situation and are in serious financial trouble. Get over the shock and make a plan.
Principle Four: Name Every Dollar
Now to the main point of this article. Naming every dollar is the key to financial success. What does that mean? It means you know where all your money is going. You give it a name and assign it somewhere. It also means that you start paying in cash. You feel it when you spend cash. It’s not overspending when you use cash.
You create a monthly budget. Then you give your money to destination. Every dollar counts. There should never be a surplus. You spend all your money. Now, I’m not saying you’re going broke, I’m saying you have a zero balance at the end of the month because you allocated all your money to something.
You must not have a surplus. The surplus money that does not have an assigned destination is kidnapped by the pizza delivery man, the children and the shopping sprees. Now I know I just confused some people. Yes, your balance must be zero every month. You’re allocating money to your savings, bills, fun, and paying off debt. Now you see why I said zero balance. Account for every dollar.
When you name each dollar and designate it to spend, save, or pay off debt, you’re in control. You are the master in command of your money to perform. This is your basis for creating wealth. Your budget tells you what expenses to cut and whether you need serious intervention.
Principle Five Accountability Partner
You can’t be successful without a team. Couples your partner is your partner. If you are single, find someone who will tell you the truth. Your partner will keep you on track and make sure you don’t lose control.
Naming each dollar is a simple process, but it requires discipline, self-control, and a plan. It’s not a one-time thing, but something you’ll use for the rest of your life. Freedom from debt and wealth are his when he names every dollar and controls his money.