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3 Simple Steps to a Better Financial Future

When you read the headlines in the personal finance arena these days, things are pretty bleak. Seventy-six percent of Americans live paycheck to paycheck; 64% of Americans can’t cover a $1000 emergency without using credit/debt; the average American household wastes 24% of their take home pay on consumer debt. Wow!

The average American household has a mortgage of $180,000, owes $50,000 in student loans, has $29,000 in auto loans, and has $16,000 in credit card debt. Again I say, Wow!

If you are the average American, you are probably looking for a way out of this mess, unless of course you are sitting in a corner with a blanket over your head hoping no one sees you. But there is a way out; in fact there is a simple way out (notice I didn’t say easy). Here are three simple steps to become the “above average American” with regards to personal finances.

Step 1 – Start with a monthly spending plan. This is probably THE key to building a better financial future. If you don’t have a plan to tell your money where to go, there’s no telling where it went. Some people call this a monthly budget, which it is, but we prefer the term spending plan as it “allows” us to spend money. The key is telling every dollar where to go every month. (In fact, Dave Ramsey has a free budgeting/spending plan app called EveryDollar, you might want to check it out.) You need to build a “net zero” spending plan each month. It starts with income then deducts every dollar of giving, saving, spending/debt paying until you end up at zero. If you have money left over (not likely in most of our homes) you give more, save more, or pay down more debt. If you are short of money, you look for places to not spend.

Step 2 – Eliminate debt. Debt is a thief. It robs you of a solid financial future. Don’t fool yourself, your kids’ college and your retirement are not all that far away. To have your money going to wants and whims of the past is not a good thing. Paying interest for those things is especially bad. Keeping up with the Joneses is not smart, the Joneses are broke! Get rid of your credit cards, stop buying things on income that you believe is coming when you have no guarantee that it will. Having lived through two job eliminations, and coaching many who have lost their jobs, I can tell you that debt robs you of more than your financial future. Find a way to eliminate debt as quickly as you can, and then never go back to it.

Step 3 – Live within your means. Don’t buy into all of the marketing and hype you see on television and the internet. We are the most marketed to society and generation in the history of the world. And we are talking world class marketers. I know you can’t imagine your life without…that car, that beverage, that phone, that television, that computer, that restaurant experience, that hotel experience, that vacation cruise, that time share, that boat, that entertainment ticket, that house…right? What if you followed a plan that said, give 10% of my income to the local church, save 10% of my income for emergencies and big ticket needs, and live on the remaining 80%? Can you imagine the financial margin you would create in your life? How would it feel to have less money stress? Living within your means can help bring this peace to your life. An even better plan is the 15%-15%-70% plan. That could really change your future.

Now, none of this is easy. It takes patience, discipline and perseverance. But the other side is so sweet! We’d be happy to talk with you about how this happens. There are resources out there that are available to everyone. And if you need that little extra help, as a personal financial coach I can come alongside you for a minimal investment and get you headed in a new direction!

To schedule a free 30 minute consultation, please email me at

Jim Horton is a personal financial coach in the Raleigh-Durham, North Carolina area. He has been serving clients for nearly 10 years in order to secure their financial future.

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