If you live paycheck-to-paycheck or feel like your debt is out of control, you’re not alone. These individuals were drowning in debt, but then they applied the strategies I’m going to share with you today. Check out how much freedom they found!

A recent article by USA Today cites a CareerBuilder report showing almost 8 in 10 Americans are living paycheck-to-paycheck:

• 78% of full-time workers live paycheck-to-paycheck
• 71% of U.S. workers are currently in debt
• 56% of U.S. workers feel “over their heads”
• 56% of U.S. workers save $100 or less a month
• And…1 in 10 working Americans, making six figures or more, also live paycheck-to-paycheck
• Adding up to approximately 60% of working Americans, who make six figures or more, in the red.

Friend, if that’s you, today is the day you say NO MORE. You have officially started on the road to independence. You’ll be surprised how simple it actually is.

You have two routes to financial independence:

1. Increasing your income
2. Reducing your spending

Usually, we focus primarily on the first one. In fact, that’s why many people start a home-based business.

We think if we just make more money, we’ll finally achieve financial freedom. And, making more money IS important. It can help you pay off debt faster.

But listen, there are hardworking Americans who make six and seven figures – millionaires – who are flat broke. They are caught up in a vicious cycle of spending every penny they earn- and then some!

So, your first step to financial freedom is learning how to hold on to that money. Even if you never make a six- or seven-figure income, you can STILL find financial independence.

Okay! Now, how can you do that?

1. Tell Your Money Where To Go

Our money is always looking for a place to go, and if you don’t “tell” it where to go, you’ll always find yourself in debt. List all of your debts, beginning with the smallest at the top and the biggest last. Then, write the monthly payment you make on each one. 

If your smallest monthly debt payment is $25, on a $500 credit card balance, let’s say you find $300 a month in excess spending you can apply to that debt. (We’ll talk about how to find that “excess” in a minute!) Now you’re paying $325 a month on a $500 debt… completely paid in just two months. Now take that $325 you’ve already budgeted per month, and apply it to your second debt. You keep going down the list, compounding the payment you make on each debt, as you pay-off each one.

Now listen, once you pay-off one thing, don’t go spend that money. Don’t buy a bunch of crap and support the habits that led to your debt in the first place. Just keep chipping away at your balances. When your credit cards are paid off, start paying down your cars. You can get those paid-off in one year, instead of five!

When those are paid off, apply it to your mortgage or student loan debt. Now you’re making double and triple payments… paying it ALL off faster. And, you save tons of money in interest. Paying off debt is one of the best investments you can make because it’s a guaranteed 18% return.

Carla, a client, began using this formula and has paid down $46,000 of debt in two years. When asked how she feels, she said “AWESOME!” Her confidence level is soaring, knowing she can now get out of debt SO much faster than she can make a million dollars in her business.

2. Find the Fat

Now we’re not talking about any fat on your waistline (or anywhere else) – although you might find some of that melts off, as a result of lower stress and better habits. Look in your pantry, look in your closet, look at your bank statement, and I promise you WILL see excess. So take a close look at that “excess.”  Get out whatever you use to track your spending. Go ahead, get it out right now. Look at your bank statement. Where does your money go?

Even if your income has increased, there might be a static income-to-debt ratio. This means as your income increases, for most Americans their spending and debt increase, too. Hans and I discovered this the first time we sat down and really looked at our expenditures. One of our businesses produced $35,000 a month, and our expenses – just day-to-day living expenses – were $19,000 a month. How pathetic is that?

Our food bill was $1200 a month, with only two small children at home. Where was it all going? I opened the pantry and found eight different boxes of cereal. All with a third of the box left. Listen, you know that’s what happens. And where does that go? In the trash. It may seem like a little thing, but that’s 2⅔ boxes just sitting there. Figuring about five bucks a box, that’s 12 bucks in the trash.

Now, look at your caffeine habit, your fast food habit, your shoe habit. Itemize all of your spending. Okay, wow. I’m spending $200 a month between my husband and I, at Starbucks. When you add it all up, you’ll want to barf. I know… because I’ve been there. At one point, we were making half a million dollars a year and $100,000 in debt. When I looked at what we were spending, I literally barfed!

We can always spend money on things that ultimately don’t benefit us, and credit card companies trap us into doing it! They make the money available, so we use it. But is that one latte a day worth the burden of debt? Is it worth not having the vacation your family deserves, because you’re drinking $200-$300 worth of stuff that’s actually bad for you every month?

Once you’ve itemized all of your spending, bet you find an extra three, four or $500 a month – at least – on stupid stuff:

• Coffee
• Diet sodas
• Eating out
• The gym membership you never use
• Random crap at the discount store
• Eight different types of cereal, PLUS the eight other breakfast options in your pantry and freezer
• Your Netflix account or premium cable package

That’s the “fat” in your budget. Define what is absolutely essential to your day-to-day living, then cut out the rest. This, ALONE, can lead you straight to financial independence.

We had a new friend who lives in our town over to our house for dinner one night. Now this fellow delivers bread in our itty bitty town and is the sole provider for his family… raising EIGHT children, on his small salary.

However, he came to an event and got convicted about his spending. He listened and obeyed when God told him to cut back, and lo and behold, in a very short time he paid-off his house and two vehicles… without raising his income one single cent. He lives completely debt-free, pays cash for everything and is completely independent financially.

So as this man sat at my table, he absolutely radiated amazing confidence and freedom! And it all came from just changing his spending habits. Now listen, increasing your income at the same time is going to help you get there faster. But you absolutely CAN become financially-independent, even if you NEVER make six figures.

3. Put it Together

Okay, you’ve found all that fat you just found in your spending. NOW, you’re going to take that money out of the marketplace, reclaim it from the people robbing you blind – without you even realizing it. Go ahead, snatch it back from those greedy hands and apply it to your debt, using the process in Step 1. It’s exhilarating, I promise!

When you’ve listed all of your debts and “found the fat,” you’ll be able to set goals based on how much you can pay each month. How quickly will you have your first debt paid-off? What about your second? Having short-term, achievable goals will help build confidence and keep you on track, as you pay down your debts.

Using the above example of a $500 debt with $350 applied per month, it will be paid off in less than two months. If your second debt is $2,000, and you were paying $120 on it each month, now you’re paying $445 per month, it will be paid off in seven months. Continue setting those milestones for yourself… because it will be tempting to fall back into old spending habits.

4. Change Your Mindset

Paying off your debt will completely change the direction of your future. You’ll feel more freedom, less stress and more peace.

BUT…

If you don’t change how you think about spending money, you will continue to be like the 71% of Americans burdened by debt. Statistics prove, the more we make, the more we spend… and in truth, this kind of thinking will never lead to financial freedom.

Being a slave to your spending is NO LIFE at all. Whether you bring in $20,000 a year or $2,000,000 a year – and ESPECIALLY while you’re still paying off debt – it’s important to establish thoughtful spending habits and a strong foundation of financial understanding.

Listen, companies pay MILLIONS of dollars to get money out of your pocket and into theirs. They pour millions of dollars in advertising and marketing, to get you to spend money, resulting in you having items in your closet with price tags still attached… AND a mountain of debt.

You have to ask if buying that thing, spending that money – however big or small the price tag – is worth the heaviness of debt? Is it worth the dread of collectors calling you? Is it worth the depression? The oppression? Feeling trapped? Is it worth being stressed-out and having no fun?

Get rid of anything tempting you. Cancel your catalogs, avoid going to stores unless it’s for essential items (remember what you defined as “essential” in Step 2?), step away from impulse purchases and sleep on it for at least four days if it’s a small purchase, and at least 30 days if it’s a big purchase.

When I went into stores and saw something I just “had to have,” I would take that money, whether it was $100, or $10 or $2, and I would put it in a separate account or even an envelope and hide it away. Pretty soon, I had $850 stashed in an envelope in my drawer… money I would have spent on stuff I’d have already lost interest in.

If you don’t lose interest and still dreaming about it in a week or 30 days, and you have the cash AFTER paying your bills and paying down your debt, then go back for it. And if it’s not on sale, then wait for it to go on sale.

HOWEVER…

Sales are not an excuse to buy seven of something.

A girlfriend of mine and her husband were $65,000 in credit card debt – not including their cars and home. JUST in credit card debt… $65,000! At one point, her husband needed a new pair of shoes, so they went to Foot Locker to shop a sale – and walked out with SEVEN pairs of shoes.

Did they need seven pairs of shoes? Seven pairs of sneakers? No. But they had a line of credit available allowing them to shop now and pay later, so they did… even though they were $65,000 in debt.

We have ALL done this. We’ve all bought things we don’t even remember we have. But THAT was the final straw for her, and she then paid off over $45,000 in debt, during a down season in her business.

I’ve made a lot of money in business. I’ve owned the multi-million dollar homes people dream about, my husband and I traveled First Class, we paid cash for Mercedes after Mercedes, and not only did I have a mountain of debt, NONE of it led to happiness or fulfillment.

I was 23 when I made my first million, and I spent every red cent of it. Every dime. Gone. History. Buh-bye.

Now some of you are thinking, “Well, you’re an idiot!” But listen, you would do it, too. If you had never made that kind of money in your life, and all of a sudden it just landed in your lap, you would spend it, too. And this leads to 56% of working Americans feeling over their heads. See, when you don’t have a foundation of financial understanding, you spend the money like it’s a bottomless well. We spend money foolishly, thinking it’s going to last forever.

And, that’s what I did. I was 23 and uneducated, so I spent my money on stupid stuff:

• Clothes
• Jewelry
• Cruises
• Traveling

Magazines about lifestyles of the rich and famous featured stories on me. Seriously. It was stupid. I spent my money on things that deteriorate. I spent $5,000 on a suit, and it was destroyed by one, single, tiny moth. That money could have gone to SO many other things:

• Feeding the homeless
• Making a difference in a county
• Impacting an entire nation
• My kids’ college tuition
• Saving for a wedding

Hans and I decided it wasn’t worth the debt burden to live that lifestyle. We made the decision to sell our home and reduce our spending and moved to a small town where Walmart was basically the only shopping option. I went from Nordstrom’s, Saks Fifth Avenue, Bloomingdale’s – you name it – to Walmart, JCPenney and Mervyn’s. My only options were stores where you couldn’t blow a ton of money… even if you tried.

Yet… even though I had limited my spending and cut back on how much I consumed, I still had the same habits. I still had the same problems, I had just limited how much I “allowed” myself to spend. I would pop my head into all these stores just to “see what they had,” even though I didn’t need anything. We have to change our fundamental habits and mindset if we want to break the cycle of debt.

5. Invest in Yourself

Once you’ve established that foundation of financial understanding and learn to hold on to the money you already make, that’s when increasing your income will really benefit you and help you find financial freedom – MUCH FASTER.

So, let’s talk investments. Guess what… guaranteed investments DO exist! YOU are your most valuable commodity. To get out of debt and maximize your value in the marketplace, you MUST invest in yourself. When you improve your skills, your income grows. When you take that money you invest in yourself and put it to work, you can watch the money grow… year after year after year.

Unfortunately, too many people in business miss this altogether and it hurts their long-term profitability. Think about a farmer. If he eats or sells everything his seasonal harvests, he ends up with nothing left to plant next season. You have to set aside some of your earnings to re-invest in your business.

For some of you, that’s the seminar you’re attending this month (you can get registered for First Steps To Success right here). For others, it’s advertising. Many might invest in getting leads. For more of you, it’s the monthly product you HAVE to have, to get your check.

(Join these First Steps To Success graduates and start your journey to financial freedom)

You can only reap what you actually sow into the ground. Whether you are running a home-based business or working a traditional job or you have a job as a stay-at-home parent, wherever you find yourself, you can benefit by educating yourself and learning skills to make you a more valuable employee, a more valuable friend and family member, a better spouse and parent. ALL of those things will set you up to reach YOUR long-term financial goals.

Frivolous spending is foolish – and in fact, scripturally – foolish and hasty spending leads to poverty. WISE investments and FRUGALITY lead to wealth. When you invest in yourself and your business, you’ll reach financial freedom faster… and have more fun doing it!

We have clients who pay off hundreds of thousands of dollars in debt in less than five years, and you can see the freedom in their lives. They have more fun. Their relationships are better. They make more money in their businesses because when they stop making calls with dollar signs in their eyes, pressured by their upcoming house payment and the car payment and Mastercard payment, they’re free to build trust with their prospects. They’re free to work from the “friends first” model.

Don’t believe the lie you will ALWAYS have a mortgage and a house payment.

Don’t believe the lie you CAN’T have the life you want on the income you have.

Don’t believe the lie FINANCIAL FREEDOM is out of your reach.

It’s time to end the cycle of living paycheck to paycheck. You are on the road to financial freedom, my friend! For even more tips to hold on to more of your hard-earned money each month, check out our free checklist of 20 Ways To Pocket More Cash.

If you often find that there is more month than money, you want to grab your copy today. You’ll be amazed by how much more money you find in your bank account at the end of the month!