Four Steps to a Clutter Free Life - Step One: Finances

Looking at the retirement horizon, there are key areas of life should be monitored and kept in order. Regardless of your age or specific timeline, actions can be taken that cultivate a rich life, materially, mentally, physically and financially.

Financial components;

I had the good fortune of interviewing a successful manufacturing business owner as he celebrated his companies 50 year anniversary. He shared a compelling and inspirational story of how he grew his business from the basement of his suburban home to an 80 million dollar enterprise. While I was able to glean several nuggets of wisdom from our conversations, one specifically stuck with me and I think of it very often. He said that when he started his business with a US $5,000 investment, he never borrowed a dime. Admittedly, he paid late sometimes, but he always paid and he never borrowed. “Debt will rot your guts,” he told me. It stuck.

There are numerous calculations available to determine the income needed to live a certain type of lifestyle. These formulas include expenses, food, housing, loans, healthcare… But imagine if you cold enter retirement debt free. Your home is paid, you have no loans, no credit card debt and because of your discipline, you’ve got a reasonable sum in the bank. Your monthly cost of living is reduced dramatically!

The swing between paying debts and trying to save saving and being debt free and saving is dramatic. It is hard to both at the same time and without debt, savings grows.

So, what to do:

Begin with the why again. If your not into it, you won’t succeed. But if you are tired of the stress and would like a sense of freedom from financial burdens, lay it all out on paper - here is a simple place to begin:

List the reasons your taking this action and what your ultimate goal is. Hopefully it will be something like a debt load of zero.
List your monthly expenses, and your monthly income. Compare the two. If your expenses are more than your income, you’ve got two options:
1. Reduce your expenses.
  - Eliminate all non essentials, cable, magazines, online shopping…
2. Increase your earnings.
  - Sell stuff
  - Part time it

There may be a period of time when you consciously do not take that vacation, buy that couch or splurge on a holiday, but the goal has been determined and the results are life changing.

Once the landscape is surveyed, list the debts from the lowest to highest with the mortgage being last and pay the lowest off first. Once that one is gone, high-five yourself! Now take the funds that went into the first debt and apply it to the next debt principal and repeat.

It may take a while, even years, but the discipline will reap financial and emotional benefits. Imagine how much you’ll be able to save if you had no monthly payments on anything but the mortgage. And when you reach that milestone, double up on the mortgage and eliminate that expense. By then your life has been changed. And the things you used to buy (waste money on) no longer have meaning and you are able to focus on the present life you have, not the future purchase or debt payment but the now

Of course as a secondary benefit, you’re now earning interest instead of paying it.

Increase the peace.