In a world where success is often measured by the magnitude of our material possessions, it can be a real challenge to maintain a course of fiscal responsibility. The appearance of prosperity has become so important in our society that it threatens to supplant the more transcendent concepts of personal integrity and human relationships as the most sought after societal ideal.

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Ultimately, each of us is left to determine our own value system. However, regardless of our own value hierarchy, there is a set of unwritten laws that will determine our financial well-being. As we come to understand these laws and comply with them, we can become prosperous - even on a single income.

Part of the challenge of gaining control of our finances is knowing where to begin, and how to go about it. The following information will help us to develop or refine a plan of action that will lead to financial security and bring us into compliance with the basic tenets of financial freedom.

It will be impossible for you to develop a financial plan for the future until you have a very clear understanding of your present situation.

Most people have a vague idea of where their money is being spent. Very few, however, have demonstrated the discipline to drill down into their spending habits and understand where each dollar is being spent - and for good reason. It requires a lot of patience.

It is difficult for anyone to maintain a meticulous budget on a consistent basis. Fortunately, this is not necessarily required. What is required, is to gain a preliminary understanding of where your money is going. Then, armed with this knowledge, you will be in an excellent position to take corrective action.

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Set a goal for the next week to keep careful track all of your spending. Then repeat the process for another three weeks. Once you have a month's worth of data, sit down and assess your current spending habits. You will probably be very surprised at what you find.

• If you tend to carry and spend cash, you will need to carry a small pocket notebook to track your expenditures.
• If you use a credit card, you will also need to note these expenditures.
• It will probably take you a few days to get used to doing it. Just keep reminding yourself that it is a temporary requirement - and a very important one. The information you glean from this process will form the foundation for the rest of your financial planning efforts.

Develop and document a set of financial goals. Keep your goals realistic and simple. Don't go overboard. Set a few goals that are attainable. Writing out a long laundry list of unachievable goals will be counterproductive. What you need at this point is a clear sense of direction - something simple and concrete to focus your attention on. Once you have mastered your first goal, then move on to the next one.

1. Stop carrying cash. Cash is far too easy to spend and far too difficult to track. This is one of the single biggest contributors to financial difficulties - yet most people are unaware that it is a problem source.
2. Don't use ATM's. Same rationale as above. Remember - loose cash is an enemy to financial freedom.
3. Get rid of your credit cards. Credit Cards are worse than cash. Credit cards allow you to spend money that you don't yet have. The basic concept of credit cards is to mortgage or pledge your future earnings - earnings that you will need for future basic necessities - to a bank or finance company in exchange for some object that you find desirable at the moment.
4. Avoid impulse purchases - more on this later.
5. Evaluate your automobile situation. Most people are surprised to find that their auto expenses rival their housing expense as their largest monthly expense. As a general rule, most households overspend on transportation. Are you getting your money's worth out of your cars before you sell them for a fraction of what you paid for them and then replace them with something even more expensive? This is a very fertile field of opportunity for expense reduction - and should be evaluated carefully.
6. Start "brown bagging" your lunches instead of eating out everyday.
7. Send your kids to school with a lunch box occasionally instead of having them purchase lunch everyday.
8. Stop ordering Pizza or Chinese every week. Start spending more time together at dinner and cooking meals at home.
9. Start using coupons more. Shop garage sales and clearance sales.

The idea is to identify the spending habits that are keeping you from enjoying financial freedom. Once you have identified them, develop a plan to eliminate them.

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This is the fundamental premise upon which your financial future hinges. To understand the power of compounding - consider Warren Buffet. He has become one of the richest men in the world by keeping his spending in check and investing his surplus. This approach certainly requires patience, but the few people who truly have the discipline to do this are greatly rewarded - over the course of time.

You've heard it said that the three most important considerations in making a real estate purchase are location, location and location. Well, the three most important things in financial solvency are Cash flow, Cash flow and Cash flow. Cash flow simply refers to the difference between what is coming in and what is going out each month. Companies and individuals with negative cash flows will not remain solvent for very long. Spending more than you take in is a dangerous habit to get into. If done consistently, it will surely lead to devastating financial problems.

One of the biggest difficulties most people have is in planning for variable or irregular expenditures. It is often difficult to come up with an annual insurance or tax premium in a single month. By identifying future expenditures you can begin to tuck away a small amount of money for these expenses each month. This eliminates the burden of having to come up with such a large amount of money at one time.

Don't make the mistake of paying yourself last. If you wait till all of the other commitments are met before setting aside money for your future, you will never save anything.

Rule:   There is an unwritten rule that states that "expenses will always expand to consume all available income."

If you are waiting to begin your savings program until your next raise, or until you pay off a few more bills, you are waiting in vain.

Save something from every paycheck - even if it seems to be an insignificant amount. Over time, these small amounts add up. They also provide an important emergency reserve in the event they are truly needed. You may find it easier, if the option is offered by your employer, to save through payroll-deduction.

"In this world, it is not what we take up, but what we give up, that makes us rich."

- Henry Ward Beecher

This is a concept which may at first seem counterintuitive. However, being generous to others - especially those who have acute financial needs - can actually improve our own financial outlook. The secret seems to be that as we focus on the needs of others, our own problems and appetites begin to fade into the background. Our attitude about our "needs" changes as we begin to recognize our relative abundance. We suddenly find ourselves less inclined to indulge in the extravagant excesses that so frequently characterize our spending habits.

"Never spend your money before you have it."

- Thomas Jefferson

There is no way to be truly free if we are enslaved by debt. Debt is an onerous burden - and one that should be avoided as we would avoid a great plague.

Develop an aggressive plan to get rid of all of your credit cards. This means paying them all off and then never using them again. The best way to ensure that you don't use them is to cut them up or send them back. It is often easier to track your credit card balance if you consolidate the cards onto a single card. If you do this, make sure that you consolidate the cards onto a card with a low interest rate - that will remain low long enough for you to pay the card off.

Once you have achieved a consolidation, destroy all other credit cards and avoid adding any new charges to your last remaining card. Then, begin working aggressively to pay the card off. Depending on the magnitude of the balance, it may take several years. You will not be able to do it by making just the minimum payment. Pay as much as you can afford without jeopardizing your other financial commitments.

Is any debt "healthy debt"?

While a certain amount of debt is sometimes necessary (and perhaps unavoidable) for the purchase of a home, an education or other significant investment, you should be striving and planning for the day when your home is paid for and free of encumbrances. Individuals who are continually enticed by the lure of easy home equity loans are moving in the opposite direction of financial freedom.

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Before you make any spending decisions ask yourself the following two questions and answer them honestly:

•   Is this purchase truly necessary, or could we get by without it?
•   If it is necessary, is it necessary now, or could it be postponed?

It is amazing what we could get by without if we put our minds to it. What's happened to the romantic notion of living the simple life? No one seems to want the simple life anymore. Everyone wants the complex life - filled with gadgetry and things, things, things!

It is interesting to watch the maddened throngs of frenzied shoppers pressing in on the malls at Christmas time - rushing about in a last minute futile attempt to find the most popular Pokemon, the latest play station, the holiday Barbie, the diamond tennis bracelet or another of this year's "must have" gifts.

But where are last year's gifts - the gifts that we just absolutely had to have? The ones that literally broke our budgets and put us neck deep in debt? Most are shoved into drawers and closets - cast aside like yesterday's news; thoughtlessly discarded into an ever-growing heap of possessions and "things". There is no lasting satisfaction in these gifts - there is no real joy that can come from these expensive baubles.

In fact, there only true purpose seems to be to complicate our lives and weigh us down with unwanted debt and responsibility. The satisfaction they bring is exceedingly fleeting and short-lived indeed.

There seems to be a high correlation between impulse purchases and the ease of a transaction. Credit cards have made it so easy to enjoy something right now that we have made no financial preparation for. We can always pay for it later - right? Likewise, a wad of cash in our pocket or purse is continually screaming out to be spent.

Consider the following payment options - listed in the order of how widely accepted they are in the marketplace:

• Cash
• Credit Card
• Check
• Out of State Check
• Barter
• IOU
• Good Looks

One of the best ways to avoid making poor purchase decisions is to stop carrying money. Of course, this may not be completely realistic. However, you can certainly stop carrying the forms of currency that are easiest to spend - like cash and credit cards. You will be amazed at how many purchases pass you by if you stick to the lower half of the list of payment options above. For instance, I have yet to find anyone who was willing to hand me over some valuable merchandise on the basis of my good looks - undoubtedly some of you will be more successful in that regard. The point is, the more challenging the purchase, the less likely that it will happen.

Bartering is an excellent option. You know the routine - spend an hour in the back of the restaurant washing dishes and then come out front and enjoy a fine meal. There is just something so gratifying about that kind of transaction. It's too bad it isn't done more often. Plopping down a credit card may seem more elegant - but in the long run it is enslaving.

One of the most important lessons we have learned from the dawn of the information age is that education and training must be a lifelong process. Education is not only important for our kids, it is important for each one of us. Technology has created a rapidly changing world. Those of us who are unwilling to learn new skills will be passed over and eventually become obsolete. One of the keys to financial security in the future will be training and education.

Take a few minutes to contemplate you current situation. Are you earning an amount of money that is adequate for the basic needs of your family? If not, you need to give serious consideration to receiving additional training in a more marketable skill. Unskilled workers have no economic leverage in today's high tech marketplace.

If you are making an adequate living, you still would be well advised to look to the future and make a truthful assessment of your earning potential and promotional opportunities given your current skill set.

All of the work that we are doing to improve our financial situation will be manifest in one fundamental way. It will increase our net worth. If our financial activities are not accomplishing this, then we are failing. Our ultimate objective should be to increase our financial net worth.

Ultimately, how much money we make is irrelevant. As the old saying goes, "it's not what you make, it's what you keep." The object of these financial exercises is to decrease our expenses so that we have a surplus left over to invest in appreciating assets whose value will increase over time - this is the secret to financial independence. It is not accomplished overnight, but with perseverance it can be achieved.

To calculate your Net Worth you simply need to add up the current market value of all of your assets (home, automobiles, stocks, cash and other investments) and then subtract from that value all of your liabilities or debt (home mortgage balance, auto loans, credit card debt, student loans, and other personal debt obligations).

Take the time to understand where you currently are. If you currently have a negative net worth, do not despair. That is the purpose of this exercise. No matter where you find yourself today, you should begin now to set personal financial objectives and work toward them.

Hint:  Make wise use of bonuses, tax refunds and other financial windfalls. By funneling these unexpected proceeds into productive assets or into paying off debt, instead of spending them, you will be able to make much more rapid progress in your quest for financial security.

Decide now where you want to be and when. Then develop a realistic but aggressive road map to get there.

Resolve today to take control of your own future. Do not rely on the government, an employer, your church, a friend, or a rich uncle to plan it for you. There is no one more qualified than you to make decisions about your long-term financial future. Use the resources provided and involve your family in the process of mapping out your new and exciting path to financial freedom.

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