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The Secret of Millionaires - Paying Yourself First & Living Frugally
By Theresa Nixon

We have become a nation of instant gratification. We want what we want when we want it. But in today's tight, economic situation, the importance of saving is critical. It is the only true means to financial solvency. That being said, however, trying to save money in a tough financial climate is difficult, at best. But did you know that the true secret to wealth is paying yourself first and living frugally? Generally speaking, that's how most self-made millionaires became rich. You, too, can cultivate the mindset of a millionaire by doing the same.

Before paying your mortgage, before paying on your car, before paying all the bill collectors, pay yourself first! It's your money, after all; you work hard for it. You deserve - in fact, are entitled - to keep a portion of your salary for yourself. By living frugally - not giving into impulse buying - and saving your dollars, you can build financial independence; but the sooner you start, the quicker you'll build financial independence.

First, decide what you are worth; then deduct that amount from your paycheck and put it into a savings account. Let this be your chief priority. The best way is to take a percentage right off the top of your gross salary. This may cause a little pain at first (like alleviating a toothache by pulling a bad tooth) but your budget will be much healthier in the long run. For instance, if your monthly gross salary is $3,000.00, and you decide that you're worth at least ten percent of that, your savings amount would be $300.00 per month. (It's important to decide your savings percentage from your gross salary as this is the true figure of what you earn, and you do not want to shortchange yourself.) Once you begin to do this regularly, your savings will grow rapidly.

Following are some tips that can help you to grow your savings even quicker:

  • Begin by living frugally. Curtail the accumulation of things and get rid of all the excess (you can sell what you don't need or give it to charity). This will also help to alleviate the anxiety often associated with having too much stuff.

  • Cut out the fat in your financial diet; create a budget to track your spending. This is imperative in order to accurately gauge where your money is going.

  • Go back through your checkbook for a year; this will give you a snapshot of your spending habits.

  • Total all unnecessary expenditures (those items not considered a need). Then calculate your spending total. I'll bet you will be amazed at how much frivolous spending you see there.

  • Make the decision to cut out impulsive spending habits. If you find yourself tempted to make an opulent purchase, walk away and allow yourself at least twenty-four hours to think about it. This loosens the emotional hold the product has over you (most impulse purchases are based on emotion); chances are, you will realize you can do without it. (Remember: if it isn't food, water, shelter, basic clothing, or a matter of life and death, you can probably do without it.)

  • Don't buy expensive cleaning or household products; this can be a major drain on your finances! Besides, most of these products don't work as well as using a plain, cloth rag and a little elbow grease; but it will save you big bucks over those highly touted, expensive brands. Shop at dollar stores for cleansers, soaps, detergents, diapers, and other non-food items.

  • Get off the credit card treadmill. Pay them all off and be done with them (very few persons can keep a credit card for dire emergencies only; most give into the easy temptation of charging again).

  • Put the money you would have used on unnecessary spending and credit card payments in the bank, or use it to pay down your car payment, add to your mortgage payment, etc.

  • Cultivate discipline by delaying gratification for those things you want by saving and paying for them in cash.

  • If you can swing it, make one or two extra car payments a year and apply it to the principal (be sure to note "towards principal amount" on your payment coupon to ensure that it goes to principal and not interest). By doing this, you will hasten the loan payoff. (The same principle applies to mortgage payments or any debt payments.)

With just a little assiduous discipline applied to living frugally and by keeping to your savings plan, you will have a tidy nest egg by the end of the year. You can use this to pay off any remaining debt. And by placing a portion of your savings into a safe higher-yield account (preferably one that has penalties for early withdrawal) you can grow your savings into a fund that will eventually sustain you. Who knows? You may even become a millionaire!

Theresa A. Nixon
Author: "Finding Your Purpose In Life (Practical Advice From The Trenches)"
Publisher: Lulu.com ( http://www.lulu.com/content/2710138 )
Please visit my blog at: http://www.youareyourownrevolution.blogspot.com

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