I'm excited about this post.  Why?  Because this is the kick off post to the financial plan.  In this post we're going to cover a number of things, including two fundamental principles as well as things you need to be prepared to do, and some things that you need to put into place before OR while you start the plan.

My goal is to change the way you view money.  There are two basic principles that lay the groundwork for developing an appropriate view of money.  First, you must live on less than you make.  No ifs ands or buts.  You don’t have the ability to print money.  Second, there are only three things you can do with money.  You can Give, Save and Spend your money.  If you want to live a balanced financial life then you need to do all three things. 

That being said, there are some things you need to do as you begin to develop those principles:
Here’s the quick summary of those things:
1. All family members need to be on board and ready for change.
2. Be current on all your bills.
3. Get on a budget.
4. Cut up and close all credit cards.
5. Give up having a credit score.

Okay, you might think that those sound easy enough.  So here are some additional details about each item.
First and foremost, if you’re married, do not attempt to try any of this unless both you and your spouse are on board.  This means that both spouses agree that change needs to occur.  This includes both being willing to work on the finances, including budgets together.

If you’re single you may have this covered, or maybe not.  As a single it can be easy to get on a program because you don’t need to persuade anyone else that it’s necessary.  You can just do it.  However, the flip side can also be true.  It can be just as easy to slack off and fall off the wagon as well.  I would suggest that you find someone you trust and ask them to provide some level of accountability.  This could be something as simple as asking the person to check in on you every once in a while.  Have them ask you how you are doing sticking to a budget.  This is someone who loves you enough to get in your face when you misbehave with money and don’t stick to the budget that you created for yourself.  This is NOT someone who creates your budget for you and does the work.

Having your family on board is critical and must be done before you move onto number 2-5.  Items 2 through 5 can be done at the same time but you cannot do those items until the first one has been taken care of.  In fact, you will fail if you do not have buy in from the right people.

Okay, so you’ve bought into the idea that changes are necessary and your spouse agrees.  The next 4 things can be worked on at the same time and in conjunction with the first step to financial freedom that I will post tomorrow.

Get current on all your bills.  If you are behind on any payments you need to get caught up as quickly as possible.  Sell your stuff.  Get a second job delivering pizzas.  If you’re behind on a car, you may be able to sell it.  If you owe more than it’s worth you may be able to sell it and get an unsecured loan for what you still owe on it after the car sells.  This is the point that you begin to get radical about changing your lifestyle.  Remember, your future success hinges on getting out of debt.

While you’re getting current on your bills you need to get used to this thing called budgeting.  Simply put, a budget is you telling your money where you want it to go.  This will be a significant change for most of you, because most of you live from paycheck to paycheck.  All of the money comes in and all of it leaves but no one knows where it goes.  I’ll write more about how to do a budget at a later date.  The summary on how to budget is this; before the month begins you need to grab a notebook.  List your income at the top.  Then list all of your known expenses.  You need to have accounted for every single dollar on paper.  Your income minus your expenses must equal zero.  Once the total does equal zero, you agree (with your spouse if married) that no money will be spent on anything unless it’s in the budget. 
Ladies, this means that you can’t run out to buy those cute pair of shoes unless they are in the budget.  Guys, no electronic gadgets unless you have the money accounted for in the budget.  If something comes up in the middle of the month then you need to sit down and determine how you are going to pay for it.  You can decide to spend less in another area in order to pay for the new pressing priority.  Remember that no matter what your income minus expenses must equal zero.

A budget will help you spend less than you make.  The major reason the wealthy are wealthy is a direct result of a decision to be in control of their financial situation.  That idea, coupled with the decision to live on less than their income, is what gives them the ability to become wealthy.  You will never become truly wealthy by borrowing money.  The average millionaire became a millionaire after they quit borrowing money.  You can become a millionaire too, and I will demonstrate how in the future.

Dump your stupid credit cards.  They will bring you nothing but trouble.  In fact, the only exception I make for this is a corporate credit card.  If your company requires you to have a corporate card for traveling on business then you will probably have to get one.  The only credit card I have is a corporate card and only business purchases go on this card.  If you work for a small company you may be able to request a business debit card.  I would much prefer you have a debit card for such purchases than a credit card.  By the way, if you own a small business and have a credit card, dump it.  You need to learn how to budget and control cash flow so that you have the capital reserves necessary to cover those large purchases.  A credit card will get you into trouble.  It’s not a matter of if, it’s only a matter of when. 
If a company wants you to keep the account open because you still have a balance then ask them to close it to new purchases.  Cut up the card now and then once it’s paid off be certain to close the account permanently.  Ask them to put closed by owner for your credit report.

Give up having a credit score also known as a FICO score.  Give this up forever.  Here’s the deal.  Everyone loaning money hypes the importance of having a good FICO score.  I’m here to tell you that having a credit score is stupid… unless you plan to borrow money.  I don’t plan to borrow money and don’t want you to borrow money, so trying to improve your credit score is stupid.  Let me make this really simple for you.  The credit score calculation consists of several different numbers but none of them have to do with building real wealth.  In fact, most if not all of the numbers used involve debt, including how much you owe, how consistent you are with payments, and more.  I’ve heard the FICO called the “I love debt” score.  Give it up.  Millionaire’s who don’t borrow money have a FICO score of 0 if they haven’t borrowed money in 10 years.

I’ve outlined what you need to know before getting out of debt.  It won’t be easy.  Eventually people will begin to think you’re weird as you build a track record of sticking to a budget and paying off your debt.  Here’s the thing, if normal is worrying about debt and being broke then frankly, I don’t want any part of it.  Here’s the payoff, when you’re out of debt you will be able to easily become a millionaire.  You will be able to save up and buy nice things, take nice trips.  All paid for with cash.  It will take time but you can and you will be able to do it.  How cool would it be to have a million or two in the bank when you retire?  How incredible would it be to pay cash for your kids to go to college?  How awesome would it be to write a large check to your favorite charity?  How life changing would it be to permanently impact your family and your community forever?  You can… once you get your finances under control.