Monday, January 10, 2011

Day 88: Step 5 - Educate Yourself

January 10, 2011

I have developed a guide to help you (and me!) achieve the mindset and principles required to successfully become debt free.  This is the fifth in a series of posts about my Twelve Steps to Debt Freedom.

Step 5 - Educate Yourself

Now that you have gathered and organized all of your financial information, it's time to figure out what to do with it.   Rather than going blindly into creating some sort of budget for yourself, take the time to become a human sponge and start learning finance and budgeting basics.

Read, read, read.  And then read some more.  There are so many books on budgeting and personal finance it is almost ridiculous.  Head to your local bookstore or library and browse through all of your options.  Find a few that speak to you and dive in.  DON'T walk out of the bookstore with $200 worth of new books - that kind of defeats the purpose of your debt free goal.  Many libraries now have an online search function - search from the comfort of your home and put a request in for the books you want.  The books will be sent to your local library if they aren't there already and you will be notified when they are available.  Key word: FREE!  If you aren't sure where to start, ask your friends, librarian or Google for recommendations.  Tip: Don't assume that what you are reading is correct or the best way for you to become debt free.  Always read with a skeptical eye and question what you are being told.  Often you will learn more about personal finance from those people you disagree with.  A few of my favorite personal finance books:

The Total Money Makeover: A Proven Plan for Financial FitnessPersonal Finance For DummiesThe Millionaire Next Door: Surprising Secrets of America's Wealthy Debt Free For Life: The Finish Rich Plan for Financial Freedom

Embrace Social Media.  There are some pretty amazing people out there talking about their own experiences and frustrations with personal finance.  Jump on Facebook or Twitter and do a key word search to find people writing about debt.  There are also numerous bloggers writing about the best way to tackle debt.  And don't forget podcasts!  The best part about social media is that it is portable.  Most of the time you can access everything from your phone so if you find yourself sitting around with some free time while you are out and about, take this opportunity to read up on the people you decided to follow.  A lot of times, I listen to podcasts through my headphones while I am at work or during my commute.  Tip:  Subscribing is the best way to follow social media.  Information is sent directly to you to read - no need to search every day.

Surf the Web.  These days, most information is just a few keystrokes away.  Make an effort to read the financial sections of newspapers (Wall Street Journal, New York Times) or check out online magazines related to personal finance (Money, Kiplingers).  Even CNN and MSNBC both have pages devoted to money.  You may not understand everything you read but the fact that you are exposing yourself to financial topics will pay off in the long run.  Tip:  Not all newspapers or magazines will fit your needs.  Some are geared towards people who already have a lot of money and are looking to invest; others are just filled with a bunch of crummy advice.  Take some time to figure out what works best for you.

Share Your Thoughts.  Once you become more comfortable with personal finance concepts, start talking to people.  Ask questions, discuss ideas and options, brainstorm.  This will further develop your understanding and also help you find like-minded people who are also interested in improving their financial situation. 

Read About Step 6 - Create/Follow A Plan

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