By financial freedom, I just mean not being caught under a mound of debt.

The key to it is one line:

If you don’t really need it, don’t buy it!

It’s that simple.

You can’t do it without major lifestyle changes, there’s no way around that.  It’s just like losing weight.  I can’t tell you what to do, you’ll have to figure out everything for yourself, but here are a few tips:

  • Know how much is coming in and going out each month.  You need to gather all receipts and make a monthly spreadsheet, do this for a few months and average things out.  If you are spending more than you are bringing in then you are really screwed and you need a good kick in the head to change your lifestyle.  If you can’t make the minimum payments without  paying them with other sources of credit, then you’re still screwed, but there’s some hope.  A professional credit counselor can probably help you better than some list of tips you read on the Internet.
  • Don’t be penny-wise-but-pound-foolish.  Getting a medium coffee instead of a large might save you 15 cents, but you could save another $1.25 by not having a coffee at all.
  • Take a long hard look at whether you really need certain things.  Do you need to have that big-screen TV, or will your existing one work?  Do you need to buy movies on DVD when you’re only going to watch it once then put it away on the shelf?
  • You only need 3 things: shelter, food and clothing.  Nothing else matters. Remember this.
  • Control your spouse, you need to be in this together. Beware of impulse purchases that the other one makes. I don’t want to sound sexist, but many stores are designed so women will make impulse purchases of unnecessary things. Drug stores are a typical example of this, how many bath products do you really need? Most items can be returned so send them back to return the unnecessary items.  You’ll appear harsh and mean if you do this, but financial stability really does strengthen a relationship.
  • Avoid Craigslist/kijiji/eBay. Yes, you’re getting a great deal on that lamp for the spare bedroom, but do you really need it? Quite often the excitement of the deal overshadows the fact that you don’t really need the item.
  • Don’t get sucked into MLM (multi-level marketing) schemes. Your friend will tell you that your money problems can be solved with a small investment, but the reality is, you’ll lose money. All products that are sold via MLM are either available cheaper at WalMart or they are crap.  Anything like vitamins, magic South American berry juice, or energy products are just quackery.  You might find a small bit of success at the beginning, but you’ll eventually run out of friends to annoy.
  • Watch out for unnecessary spending traps (babies, weddings, home outfitting). Have a baby on the way? Congratulations! Now, your wallet is going to be a lot lighter. Diapers and formula are expensive enough, but beware of “nesting syndrome”. This makes expectant mothers spend like crazy on things “for the baby”. Now, about 95% of things “for the baby” aren’t actually for the baby, they’re for the mother.  The baby needs a crib, but doesn’t need a $100 bed set with matching sheets and bumper pads (bumper pads actually kill babies too). Will your baby really care how they’re dressed? Designer clothes for babies are a waste of money, they won’t know the difference.
  • Do you really need 2 cars? If you’re just commuting back and forth to work every day at the same time, why not save a lot of coin and take the bus? Just the insurance alone will make up for the bus tickets. Doing this will save you thousands each year. Yeah, you’ll have to stand out in the cold and rain, but just the thought of your heavier wallet will warm you back up.
  • Say no to charities. Not all of them, of course, but you can’t give money to every one who asks. Instead of donating money, donate time instead.
  • Set goals and reward yourself with something small for meeting them. Just make sure your rewards don’t end up adding to your debt.
  • Find alternatives to expensive things. I really don’t want to advocate piracy, but why pay $5.99 for a movie rental when you can download it?
  • Selling possessions is not a true solution as you’ll eventually run out of stuff to sell and then you’ll just end up buying something else to replace it. Once you’ve cured yourself of the “spendies”, it’s a great way to clear up some space, but try not to fill it again.

So, in conclusion: don’t expect change without great sacrifice.  I was able to use the above techniques and clear out a fair amount of debt in 2 years.

The next step is to have a savings account and use that to spend on things you want. And of course, don’t buy the item unless you have the cash in your savings or else you’ll just end up back to where you started again.