It isn't as difficult as people make it out to be. It just isn't as fun or pleasant. Here are some basic steps to getting wealthy without making tons of money (modified from Dave Ramsey's tips, check out his site for more detailed advice). Sorry this is so long but there are many steps to changing the behavior that gets so many in debt and out of savings.
Step one: Control where your money is going
1.Write down in a notebook every cent you spend and what you spend it on.
2.Separate the needs vs. wants for everything you spent. Be honest.
3.Evaluate where waste can be trimmed. Common areas are junk food, eating out, cigarettes, alcohol, unused or unnecessary services such as large cell phone or cable packages; maybe a gym membership you don’t use. Also shop around for auto and homeowners insurance. Look into energy saving tips, clip coupons and comparison shop. Angel Food Ministries could save you a lot on groceries (look them up online for a site near you, it is a service open to anyone and is not based on income. The food is the same you would buy at the store but about 50% cheaper.)
Step two: Budget
1.Use what you learned about your spending in step one to write a full budget.
2.Put the budget in order of priority:
Clothing (only bare necessities)
All other debts
3.Assuming you can afford at least the minimums on all debts, and pay all bills in full, allow at least a little spending and entertainment money . Make it minimal while you are still in debt. Maybe something like ten percent of whatever is left after all bills are paid, or a set dollar amount such as $20 a week.
4.If you cannot afford all bills, cut back further and bring in more income. You may need to consider downsizing your lifestyle: Sell a car with an expensive payment and buy in cash or with a smaller payment, a cheap car that gets from point A to point B. A better car can wait. Maybe move into a smaller house or an apartment. To bring in more income, do odd jobs, work and extra shift or take on a temporary part-time job.
Step Three: Create an Emergency Fund:
An ideal emergency fund is 3-6 months of expenses, this should be saved for after Steps Four and Five; for now a mini emergency fund should be started so Steps Four and Five are more possible. A mini emergency fund is $500 if you make less than $20k/year and $1000 if you make more. This should be funded ASAP (think weeks not months) Sell stuff work extra whatever it takes to get it done.
Step Four: Cut the Cards!
Now that you have money to fall back on if, say your tire blows out, it is time to ditch the credit card and you won't be able to use the excuse "it's just for emergencies" since you now have cash to pay for emergencies. This is the time to make the commitment to use no more credit and take out no more loans. Save for everything and settle for second best if you cannot afford better with cash.
Step Five: Pay off debt
Now that you have your mini emergency fund and are not acquiring any new debt, it is time to pay off the old debt. The sooner you pay it off the more you will save in the long run. It is very difficult to build a large bank account on average income while paying debt. That is why you should pay it off before you begin saving for big ticket items. I would not include a mortgage in this though. Interest rates are low enough that assuming the market rebounds as it has every other down turn, you should be able to make more with your money than you would pay in in interest in the long run. Easy steps to get you out of debt in an average of 18-24 months:
1.Gather all debts
2.Arrange from smallest to largest; write each debt and amount in order on a sheet of paper. Include the minimum payment of each.
3.Pay the minimums on all EXCEPT the smallest debt. On this one put every extra penny towards until it is gone. Cross it off the list
4.Move on to the next smallest debt. Pay the minimum on it + the minimum from the debt you paid off + every extra penny you can come up with until it is paid off. Continue until you are debt-free!
Step Six: Fully-Funded Emergency Fund
Save 3-6 months of expenses to be used only for emergencies. Put it in an account that gains interest but is accessible since the whole idea is to be able to use it when you need it.
Once you do all this it is time to look into insurances, retirement funds, tuition funds, and of course savings for all your wants and needs.