by Tena Kight

Created on: July 22, 2010   Last Updated: July 23, 2010

More and more individuals are facing financial hardships today. Financial freedom isn't going to magically appear. But with a “take action attitude” and a few tips on where to start, you can avoid extreme debt. These tips practiced over time can also help significantly reduce previously acquired debt and start you on a path to financial freedom.

1. Live within your means.

This simply means you shouldn't spend more money than you make. “Charge it” are two tiny words that can cause insurmountable debt. Credit purchases might be necessary for a home, but that new pair of shoes can wait until you have the cash. Credit cards might seem like a great way to have what you can't afford. But, your purchases will still have to be paid off eventually, so all you've done is prolong the inevitable financial crises. Practice financial discipline and purchase an item only when you can pay for it.

2. Budget your money.

A list of debts and an accurate account of your total income can show exactly where your money is going. It also helps keep track of how much money is left for luxury spending. Once the budget is set up and balanced on paper, challenge yourself to stick to it in reality.

3. Purpose to pay off debts.

Familiarize yourself with the pay off amounts on debts and work toward paying them off. Start with the smaller debts and pay extra on them when you can afford it. It's very encouraging when you see that first “paid in full” or the lovely zero balance on a bill. Don't run out and replace that debt with another one, but instead put that money toward the next debt pay off. The savings on interest alone can be substantial for each debt paid off early. 

4. Pay your bills by the due date.

Paying your bills on time will eliminate extra fees. Late charges and penalties can quickly consume what would be extra cash. It also helps improve your credit score to consistently pay your creditors by the agreed upon date. Also, keeping a routine payment schedule can lessen the headaches and confusion of the bill paying process. Most bills come due the same date each month, enabling you to know ahead of time how much of your income is already spent for the month.

5. Keep updated records.

Financial records are necessary for tax purposes and help prevent any mistakes in over payment. It's not unheard of for a company to make mistakes in billing. If you keep good records then you always have proof of what you owe and what you have paid. If

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