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Steps to Creating Financial Abundance

September 29, 2009

There are many who have read “The Secret”, understand the law of attraction, and yet, haven’t been able to bring financial abundance into their lives. The law of attraction and positive thinking do work, but only if you take action. Thinking about, and picturing financial success alone will not bring you anything. It’s just the first step. You do need to think about and clearly define what financial success means to you. For some people it means having enough money to pay the bills. For others financial success means having enough money in the bank so that they never have to work again. However you define financial success, here are a few steps you must take once you’ve defined your goals.

The first thing you have to do is create personal financial statements. These don’t have to be elaborate or done by a CPA, but you need to write out your current financial situation. Writing everything out will give you a clear understanding of your current situation. There’s no way to create a plan to get to your end goal if you don’t know where you’re starting.

Write out a list of all of your assets. Next to each asset, write an estimation of its current market value and what debt, if any, is owed on that asset. Also add any debt that isn’t tied to an asset you still have, such as credit cards. If you total up all of your assets and then subtract the total of all your debts, this is your net worth. For many, this number will be negative. Whatever the result, don’t let it bring you down. Remember, we’re just establishing a starting point to work from, not punishing ourselves for past mistakes.

The next list we’re going to make is a list of monthly expenditures. Write down each monthly recurring bill you have, such as rent, car payments, utilities, etc. After you’ve listed your monthly bills, use your checking, savings, and credit card statements to determine where you spend other money. Make sure you list food, entertainment, clothes, travel, etc. On the other side of the page, write down your monthly income from all sources. Adding these numbers up will allow you to determine if you’re a net saver, or spender. Again, these numbers may be ugly, but acknowledging your situation is the first step to improving it.

Now that we know where we are, let’s start working towards where we want to be. In order to have financial abundance, you must be a net saver. If you’re a net spender, you’re stuck in a cycle of increasing debt that must be broken in order to prosper. Take a look at the page with your income and monthly expenditures. If there are ways to increase your income, that’s great, but you need to focus on the expense side of the paper. You need to look long and hard at how you can cut your expenses. Every budget has items that aren’t necessary. It may mean living with less extravagance, it may even mean living like a pauper, but you must become a net saver. If you’re already a net saver, find ways to increase your monthly savings.

Once you’re net saver, you need to start tackling debt. Not all debt is created equal. Some debt is good, some is bad, and some is really bad. You want to pay down your really bad debt first. Really bad debt is debt you incurred for something that no longer has much, or any value, such as credit card debt. Start by paying off the highest interest rate card you have. Once the really bad debt is gone, start tackling bad debt, which is debt on an asset you still have, but depreciates, such as a car, boat. Once you get to the good debt, you can decide if you want to pay it off, or use your savings to invest. Good debt is debt tied to appreciable assets, such as a home or business, and is tax deductible. Often times, it’s in your best interest to keep this debt, and invest your savings.

Once you get to the point where your monthly net savings are going into investments such as businesses, real estate, stocks, or bonds, you will be creating true financial abundance! To learn more about creating financial abundance using the law of attraction, visit http://www.TheRichestLife.com.

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