1. Step 1: Envision the Life You Want
Financial order is absolutely necessary for the time, energy, and emotional and spiritual health to create the vision you want of your life, Peter says. Most people think the opposite of debt is wealth, but Peter says the opposite of debt is no debt: a life where you are living within your means and where you don’t lie to yourself about how much money you have or pretend that you can afford things that you can’t. "It is a life of freedom," he says.
Start decluttering your finances with this basic question, Peter says: What is the vision you have for your life? Then ask yourself the following:
- Is your vision realistic?
- What is the reality vs. the vision? Where is there dissonance between the life you have and the life you want?
- Does the stuff you consume (or the stuff you want and have to have) take you closer to or further away from the life you want?
2. Step 2: Look at the True Cost of Your Debt
The quantity of your stuff can no longer be considered the measure of your success, Peter says. Rather, it is the quality of your relationships that lead to deeper happiness, he says. "Debt doesn't just ruin your credit rating—it ruins your relationships," Peter says. "Debt creates selfishness, an inward focus and preoccupation that robs you of what really matters—your true self and your relationships."
3. Step 3: Explore Your Limits
Just as you only have so much space in your home, you only have so much money, time and emotional energy, Peter says. Credit card companies offer no-limit and high-dollar credit cards, giving you the illusion that you can buy on credit forever. You can max out on your credit cards, but Peter says you can also max out the time and energy you need to spend generating money to pay your bills. "Recognize and pinpoint your limits," he says. "You can continue to ignore them, or you can start to set limits for yourself."
4. Step 4: Assess Your Spending Habits
Look at your spending habits and figure out exactly what you're spending your money on. "Where is your pursuit of 'more' taking over your life, robbing you of true happiness?" Peter asks. "More" could be eating out at restaurants, shopping for clothes or taking luxury vacations. "Shopping is a means to an end," he says. "If it's an end in itself, then there's a problem."
5. Step 5: Discuss Necessities vs. Luxuries
Once people get their hands on a little bit of money, they start to think that luxuries are essentials and will do anything to keep their lifestyle, Peter says. "There are very few luxuries in your life that are essential to you: your family and their happiness," Peter says. "Sit and talk with your spouse, partner or family, and separate what you consider to be necessities from the luxuries."
6. Step 6: Consider Your Happiness Quotient
Happiness is all about balance, Peter says. When you're in debt, you're out of balance. "Head, heart and spirit—it's all connected," Peter says. "Consider where you derive pleasure and happiness from in your life."
7. Step 7: Create Space for What Really Matters
Once you've decluttered and organized, your life will take on a different focus—the "stuff" loses its importance, Peter says. Think about what you want from your home and how can achieving it, he says. Cutting down on the influx of stuff will immediately translate into spending less money. "Your home is a respite, a reflection of your goals," Peter says. "Consuming less improves your lifestyle, and an ordered home reflects a life without debt."
8. Step 8: Make It Real
Take time to develop a budget, seek sound financial advice and establish a financial plan. "Now is the time to organize your home, your wallet and bank account to achieve what you desire," he says. Ask yourself the following questions:
More of Peter's clutter-busting advice
- How much should you be spending on your living expenses?
- What is a reasonable amount to spend each month on rent or a mortgage? Food and entertainment?
- How much should be going into your savings? Should you be investing?