Image via WikipediaYou go through your life noticing everything around you except what is going on in your finances. Unless your a royal nerd you are sloppy with your money. But the day comes when you wake up because you have just opened that credit card bill and see a five figure balance. You think what did I get myself into. It's time to get things in order and pay it off. If you realize something has to be done, you have just done step one of the plan. Realizing something is wrong and deciding to fix it is the first step on the journey out of debt and responsible living.
Go through your check register and credit card statements and see where your money is going. Write down everything you spend for one month, you'll be shocked how you waste money. Total up all your debts so you can see the monster your going to attack and destroy.
Forget the computers and spreadsheets get a piece of paper and a pencil and write down your paycheck at the top of the page. Now write down every bill that must be paid from it. Then set aside a portion for food, gas and a small pocket money allowance. What ever is left, use to pay down debt. Some pay periods you may only have $50 to pay down debt, while others you may have $500. Do this the day you are paid so you will know there is no more money to spend.
Put all you credit card debts on low interest balance transfer cards. This will lessen the time for repaying and save money to.
All this is not going to work if you keep going back to using your credit card. The credit cards have to die. Cut them up and say good bye, you won't miss them after a while. Remember they are the ones that got you into this mess. Well, really you got yourself into this mess but they helped.
Paying with cash gives you immediate feedback of the consequences of your spending. Credit cards come with an anesthetic so you don't feel the pain of your spending. I guarantee you will spend less over time with cash. Your spending IQ will go up when you find cheaper places to eat and shop.
Being open and honest with your better half will make the process go much better. The times will come when you feel constrained with the spending plan. It will cause some friction at first. But a healthy budget committee meeting will tackle that problem. Charting your budget and your debt paying, will build confidence in your plan. Seeing that debt go down will inspire everyone to keep going.
You will find motivation for your plan along the way because goals will be attained and new goals will be worked toward causing you to feel good about what you are doing. If you sell something or receive an unforeseen income all the better to get you where you want to be.
Being open and honest with your better half will make the process go much better. The times will come when you feel constrained with the spending plan. It will cause some friction at first. But a healthy budget committee meeting will tackle that problem. Charting your budget and your debt paying, will build confidence in your plan. Seeing that debt go down will inspire everyone to keep going.
You will find motivation for your plan along the way because goals will be attained and new goals will be worked toward causing you to feel good about what you are doing. If you sell something or receive an unforeseen income all the better to get you where you want to be.
To Do List:
Tools needed to eliminate debt:
With these tools and your plan, you will be able to take your debt and eliminate it. I guarantee it.
Reader: Do you have any tips on how to tackle the debt reduction process?
- Admit you have a problem with debt and form a plan to conquer it.
- Set up a budget with Income and expenses listed.
- Cut up the credit cards and switch to cash.
- Communicate often and honestly.
- Find motivation to carry on and finish.
Tools needed to eliminate debt:
- Paper and pencil
- A plan
- Honesty
- Motivation.
- Scissors to cut up credit cards
With these tools and your plan, you will be able to take your debt and eliminate it. I guarantee it.
Reader: Do you have any tips on how to tackle the debt reduction process?
The key thing is being honest about your situation and having the willpower to do something about it. It doesn't matter if you are using pencil and paper or a spreadsheet to track your progress.
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