Don’t leave your finances to chance. Create a plan. Create a spending plan that suits your own circumstances, your own budget. Track what you spend. Stop adding to your debt level, mostori and you will gain the advantage of starting down the path to pay off your debts.
Small, everyday purchases drain away your cash and raise your debt so slowly that most people report they didn’t know they were that deep in debt until it seemed too late to do anything to improve things.
But you can always find a way to slash spending on non-essentials and essential everyday buys.
The secret to paying down debts that are nagging you is to know where your money is going. Small purchases for lattes, soda, gum, an extra candy bar, a newspaper or magazine, akunprothailand a gift for a friend… the list seems endless. Go ahead: track your expenses for these types of purchases for the next 3 days. You’ll be amazed at how much you are spending right now carelessly. Then, to see how much you are spending monthly, multiply that amount by 10. You’ll have a rough idea of cash that is slipping through your fingers each and every month. Here are two things you must do right away:
Stop spending. Start making a spending plan.
Plug the debt leaks. Quit writing checks or using your credit card. Only buy what you decided to buy on your shopping list. When approaching the checkout lane, stop and count all the unnecessary purchases. Take them out of the cart. Return them to their shelves. Do without. Starting to train yourself to “deprive” yourself of these small purchases will add up to big savings.
Now, take that money you almost spent, and quickly make an online credit card payment. Pay down your credit card balance even if you’ve made a payment within the last week. Do it now. You’ll be surprised how this will help sharpen up your spending habits quick.
Your goal can be simple. Match up what you earn with what you are spending. Decrease spending. Use the difference to make a dent in the debts you owe. Lowering your debts this way will help add discipline to future spending.
Control your spending by:
- Never make an impulse buy.
- “Sleep on it” — think all purchases over at least 24 hours.
- Ask yourself: “Can I find this cheaper elsewhere?” If so, start looking.
- Buy used and save money.
- Use coupons at the grocery store. But only buy products you use regularly.
- Pay cash or use your debit card at the grocery store. Don’t use a credit card; you’re likely to spend more money if you do.
- Eliminate emotions from the buying process. Think logically if you really need to spend the money. Usually, you’ll find you don’t.
Asked to donate for a special cause at the office? Take a deep breath and say, “Not this time.” It’ll be OK. You can donate later when your debts are eliminated. You’ll give more freely then.
Finding $50 in extra money this way soon will lead to saving $75, then $150 by scrutinizing all purchases and deciding if they fit into your spending plan. In this way, you’ll have a simple tool to cut spending and put a halt to poor spending habits. v
Stop Spending — When you’re in a hole, stop digging. When you’re in debt over your head, quit going deeper into debt. Put away your credit cards, your checkbook, your cash, and hide your piggybank. Don’t give yourself ammunition to shoot yourself in the foot again. Stopping making debts is the best way to get started paying off debts.
Know What You Owe — The only thing you have to fear regarding your debts is being clueless as to how large your debt load really is. Take a deep breath, open up that tall stack of bills you’ve been ignoring, and start totalling up the balances you owe. Total up car loans, credit card bills, department store bills, gas card bills, monthly insurance totals and phone and utility bills. Be realistic. Don’t say, “My cell phone bill is $50 a month” if you open up your last month’s cell phone bill to find that it is actually $69.50. Write down $70 on your inventory of debts. Keep writing down the actual debts you’re paying to get a realistic view of the total. Dont’ forget to add in the forgotten automatic charges that are hitting your checking accounts or credit card accounts each month, perhaps for a magazine subscription, accident insurance, or online automatic buying club. Better yet, pull out your latest statements, dial the phone number of each automatic draft, and cancel your subscription today. Not tomorrow, today. Your goal here is to know exactly where you’re spending money. So don’t forget those little leaks in your money pool!
No Excuses — Keep track of new purchases and stay aware of how you’re spending and saving money. Don’t slip backwards and make excuses that you’ll save money next month. Don’t spend today, and save the money today, not next month. And next month, save some more. By next year this time, you will have made major positive changes to your finances by following this advice.
Make Allowances — Every successful spending plan allows for emergency purchases such as new tires when the old ones on your car wear out, and birthday and anniversary gifts when these important dates come around. Your spending plan needs flexibility for you to stick with it. But you also must pre-plan for some emergencies. Calculate a certain percentage — say 15% — that should be set aside in your budget for unforseen purchases. Then, if you don’t need it, take this extra amount and pay off a bill that is nagging you. But having the money set aside is powerful. Dave Ramsey, author of the “Total Money Makeover” program, is adamant that having the $1000 emergency fund is essential to giving you that flexibility in your spending plan.
Set A Goal — Your spending plan will work when you are committed to achieving a goal. “I want to save $25 a week” is a tangible goal that will next you $1,300.00 over the course of the next year — maybe enough to pay off one or two department store charge card? If so, maybe raising your goal to $30 a week could next nearly $1,600.00 in annual savings. So making constant progress toward realistic goals and following through on your spending plan will help you gain control over your financial drama and give your real debt relief. And having set the goal and realizing it through your own efforts will in the end provide you the energy to continue on no matter what. Better credit habits will lead to better credit. Because as you get closer to paying off all your outstanding debts, you will find the way to succeed because being free of debt feels good!