Anyone who has ever been in debt understands how restraining it is. You have no disposable income because everything is going out. You work every day but don’t enjoy life in part because you can’t see an end to the debt cycle.
There are simple things you can do to put your finances back under your control and get out of debt. This is the year to implement strategies to put you on a financial path that gets you out of the red and back in black.
It may seem challenging, and it has its pitfalls, but you can work to lower your debt and have more money for things you love.
Four Simple Goals
1. End Impulse Buying
Impulse buying is one of the worst things people can do and this type of behavior leads to a lot of debt. Changing this habit involves changing how you think about spending money, credit cards, and purchasing.
People sometimes buy things to make them feel better or build their confidence because a situation has them down. This is not why you should purchase something. Purchases should only be made if you need them.
Identifying your needs from wants is key to ending impulse shopping. One exercise is to make of list of things you need this year. Write down the cost of those things, as best as you can guess, next to them.
The next time you want to buy something at a store, remind yourself of the list. Put the money the item costs in savings toward the goals on your list rather than buying it.
2. Take a Serious Look at Your Budget
Looking at your budget seriously will take some time and detail. Write out everything you spend money on.
Write out what monthly bills are non-negotiable, such as mortgage or rent, utilities, gas for the car. Add up both lists and compare the total to your monthly income.
After you recover from your sudden shock, decide where you can trim. Look at your readjusted budget. Make a plan to stick to it.
3. Find Extra Money
You may discover that you don’t make enough to cover your most basic bills. If you are juggling bills every month trying to catch up before they hit collections, it is a sure sign you need better cash flow. You need to make more money.
Many legal ways exist to make money on the side. Many work from home. Find a legitimate freelance agency to use your career skills to make some extra money.
You can also use a hidden skill to make extra cash in your community. Sewing, watching neighbor’s pets, lawncare are a few options. Teach someone a skill.
3. Use a Realistic Plan for Saving and Spending
An adage is the 10-10-80 plan. You give 10 percent of income to church or charity while another 10 percent goes into savings. You can spend the rest with pleasure.
Some readjustments are required if you are in debt but the principle is a good one to implement now. The idea is to create habits that include regularly giving to a worthy cause and putting some in savings for emergencies. The rest can be spent on living, including bills and fun.
This is a simple way to create a weekly, bi-weekly, or monthly budget. It creates a system. Creating savings and adding to it every paycheck will make you feel better because it gives you control. It reduces stress in emergencies.
Giving away something, even a small amount like $5, regularly will make you feel richer. It also puts priorities in place because you realize others have greater needs. That reduces your spending.
4. Call All Your Creditors
Many people rely on credit professionals to do this but anyone can do it. Most creditors offer between 20 percent to 50 percent off in a settlement.
Others remove interest and late fees if you set up automatic payment arrangements. Work within your budget. Be a tough negotiator. They will strike a deal.
Following these four simple guidelines are easy ways to jumpstart into financial frugalness and transform yourself from a debtor into someone with some wealth. You won’t get rich quick, but you will have peace of mind knowing you are in control of your finances and headed in the right direction.
Image credit: [KAROLINA GRABOWSKA]