Personal debt can be extremely stressful and has the ability to turn into a big problem that has to be addressed. Logically, the fastest way to get yourself back on track is to stop spending money. First, do not carry credit cards in your purse, only debit and ATM. Write checks, and pay cash. It can be awfully tempting to spend money that you don’t have, but if you do not have the means to do so, you won’t. If there is a special occasion, like a holiday, vacation, or an anniversary, create a specific fund for it so you don’t spend more money than you intended to on it. Late fees can add up. To avoid this hassle, pay credit card bills on time. Don’t make more than one ATM visit a week, and if you can’t pay it in full at the end of the month, don’t run up a bill. Rally up emotional support and put your money where your mouth is (pun intended) by telling your friends what you are trying to do.
Try thinking outside the box. Trade for services and goods using your gifts, skills, and talents. Hold swap parties where you and your friends exchange things like clothes, shoes, handbags, household items, and the like. These can be fun and useful at the same time. Do not be seduced by credit card offers like airline miles, or taken in into opening new credit cards at retail stores just to get the discounts. Instead, use the trusty “envelope system” and only spend money that you have put away in advance. If it helps, pick an “accountability partner” to help you stay on your course. Remember that you have a choice in how you spend your cash, so having a plan in place can be very empowering.
Every single month, make a new spending plan that details your estimated monthly costs. Attempt to finish it at least fifteen days in advance of the beginning of the month. That way when you follow this time line, if you have a period where you have more money going out than coming in, you will have the time to cut expenses or grow additional income.
Here is an easy formula for devising your spending plan. Look over your calendar and take note of any special events that might cost cash. Complete your spending plan by attempting to estimate your upcoming bills and other needs for the month. Adjust the payments accordingly to figure out the minimum amounts that can be spent without creating a sense of deprivation. Include an amount for savings so that you have a resource available for emergencies. Try to determine your cash flow. What is the amount left over after you subtract the total expenses from the net income you will have for the month? Keeping Murphy’s Law in mind, tack on an extra ten percent to the spending plan once you have finished it. If something goes wrong, like car problems or getting hurt, this number is realistically, what you are going to spend. Any remaining cash can go to your debts.
If you get more than one paycheck a month, figure out which bills to pay from which paycheck. Look at the due dates on your bills and jot them down on a calendar. Then pay as many bills on time as possible from each paycheck. Remember that fine tuning your spending plan is a complex process. If your plan does not work at first, it does not mean you should give up! If anything, this should give you more motivation to adjust the plan and figure out how to make it work to accomplish your goals. Also, just performing this exercise will make you more aware of how you choose to spend your cash and how motivated you are to pay your debt off, so it can’t hurt either way.
Mallory Megan works for Rapid Recovery Solution and writes articles about medical collection agencies.