Take it slow.
Its impossible for you to make all the changes you want to at one time. If you try to take them all on at once, you are bound to fall back into old habits discouraged. Paying off debts is not an instant fix; its a lengthy process towards a new financially stable. Take a few weeks to monitor your spending to find where your habits lie. Take another few weeks to try and curb your spending and form a budget that will benefit your lifestyle. Once everything is in check, then you can take all of your new found knowledge to begin your debt busting regimen.

Don’t forget to be realistic in your thinking.
Short term goals are extremely beneficial. Once you accomplish these you will have new found confidence in yourself and you will push yourself even harder to accomplish your long term goal of paying off all of your debts. Stop accruing debt first and then begin paying it down. Depending on the extent of your debt situation, it could take a few years to be debt free. Reward yourself every time you achieve one of your goals so that you can encourage yourself to continue. How happy will you be when you can open your credit card statements without a shock, or you can answer the phone without wondering who is on the other end of the 800 #?

Create your own method.
Don’t jump on fads or whatever may be popular at the time. Don’t compare your debts to the success or failure of another person’s plan. You are the only one who knows what is best for you and your family. Visualize your debt free future and what you would like to do with all the additional money at the time. Do you want to invest it? Do you want to go on a dream vacation? Do you want to retire early? It’s amazing what you will be able to do with your income once you aren’t stuck paying out to everyone but yourself.

Simplify and replace old habits.
Pay bills by check; pull cash out and leave your debit and credit cards at home; cut back on your spending. It sounds challenging at first, but as I mentioned in another post it takes 21 days for a new habit to form.

Mistakes will happen, we are only human after all. If you fall short or slip occasionally, just pick it back up and do it all over again. Don’t let small  hindrances deter you from your ultimate goal! Believe in yourself, you will succeed as long as you put your mind to it and follow your budget plan!

*Wants* Anything that you would like to have to increase your quality of life, but you could survive without. Jewelery. Nights Out On The Town. Makeup. Video Games. ETC.

VS.

*Needs* Anything required in order for you to survive. Food. Water. Shelter. Clothing. ETC.

Always set realistic goals for yourself. By setting easier goals for you to accomplish at first, you will keep  yourself from becoming discouraged. For example, if you have a habit for purchasing clothes a little too often, cut back to buying one article of clothing each week and work yourself up until you only buy one piece of clothing per month.

Based on past trends in spending, food seems to consume most families income. It’s the same old story: You spend quite amount of money stocking your refrigerator with healthy delicious foods. After a late night at work, you are too tired to cook anything and decide to just pick something up for dinner.

Did you know that the average family of four can spend up to $50 on just one meal at a fast food restaurant?

So although food is a NEED, eating out and spending a weeks worth of groceries on one meal is not necessary. So the next time you plan to stop and pick some chow for the family at McD’s, ask yourself if making an extra payment on your car note or a cheeseburger is more important to you!

When it comes to making changes about how we spend our money on wants and needs, we need to be patient. Change takes time and it is not always going to be easy. If you family is accustomed to eating out constantly, then cut back to eating at least one meal a day at home and work your way up until you can eat 95% of your meals are at home. Your wallet will inevitably thank you, and so will your waistline!

Just think about how fantastic it will be to enjoy a delicious night out on the town with your spouse knowing that all of your bills are paid and you are debt free! ahh, the sweet feeling of no stress!

Question: If you make approximately $40K a year, what is a reasonable amount of debt for you to have each month?
Answer: You should spend no more than 30% of your take home income each month on housing (rent or mortgage). Additional debts (i.e. credit cards, car payments, etc) should only account for, at maximum, 10% of of your take home income. Using the $40K example above, that means that you should spend no more than $990/mth (approx.) on housing and $330(approx.) on additional debts.

The 4 Things You Need To Do To Get Out Of Debt:

* Pay Attention -> Look at your income and monitor every expense. Before you swipe your debit card, contemplate if the purchase is a WANT or a NEED. If it is a NEED, is it possible to get the purchase somewhere else at a better price? Do you really need the high quality version at this time?

Simple Trick: Pay for as much as you can by personal check. Paying by check allows you to have exact records of everything you purchased so that you may look back and see exactly what you spent most of your money on.

* Be Disciplined -> Stick to your budgeted plan. Try to pay more than the minimum on your credit cards and be sure to pay your bills on time. It takes 21 days for a new intention to become a habit! Even after that point, it is still very important to stick to your plan.

Simple Trick: Instead of carrying around your debit card, carry only what you designate as your cash allowance each week.

*Craft A Plan -> Grab a sheet of paper and a pencil and put your goals and budget on paper. Having an exact write up and plan of how you want to pay off your debts and get back on track will motivate you and let you track your progress.

Simple Trick: Put your budget on a conspicous place so that you constantly glance at it. If it’s in a place you walk past frequently you have a constant reminder of your goals.

*Do It -> What good is a well thought out plan with no follow through? Follow your plans to the best of your abilities and adjust them as you go if need be.

Simple Trick: Each time you prepare to write a check for a payment, remind yourself of one of your main goals and decide if the purchase is a necessity.

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Make sure that your family (those living with you) understand what you are doing. It will make your life just a bit easier knowing that your family understands that you are cutting back on spending. If your spouse is not 100% committed with you on your debt free goals, it will inevitably cause you to fail. You and your spouse must make all the money decisions together and in an effort to reduce your combined debt.

Its also a great idea to have some close friends jump on the band wagon with you. Having a “buddy system” with close friends has been shown to help people accomplish their goals more efficiently!  You could also get in touch with some local groups in your area.

Debtors Anonymous Groups
To find a FREE meeting in your area
www.debtorsanonymous.org or write to
P.O. Box 920888 Needham, MA 02492-0009
(781)453-2743/(781)453-2745