Frugal for Life recently wrote an article that she called "11 Simple Steps to Living on Less." The article was a very good, but brief explanation of some of the very simple things you can do to get your spending under control.
As she so elegantly stated, "Debt is outcome from living beyond our means and wanting it all now. But if you are serious about getting into the black and living a life that makes you happy, there are some simple ways to get back on track."
It is a message that I have said repeatedly on both of the personal finance blogs that I write.
- Make A spending Plan.. This is the number one thing. You must spend every dollar, every cent on paper at the very beginning of every month. There can be no exceptions, you must do it. If you don't plan your "Fun" money around your monthly obligations, then you will be in a financial pinch when the late fees start adding up.
- Pay Yourself... One the things that most every financial expert agrees on is "pay yourself first." Savings should be a line on your budget as if it were another bill. Once your debts are paid off, move those funds to your savings line. This will allow you to save up for those big purchases. Save for your next car, so that you can pay cash for it. Don't forget to save for your retirement to. You don't want to spend your golden years working at the golden arches for failing to plan.
- Examine every single purchase... One thing we must do every time we make a purchase, no matter how big or small is ask ourselves, "do I really need it." If it is a big purchase, we must not only compare prices, but if we are married, we must talk it over with our spouses.
- Follow every Cent... It is important to know where every little cent goes that we spend. It is the little things that can really blow a budget. 60 cents for a candy bar or can of pop may not seem like a tot but they can really add up. Just buying 1 candy bar and 1 can of pop each day at work from the companies vending machine at 60 cents will cost $20. It isn't enough just to balance your checkbook, but to keep a spending diary of those little things you spend "pocket money" on.
- Pay your bills when they come in... What more can I say. Pay your bills on time and you will avoid the late fees. The best way to do this, and it is something that I need to improve myself, is to pay the bills when you get them. Don't let the bills set idle on your desk. Of course, this may mean getting the debts paid off, before you can actually be in a financial position to do this.
- Cut your expenses... Be honest with yourself. If you can't afford something, evaluate your need for it. Do you really need your cable or satellite TV? It doesn't matter how much you want it, if you can't afford it, you need to cut it out. The money you are spending on that service can be applied to your debts, so that you can become debt free sooner. The sooner you are debt free and can build your emergency fund, the sooner you can "enjoy your money" again. As long it is done within your budget.
- Find free alternatives... There are a number of things you can do or get for free. Instead of buying (or renting) books, videos/DVD's and music borrow them from the library. Instead of running out and buying a new piece of furniture, look on FreeCycle for whatever you may be looking for. I have given away a few things on the site, and I have received some bar stools by putting out a request on there.
- Cut up your credit cards... This is very important. Both John Cummuta and Dave Ramsey suggest this. If you think you are going to build wealth by using your credit card(s), then think again. Look at where you live, then look at the homes of the credit card companies. Multi-story buildings of glass and steel, pretty impressive, huh? Think you are going to have something that nice? Not if you keep giving them your hard earned money. Now look inside. See all that nice furniture. It's yours! They bought it with the money they stole from you.
- Remain Focused... To help you remain focused on getting debt free, make a goal. Write it down and post it on your mirror or refrigerator. Someplace you will see it every day, to remind yourself of why you are getting debt free.
- Set priorities... Finally, you must prioritize! If you really want to be debt free, you must live on less then you make. It doesn't matter if you make $19,000, $30,000, or $60,000 you must live on less then you make. You must decide what you really need and what you don't. Eliminate all nonessential bills.
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