- Sit down with your spouse and come up with a monthly budget (If you're single, find someone to hold you accountable). Extra money should go towards saving for an emergency fund and then debt repayment. Try to live on as little as you can, so that you can be debt free within the next few years. Do make sure that your budget is realistic though – you need to actually be able to live on the amounts you have set aside for each category. If you don’t leave yourself enough for groceries, you will have to pull money from another category or get into more debt to be able to eat. Then you will be in more financial trouble than when you started.
- Resolve to live on cash only while you are paying down your debts. It is much easier to overspend when you are constantly swiping your credit or debit card and can't actually see your money disappearing when you spend it. In order to do so, take out cash for each budget category that isn’t a payment set up on automatic withdrawal (some examples of categories would be groceries, gas, clothing, entertainment with friends, etc). Put the amount for each category into its own envelope. When the money in that envelope is gone, you can’t spend any more money from that category until the next month (or next pay cheque – depending on your budget and pay schedule).
- Take stock of what you own and see if you have items you can sell. Maybe you have an extra car that you own but don’t really need, or extra furniture, or computer equipment, or even a vacation property. If you are really serious about getting out of debt, you can sell what you don’t need and put that money towards your emergency fund and then towards your debts.
- Set up a meeting with your bank to review your account type and charges to see if there is any way you can save money. You might be paying a high monthly fee for a bank account that comes with features you don’t need (such as a certain number of withdrawals per month, overseas transfers, or a safety deposit box). If you talk to a representative at your bank, you can see if you can switch to a different account that you will be charged less for.
- Analyze your spending over the past few months and determine where you can cut costs. My husband and I don’t have cable, and we also got rid of our cell phones in order to save money. That may sound extreme, but we have quickly learned that you have to make sacrifices in order to pay off debt, and we save a lot of money each month by using a landline instead of two cell phones. Is there anything you are spending money on that is a luxury and not a necessity? Maybe you can sacrifice getting your hair cut at the expensive salon and opt for a cut at a cheap salon instead. I have done that, and I have had fantastic service for less than half the price I used to pay.
Are you struggling financially? If so, I strongly recommend reading Dave Ramsey’s book, “The Total Money Makeover.” http://www.daveramsey.com/store/prod326.html?ictid=gc8.326.C11 If you follow the principles in his book, you will be well on your way to a bright financial future. If you can’t afford to buy the book, see if they have it at your local library – that’s what I did when my husband and I needed serious help with our finances. Also, check out the rest of the resources and articles on Dave’s website: www.daveramsey.com
Do you have any tips for achieving financial fitness? If so, I’d love to hear from you in the comments section.