When you put things in black and white in front of you, they all of a sudden start to make a lot more sense. This is very much so the case with fixing your debt – writing your budget in black and white on a piece of paper will help you to realise the sectors of your life in which you can save money and the sectors in your life in which you can spend more. When it comes to debt, you should be trying to save money on the things that you pay out for on a day to day basis and placing more money aside to pay off the things that you owe on.
On your piece of paper, you should be making a list. How much money do you have coming in each week/two weeks/month? Then put all of your expenses and money that is going out. How much do you spend on groceries, car payments, credit card payments, cell phone bills, etc.? You should have an amount left over, once you have deducted all the money that is going out from your income, which should be in the positive. If you do not, you have to figure out a way to balance these two so that income is always above the money going out.
When you have your budget and a list of everything that comes in and goes out of your home over a period of time, you can very clearly see exactly where you are having issues with money. You need to be somewhat brutal and critical about your spending. If you are spending $200 per month on a cable TV bill to have all the best channels when you cannot afford to meet your monthly credit card payments or the mortgage/rent payments, you need to sacrifice. This doesn’t necessarily mean cutting out the cable completely; it just means that you perhaps don’t need the full cable package. Change to a cheaper cable bill and then use the money that you have saved to pay off some of your debt.
Debt management and fixing old debts doesn’t need to be a difficult process, you just need to be a little harder on yourself. Many people have been able to pay off debt using this simple strategy. You may think that you are living the good life at the moment, but in reality you’re just putting yourself further and further into debt if you are spending more than you take in with no hope of getting out of it.