Getting Debt Free – A Life Saving Plan
As part of the organization phase, draw out your monthly budget. We all need to live within our means; in other words, if you don't have the money, you can't afford to spend it. That very attitude is a must if you wish to succeed in pulling yourself out of debt. With that in mind, make a list of monthly expenses that are consistent. We'll call these non-controllable. These are necessities only. DO NOT INCLUDE CREDIT CARD MINIMUM PAYMENTS YET. With few exceptions, these are the consistent, stable bills that are nearly the same from month to month. For example, you might have the following:
1. Rent/House payment (Include property taxes and home insurance here.)
2. Home power/gas/electric expenses.
3. Other non-controllable home expenses such as water, trash removal, home-owner's association dues, phone/Internet connectivity expenses.
4. Gas and auto expenses including car payment and auto insurance.
5. Grocery/food only expenses.
6. Medical insurance. Do not include medical insurance if it comes out of your paycheck; include it only if you pay it yourself.
7. Basic Cable. BASIC cable only; 100 channels is not a necessity.
8. Be sure to account for annual fees, car registration, for example, and make a note as to when these expenses are due. You will need to put aside enough money each month to handle these bills when they come up.
Write down the total at the bottom of your list. That figure is the bare minimum; the amount of money that you need to survive. Notice that there is not an allowance for recreation at this point. Until this debt is under control, the less you spend on unnecessary items, the more quickly you will be out of debt.
2. ATTACK STRATEGY
At this point, when you subtract these above expenses from your income per month, hopefully there will be a positive number on the bottom line! If you are spending more for the bare necessities than you are bringing in, you have set yourself up for failure. In this case, you need to make big changes to your lifestyle. You'll have to cut expenses in order to get ahead. Remember, we are taking this nasty bull by the horns. If you are one of the few who will fall into this category, consider an apartment with lower rent, an abode closer to where you work. Take in a room mate to help with the rent. Do whatever you need to do to live within your means.
You probably fall into the other category; your income covers your basics, but once you start paying those monthly credit card minimum payments, your ends just aren't meeting. The majority of your debt is most likely credit card debt, as is the case for most people who find themselves in financial distress.
