Who doesn’t want to save money? I would be surprised (and concerned) if you actually found someone who wants to remain in debt!
Imagine being free to devote your time and energy on the pursuits that are important to you with out having to worry about debt! We will always have some sort of financial responsibility but the more debt we eliminate the less likely we are to be stuck in a job we hate just to make ends meet.
To make this happen you need a plan. It will take a little work and some patience, but so do most things that are worth your time and effort. Below I have outlined some steps to start getting your finances under control and start eliminating debt. I am by no means a financial expert, but by applying these principals, we have been able to once again live on one income.
7 Steps to Saving Money
Total Your Debt
Take an inventory on how much you truly owe. While we may have a general idea how much we owe, it is important to have an accurate total. Make a list of all your financial responsibilities, along with their due date and percentage rate if applicable.
Track Your Spending
The next step can be rather eye opening, but it is imperative. This may be as easy as viewing your account online. We want to get a clear picture of where are money is going. I suggest doing at least 2 to 3 months to get an accurate picture of where your money is going.
Categorize Your Expenditures
Once your list is compiled, go through and label each item as a need or a want. As you label, really think these through. Are there things we are currently viewing as needs that we can temporarily do without while we paying down our debt. The more needs you have the less you will have to pay down debt.
Temporarily eliminate wants. This does not need to be forever, make it work for you. It all depends how quickly you want to get out of debt. If you want to plan in some “wants” to your budget that is also an option. This is not to be an exercise in deprivation, but a way to make our finances work for us, not vice versa.
Review Needs List
Examine your needs list and begin finding ways to save. For example, there are many ways to save on food, from buying the store brand to shopping sales. We will be looking further into this in future posts. Be creative, it’s your money, why spend more of it then you need to.
Find further money savings tips in my article Don’t Let Money Be A Roadblock To Your Goals.
Formulate A Payment Schedule
With your list of debts and needs, put together your payment schedule. Make sure you pay your accounts on time to avoid late fees. Write out what gets paid and when and stick to it.
Begin Paying Down Debt
With the money saved from temporarily eliminating “wants” and reducing the cost of “needs”, start paying down your debt with the highest interest rates. This will help you save in the long run. The other alternative is to pay down off your lowest debt first and when that debt is paid off apply it to the next higher debt. The option is up to you.
The more money you can save from eliminating your unnecessary expenditures, the quicker you can pay off your debt and truly pursue what makes you happy.
What are some ways you have found to save on some of those “needs” items? Please comment below.