Reducing Debt by Eliminating Leaks
If you have debt, especially high interest credit card debt, you have a problem. Your financial well health is being drained away.
A common suggestion offered to people for getting their debt under control is to put together a budget. This helps identify costly holes that your money uses to escape.
Unfortunately the concept of a starting a budget frightens, intimidates and bores many folks. If you fall into this camp it is okay. There is a smaller step you can take to help you get your situation under control.
Spending Log
1- For one week sit down every evening and write down everything that you spent cash on that day. You only need to track cash because everything else should have other records.
2- At the end of the week sit down with your cash list, checkbook, credit card and bank transactions and add them up. If you have online access to your bank and credit cards this will be easy. If you don’t have online access to your accounts just wait a few weeks until you have all your statements.
3- Multiply your cash items by 4. We only tracked these expenses for a week to limit the amount of work you have to do.
4- Add in your big monthly bills like your mortgage, car and utilities.
Now you know approximately what you spend. Look through it. Is there anything that stands out that you are really not happy about? Is there a restaurant you grab lunch at because it is near work that isn’t very good but is quite expensive? Did you buy a bunch of music that you really don’t listen too that much?
Use these items to identify a few simple areas that you can save some money and get started.
Smile when you write a bigger check to the credit card company. You are building your financial health and that should make you happy.