Helping Yourself Pay Debt the Right Way


A hard reality of the current economy is that people have lots of debt. Unfortunately, having lots of debt is not something that can be easily erased and takes dedication and discipline to remedy. However, with a plan of action and a commitment to getting out of debt, you can soon dig your way out and get back on the road to financial relief.

Honestly Assess Your Debts

One of the hardest things about sitting down and managing your money in a healthy way is taking a hard look at how you really spend your money. When you sit down to pay your bills every month, you may wonder where exactly all of your money goes, especially if you never seem to have enough money to go around.

For at least one full month, keep detailed records of every penny you spend. This means keeping receipts and writing down every cup of coffee you buy, every game you buy online, all the groceries you buy, every tank of gas and anything else you may spend money on. If you get money out of the bank or draw cash out when you pay for your groceries, not only should you note taking the money out, but also what you do with the cash. If you give $20 to your child and are going to include him or her in your money analysis, find out how they spend that money.

At the end of the month, sit down and honestly evaluate how you spent your money. You may be surprised to discover that you are spending a great deal of money on nonessential things that, if you are completely honest, you really can sacrifice, particularly if you are committed to getting out of debt.

Make a Budget

Now that you know where you are spending your money unconsciously each month, you can begin to make some thoughtful choices about money. The first things that you need to include in your monthly budget are essentials, such as rent/mortgage, utilities, groceries and transportation. If you also have spousal or child support payments, you need to also include those in your monthly budget.

With all of the essentials accounted for, then you can begin to decide what else you want to spend your money on and how much to allocate to each item. If your real goal is to get out of debt, paying off your credit cards and other debt obligations should take priority. It may mean that you have to live fairly basic for a while, but the faster you pay off your debts, the sooner you will be able to go back to buying your favorite coffee drinks or start your World of Warcraft account again.

Choosing Credit Cards to Pay Off

When you are making up your budget, you will have to decide which debts to make a priority and pay off first. The easiest and best approach is to make minimum payments on larger accounts and pay larger payments to accounts with smaller balances. Choose the account with the smallest balance and decide the largest amount you can afford to pay for that account every month. Then, remain committed to making that payment amount until the account is paid off. This will allow you to whittle down your debts within a reasonable amount of time.

By being honest about how you spend your money and making conscious choices when it comes to budgeting, you can begin the process of digging your way out of debt. As you pay off smaller accounts, you will have larger amounts of money available to then pay off your larger credit balances. It may be painful initially, but you may be surprised to discover that you can become quite comfortable living on a budget, and who knows, you may become an extreme coupon shopper and reveal in the thrill of scoping out the best deal.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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