As most people I make my list of annual resolutions which include the standard losing weight, getting into shape and getting out of debt. This year however, getting out of debt and gaining control of our finances moved to the top of the resolution list when we were denied an auto loan based on our credit rating. Our debt and spending had gotten out of control and it was time get a grip on the situation before it was too late. My husband and I sat down and took a hard look at our finances and habits and made some change that are slowly paying off.
Create a budget – I hate to write out a budget, probably because it forces me to look realistically at what I need to pay and what I can or cannot buy. Yet once I get it down on paper it becomes reality.
Set up different saving accounts for your savings goals – This sounds difficult but for my family, it really does help not only financially but emotionally as well. It’s like being on a diet; if I limit what I’m eating I begin to feel deprived which leads to a binge. It’s the same way with my spending/savings habits. I’ve found that if I set up different piggy banks, coffee cans or jars and label them with our different goals the savings add up and I don’t feel restricted. I’ve turned my bank’s “Holiday” Club account into a fund to pay for my daughter’s annual dance competition held in late November. The money I put in there can’t be touched until the check is mailed to me mid-November. If we aren’t involved with the competition that year, then we have to the money to use for Christmas or put on a bill. Even my daughter has gotten into the savings game and is actively seeking out coins to put in our vacation fund.
Be mindful of your spending habits – It’s a Zen like approach to spending but if you are mindful of what you need and what you don’t you can make the correct purchasing decisions and avoid over spending. Do you really need that book or do you simply want it? Can you get if free at your local library? Do you need to buy the bottle of wine or six-pack? I found that by cutting back on my nightly glass or two of wine and/or buying less expensive brands I saved $200 a month!
Put the extra on existing debt – Now that you’ve trimmed the fat from your monthly budget, take the savings and attack your debt.
Do not incur additional debt – Pay cash for your purchases or do not make the purchase just do not take on additional debt if absolutely possible.
Keep a focus on your finances – After overdrawing my checking account on several occasions and incurring several hundred dollars in fees I now check my account online every day as part of my morning routine. Of course this in conjunction with my budget to help stay on course.
Like weight, your finances didn’t get out of control overnight and they won’t be under control overnight either. Take the time you need to evaluate your situation and take the necessary steps you need to get yourself out of debt, start saving for a house or college or whatever your goals may be. In addition to improving your financial health you just may find your overall well-being improving too.