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There seems to be a running joke that New Year's resolutions never last. (Why else would we have to keep making them every year?) But if you take the right approach to a resolution such as "getting out of debt", there's no reason you can't be successful. If you've been working to get out of debt and are not happy with your progress, or feel that you are starting to backslide, it's probably time to reassess your budget and fine-tune your strategy. The best way to get started is to: get organized, assess your current situation, develop a strategy that works for you, and make sure your goals are realistic.
It's important that you have your bills organized so you know when they are due, and you can avoid late payments that can damage your credit and cost you money in late fees and higher interest rates. There are also other financial benefits to getting yourself organized. For example, get in the habit of planning your day the night before so you aren't rushing around in the morning. Let's look at the financial impact of running late in the morning:
As you can see, not being organized can really add up! Developing systems can help reduce stress in your life, and at the same time help to keep you on track financially.
There's not a lot you can do about fixed expenses, like housing or a car payment, except for taking serious steps like moving or selling your car and purchasing a less expensive one. However, many of us have opportunities to cut back on incidental expenses.
If it's been a while since you made your last budget (or you haven't gotten around to making one!), you need to start by tracking your spending to have a realistic idea of where you're money is going. You can use computer programs, or spreadsheets, but the simplest way to do this is pretty low-tech � get a pocket notepad and record everything you spend for a month. Don't cheat! It's those everyday regular expenses that you normally don't notice that can really add up and be a real eye-opener. Let's just consider some hypothetical daily expenditures over a typical month of 22 work days:
These are all relatively small expenditures when you are making the single transaction, but by tracking your spending you'll see that you spent $275.00 on them by the end of the month. That could go a long way to paying down debt.
Once you determine where your money is going, you have to develop a strategy that works for you. If you need some ideas or support, consider joining in on the discussion boards in the CareOne community . Using the example above, some strategies you could adopt (besides making sure you get up early!) are:
Once you've identified the weaknesses in your budget and the habits that are causing you to waste money, it's relatively easy to come up with a solution.
The reason many people have difficulty sticking to their resolution of "getting out of debt" is they focus too much on the big picture and expect quick results. You need to remember that you didn't get in debt overnight and you are not going to get out of debt overnight. To be successful at sticking to a budget and getting out of debt:
By taking a systematic approach to your New Year's resolution of getting out of debt, you can greatly increase your chance of getting out of debt. Assess your situation, develop a realistic budget, and set realistic, achievable goals � and make 2008 the year that you successfully stick to your resolution!
Regardless of whether you binge on shopping or simply use credit cards to make ends meet, there may come a time when you need a financial intervention to help organize your bills, repay your debt, and improve your finances. For some, debt consolidation is the answer. But before you jump in head first, it's time for a course in Debt Consolidation 101.
Your Debt-to-Income Ratio is a crucial personal financial health indicator. Find out how to calculate it and what it means to you.
Debt relief comes in many forms- credit counseling, debt consolidation loans, settlement and even bankruptcy. Each solution will help you get out of debt, but the long term impacts and fees can vary greatly. Understand the myth and reality behind your debt relief options.
If you have lots of debt, consolidation may save you time and money. Depending on your financial situation, there may be a solution that's right for you.
Feeling overwhelmed by your debts? Having trouble making ends meet? Unable to get ahead of your credit card debts? A Debt Relief plan may be your solution to getting control of your finances.
What's your debt IQ? Take one of our quizzes and find out how much you know about financial fitness.Take the Quiz Now!
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