You can lower your interest rates and stop any plans for big purchases or vacations, but if you are really determined to get out of debt, you are going to have to make more changes in your life than just those. Take a serious look at where your money goes and determine what you can go without and what you can get away with less of. You may feel that you are not extravagant with your money, but many of us spend a little here and a little there without realizing how quickly that little bit adds up to too much spending.
Even if you feel that you do not waste money, closely evaluate your spending habits. Start your evaluation by writing down everything you can think of that you buy in a month. This is going to take time, but is immeasurably helpful in figuring out your expenses and changing your habits. While you are making your list, which may require you to look through your checkbook, credit card bills, and saved receipts, write how much you spent on each item for the month. Do not leave out your rent, utilities, car insurance, groceries, entertainment, and afternoon coffee – include everything that takes money out of your pocket.
Once you have determined exactly how much money you spend each month, you can identify what things and activities siphon off your funds without you thinking about the spending. Typical expenses along these lines include snack breaks, pricey coffee drinks, daily lunches out, and impulse buying. When making these purchases, the costs do not seem very expensive, but this type of thoughtless spending piles up over time to make up a lot of money.
If you eat lunch out every day, spending an average of $7 a day, 5 days a week, by the end of the year, you will have spent $1,820 dollars on lunches out. Even if you manage to just spend $5 a day, 5 days a week, this still adds up to $1,200 a year. Remember what a difference a $150 a month payment toward a high-interest debt made in comparison to a $100 a month payment toward the same credit card. Even if $5 a day or $1,200 a year does not seem like a lot of money to you, think about, in addition to how much money you are spending, how much money you are accumulating in debt because you are not paying off your creditors as quickly as you can.
Remember every penny counts and I know from experience it is very difficult to give up items that you are accustomed to and that fit in your quality of life. It is necessary to cut back on expenses if you one day want to return to you quality of life.
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