Repair Debt With Healthy Spending Habits

Next to our physical health most of us are primarily concerned with our financial health, and with good reason. Although our intentions are usually great our follow-through and discipline generally isn't. Mere mention of the word budget or cutback sends us into fits. As a result most of us carry more debt than we can handle comfortable. Recent surveys record the average American debt at more than $7,000 per household. To make matters worse, we are spending more and saving less. Turning this unhealthy habit around will take time, discipline and patience. We are not likely to see any debt relief until we are ready and willing to make some significant changes with regard to our spending habits. Following are some tips to help the serious get started: Keep in mind before you start this new program that healthy spending habits need not be synonymous with deprivation - a bad word in our "you deserve it/you've earned it culture." Those interested in cultivating more healthy spending habits will be happy to know that rehabilitation is painless. o Start with a spending log. Yes, you have heard this advice before. This exercise is eye-opening if you do it diligently. If you have been unable to keep such a log because it is tedious or difficult to remember, consider using your debit card (never your credit card - after all, the goal is debt repair - not debt deepening) for every purchase. You can find the Visa/Mastercard logo nearly everywhere you shop or buy, including many fast food spots. With online banking you will have access to a visual record of all your spending. This is a great way to begin to spot patterns and decide where you can cut back. o Analyze your online account statement (four weeks is ideal) to help you determine where your money is going. Most banks offer up to the minute transaction information. Review your log without judgment. What you have done, in terms of your spending, does not matter - at least not yet. What does matter is that you get a firm hold on your expenses. For example, how much money do you spend on coffee each week? Dry cleaning? Take out? Movies? Where do you see impulse buying? You get the idea. o Next, write down all sources of income. With a list of your income and expenses in hand determine your priorities. Begin your debt repair plan here. Obviously housing and other fixed costs will figure prominently on your priority list. Now, take a look at the conveniences that represent variable expenses. This is likely where you will find money for extra payments. For example, if you subscribe to a video service can you get the two DVD plan instead of the three or eight DVD plan. If you buy coffee each day, can you bring it from home a time or two each week? Or would you be willing to purchase a smaller or otherwise less expensive cup? Can you clip coupons or eat out a little less? o Write your debt repair plan in pencil. Writing in pencil will help you remember that your plan is a fluid document. As you live with it you will probably need to make changes. That's okay. You may even want to include a little mad money each month. It is far better to blow a budgeted $20.00 than it is to impulsively fritter away $200.00. o Bear in mind that it took you some time to get into debt and it will take you some time to get out. Be patient with the process. Debt repair cannot happen without time. There are no quick fixes and no magic wands. You must pay down your debts dollar by dollar and month by month. o Now that you have found some money in your budget (hopefully) double, or triple, if you can the minimum payment on the card with the lowest balance or the highest interest rate (the former if you need quick satisfaction, the former if you want to maximize you debt repair program). Be patient with yourself if you do get off track. If it helps, try writing your payment goals down. Remember, developing a new habit takes practice. In time you may even learn to love your new healthy spending habits. It is liberating to be in control of your finances. So, go ahead, clip those coupons. Write your budget and honor your payment goals.

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