A few months back I said to myself, this can’t go like this. Bills of $10,000 on my 2 credit cards and no money in the bank. I do have a decent job but I had no discipline in regards to money management. I can tell you that being in debt and missing discipline spills over in every part of your life. It’s like sickness that will make you unsuccessful everywhere, from work, to dating to health etc..
The first thing I realized is that I am like a child when it comes to spending. Immature and I set myself a few goals a few months back. So far it shows good results.
So here are things I did so far to reduce my debt to half and falling down… This is not a product of my genius, I just collected information available from various sources. But hope it helps:
1) Pay ONLY CASH for purchases (forget credit card for day-to-day purchases, and don’t do large purchases when there is no money). Cash is the king.
2) Stop that “pay-check-to-paycheck” attitude. You have to LIVE AT LESS than what you can earn. Even if it is just 1 dollar less. But you have to do it, it is psychological.
3) Start investing for retirement (start with simple savings account and put monthly payment there). This is again more psychological than technical.
4) Make your money WORK. Set some expectations for your money and check on monthly basis if those expectations have been met (=your net worth must go up every month, even if it is just 1 dollar).
5) You must have a budget that you set month IN ADVANCE. If you need to pay by credit card, then PREPAY IT. It’s easy to do. With most credit card companies there is not a problem to put more money on your credit card than required. You can even keep a POSITIVE BALANCE every month and use the card till you used up that balance and reach 0. Your credit card company will be happy. Since you are giving them free money in their pocket. Again, you don’t need to do that, but it really helps! Try it.
6) Be disciplined. Don’t let your credit card company chase you down like a 5 year old. Man up (or woman up) and have a good attitude so you can be proud for yourself. Don’t avoid looking at that bank account or credit card statement every day. Face it.
7) Give every dollar a JOB. I mean a function, so every time you purchase something, set the expectations for every dollar. Don’t just get your money to go away like if you flush down the toilet.
8) sign up for some online financial and budgeting tools like Yodlee MoneyCente or Quicken Online. Both are free. Have a joy doing this every day.
9) Don’t be afraid to TELL people in conversation that you are in debt and are working to get out of it. This is psychological. The right friends will understand it and even help you out. People who won’t understand it are not your friends.
10) Don’t forget to donate! This has again psychological effect. But I don’t mean shelling out money to someone who has same problems as you. This won’t help them. You have to give your money a job. So select a good cause for donating. In addition to that – donating is not only money, it can be your time. Donate your time. By helping others to change their lives you help yourself.
(P.S. If it helps you, you can cut that credit card in half.)
