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Add up your cost of living
Get a notebook and write down all your expenses including even you smallest purchases. Divide them into entertainment, food, clothing, insurance, transportation and other logical categories. If you find your expenses exceed your income, single out those items you can do without.
In the same notebook, list all the items you purchase on a daily basis. Gather all your receipts and record them in the same notebook. At the bottom of every page write down the total amount spent. This will show your daily spending habits and how you could change. This is the most important step in improving your personal finances.
You cannot stop buying food but you can change your food buying habits. Look for stores that offer good specials on groceries. You will be shocked at how much you can save. Take advantage of food coupons in your local newspaper. Some stores have shopper rewards cards that can add to your savings. If you are driving, look around for a station where gas is cheaper.
Minimize your expenses especially the unnecessary ones. If you pay for a gym membership, you might consider dropping it and doing some exercises at home. You can also do your own nails as opposed to going to a spa and save the money you would have spent there.
Take a look at the list you made on your notebook and review your debt. They should be arranged in a given order from the smallest to the largest. Start by paying off the smallest debts first, the second smallest and so on. As you pay off the debts, use the money you’ve freed up to pay off your other debts.
Have a savings account
Your savings account does not have to be in the bank. You could have a glass jar where you put your change each day. When the jar is full, take it to the bank and deposit the money into your savings account. You could also get a part time job to supplement your income. You will have more to save because you will have more cash to work with.
Negotiate with your mortgage company
You may be able to negotiate with your mortgage holder to get a mortgage modification. This would lower your monthly payments and significantly reduce your financial burdens.
Live within your means
Be realistic with your budget and know your financial limitations. Be sure to put aside a specific amount of cash each month for your extra expenses. Spend what you can afford and don’t overspend as you will only be doing an injustice to yourself.
If your financial situation is bleak and you have tried all matter of ways to get it under control without success, you could seek help from a credit-counseling agency. A credit counselor will be assigned to you who will review your financial situation and provide you with debt relief options.
Debt settlement is one of the best ways to get rid of debt. If you choose this option, you should be able to cut your debts by 40% to 50% and become debt free in 12 to 48 months. Given the fact that it took years for you to accumulate your debt, 48 months is definitely not a long time to get rid of it.