There are a number of very different strategies that you
can utilize to confront credit card debt and other debt
issues you're facing - proactively, directly, and head-on -
and this post will be just one more tool you can put in
your "debt relief tool box".
So, let's talk about variable expenses and how you can tame
this wild debt beast.
You're on a budget and abiding by it the best you can, but
we're only human, and there's a tendency to over-spend on
certain things. It's happened to us all: We go to the
grocery store for food and we frequently come out with a
few 'extras' - things we really don't really need, but we
decide to get anyway.
Individually, these are minor expenses, but they do add up.
Quickly. In the interest of debt reduction, these expenses
need to be controlled. Here's a good way to do it.
Instead of writing a check or using a debit card you should
pay with cash only. You may think it doesn't matter how you
pay for these items, but it really does. What I'm asking
you to do is to play a minor psychological trick on
yourself.
The fast food industry has discovered that people who pay
with cash equivalents (checks, credit & debit cards) tend
to spend about 10 percent more than those who pay with
cash. You don't really think they take these other forms of
payment because they like you do you? They take them
because you'll spend more. This is financial warfare.
You're battling for your financial future so I want to arm
you with...cash.
HERE ARE THE STEPS TO TAKE...
On payday, I want you to withdraw in cash the amount of
money you have budgeted for variable expenses. I'm talking
here about groceries, gasoline, clothes, lunches,
miscellaneous - all of it. Now separate the money into
small piles based on category. Place the smaller piles into
their corresponding envelopes (write the category names on
the outside of the envelopes) and put them in a safe place.
What I want you to do is pay for your variable expenses out
of these envelopes. When the money you've budgeted for a
particular expense is gone, you're done spending on that
category until payday rolls around again. If you decide to
order a pizza or get fast food, that's fine, but realize
that it's coming out of the envelope.
You're going to have to curtail your spending to keep cash
in the envelope, or you could wind up walking or singing
for your supper. It takes work, but with careful planning
you'll actually begin to have money left over at the end of
the week. And then the sheer beauty of this plan can kick
in.
THE BENEFITS:
At the end of the week, take all 'leftover' money out of
the envelopes and count it. Deposit it into your checking
account. Immediately write out a check and mail it to the
creditor with the lowest balance. It might be a credit card
or a personal loan. Whatever the case is, mail the check.
If it's only $12.37, mail it anyway. It's not the amount
that matters.
NOW YOU'RE ON YOUR WAY!
By mailing your envelope leftovers, you're making progress
on your debt situation. Have you ever heard the expression
"You're nickel and diming me to death!"? You probably had a
parent when you were a child that made that complaint when
you would constantly ask for a very small amount of money
for something you wanted.
This is that same principle in reverse: You're n ickel &
diming yourself back to life. It may not seem like much,
but if you can find just a little extra to send to a
creditor every week, using my example, that's over $600 in
a year's time. And that's not loose change.
----------------------------------------------------
Darrin Roseborsky is a Refinance Specialist with OMAC
Mortgages, seminar speaker and president of
HomeRefinanceCoach.com. Darrin shows people how to MAXIMIZE
their equity PROPERLY and how to choose options that make
the MOST SENSE for their situation! An example of exactly
how this works, is at: http://www.homerefinancecoach.com
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