Debt management begins with money management

The average American consumer has a boatload of debt. There is no getting around that. The reasons are varied, but the easy availability of credit is certainly a large component of that. Twenty years ago, it was difficult to obtain a credit card without established credit. Today, many college students, even those with no income, find themselves awash in credit card offers. The companies that issue them know that if they get their customers spending money early they will likely have them sending in monthly checks for life.

Most people who overspend and end up in debt imagine that they could get out of debt if they only had more money. But that usually isn’t the case. Think about where you were ten years ago. You were certainly earning less than you are now. Are you better off now, or are you just spending more money? Most people don’t pay off the bills when they get a raise; they just start spending more money.

The key to managing your debt begins by managing your money. Pure and simple - if you want to get out of debt, you have to stop spending so much and start saving more. And the sooner you start, the better off you will be. Here are some tips as to how you can start to save more and thus spend more to retire your debt.

• Find out where your money is going - For a month, write down every expense, no matter how trivial. Add it up at the end of the month and look over the list carefully. What can you find that might have been unnecessary? Start looking for ways to cut corners.
• Eat out less - Do you eat out every day for lunch? Pack a sack lunch.  If you eat out three nights a week, cut it back to two, or one, or none. You have a kitchen; use it. The amount of money that most people spend each month eating meals away from home is staggering. How about that $4 coffee at Starbucks? Could you brew some at home and take it with you instead? A cup of coffee shop brew every day for a month adds up quickly.
• Save at work - Do you have a 401(K) plan at work? Does your employer offer matching funds? Many do, and if you are not taking advantage of it, you are literally leaving free money on the table. Look into it, and start saving money there today.
• Pay your bills on time - Late fees add up and hurt your credit score. Paying late makes a bad situation worse. The same can be said for using your banks overdraft protection feature. It’s convenient, but it’s also expensive. If you are using an overdraft feature, you might as well be taking out an expensive payday loan instead.

We will look into some more debt consolidation strategies in part two of this article.

Copyright © 2005-2007 by Retro Marketing. All rights reserved.