Reduce your debt, part 1

By Mike Aux-Tinee

Alright, let’s be honest. We are carrying too much debt and doing so is making our lives much harder and less happier.
Let me start by saying, if you think you are ‘rich’ because you have a credit card, that is not correct.  You have a line of credit that you will need to pay back. You can not simply discharge your credit card debts. They will stay with you until you pay them off.  
If you use a credit card to make a majority of your purchases and do not payoff your balances every month, you are simply turning over your more of your hard-earned money than you need to.
You can go on and ignore reality, but do not complain when the bill comes due. This bill is coming due and much sooner than you think!
You are the one who put yourself into this position. Do not blame the credit card companies, the countless advertisements or your neighbors . This problem is your own making. Just look at yourself in the mirror and scream it out loud, “You did this to me! I am going to get out of it! “
Once you have come around to the idea of spending cash, you can regain control of your life. These changes will move your life off the credit card track and onto something much better. That is, making more purchases with cash instead of with a credit card. Doing this, should help focus on your spending and ultimately save more than you spend.
This will not be easy and you will need to make sacrifices and so will  your family. Remember your new mantra, “I did this and I have to get me out of this.”
The first step in the process will be to create an income and expense sheet. This is not a complex process. Just take a piece of paper and a pencil. Yes, I did say, use paper and pencil. I do not want you to work off a computer. The psychological impact of using paper and pencil will become more apparent.
On one side, under income I want you to list all sources of  income. This includes:
  • Primary employment
  • Part-time work
  • Rental income 
  • Other sources of money coming into your bank account every month.
  • Then add up the total and this is your monthly income.
Next, I want you to list every bill and expense you incurred during the month. This includes:
  • Rent or mortgage payments
  • All utilities
  • Car payments
  • Cell phone bills
  • Cable tv (or whatever you have)
  • Food
  • Transportation costs (gas, oil changes and maintenance for your car or cars)
  • Eating out
  • Insurance
  • Spending money 
  • Anything else where money was leaving your account.  But I want you to list everything, even one time items. Now, add up the total and this becomes your expenses.
Now, this is the really simple part:
If  your income is greater than your expenses you have a surplus.
If your income is less than your expenses you have a deficit.
What did you come up with? I really hope it is a surplus and that is the road to becoming richer. However, for many, the numbers staring back at you most likely state, a deficit. Which means you are spending more than you take in. It is a shock to actually see it on paper.
Like many people, I bet you did not even know what you are spending each month. One reason, your bills are staggered. The car payment is due on the 1st, the mortgage on the 10th, credit cards on the 20th of the month and so on. A second reason, most people do not actually keep a journal or track this information. 
In the next series of articles, I am going to talk about some options for paying off your credit card debts, reducing spending and using cash for purchases. I will show you exactly what you need to cut and what to cut back on. I will also talk about starting a financial journal to track monthly expenses.   
This is a difficult process and you will make many excuses to justify and keep everything. If you do this, you will never get out from the credit card nightmare. You must make the changes and not look back. Not even once!
The goal is to get out of debt, develop financial independence and put yourself  a head of everyone else. I hope you take my suggestions. They have worked for me, that is why I am able to make them.
Peace Dudes!

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s