Taking Control of Your Finances And Your Life
This is one of the hardest situations for people to deal with. When you are dealing with personal debt and money management, you are dealing with more than just money. You are dealing with a person’s life. Money is connected with life, life is connected with money. In order to have control over one, you need to have control over the other. There is no way a person can have control over money when their life is so out of control.
The first step to taking back control is through writing it all out. Think of this as financial therapy. Write down where your money is going. If you spend $10 on booze, than write it down. Write down your rent and utilities. You get the idea of where I am going with this.
The next step involves getting some headroom. If you are spending more than what is coming in, there lies the problem. Concentrate on making some room for some cash. If this means cutting down on some extra spending, than you might want to do that. Once you have some headroom to play with, then the next step involves paying the debts down.
The more cash you have to play with, the more you can pay things off. Say you have an extra $200 at the end of the month. Say you got that extra $200 from working a few extra shifts. Take this $200 and use it to pay off some old debt. You might not be able to do this all the time. The goal is to do it when you can.
As you pay down your debts, look to create a small fund for yourself. This means putting away some money and not touching it. This could prove difficult for some of you, but you’ll never know unless you try. The same rules apply for this too. As you come across extra money, money that you are not using for debt repayment, put it towards a small emergency fund.
Some people say that $500 emergency fund is suitable. In some cases this might not be possible. Just do the best you can. Work with what you got. If you have an extra $40 lying around, put it away. The key here is not to spend it, unless it’s for something really essential. You are trying to pay down your debt, not add to it.
The idea is to make goals and stick with them as much as possible. Do not celebrate paying off your debt by creating new debt. This is probably what got you into trouble in the first place. Learn from this situation. The idea is not to make the same mistakes twice.