Debt Management Solution STEP 3:
Action 1: Track your spending habits and find extra money.

One debt management solution begins with knowing exactly where you are today. If you are following the Debt Ditch Guide, you have just done that and now know exactly how much you owe, what it is costing you to carry your debt, and what your assets are. Click here to go back to that step if you haven't completed it.

The next step in our debt management solution to get out of debt is to track your spending habits and patterns. Find out where your money is going. Most of us have limited funds. If we are not mindful of how we are spending our money we can end up with more days than money at the end of each month.

The first time I ever tracked my spending I was shocked at how much money I spend on "extras". Most of us don't pay much attention to how much money we are spending on things like fancy coffees on the way to work, lunches out, sodas, kids lunches, candies and snacks, bottled water, eating out and magazines.

This next step in our debt management solution involves expense tracking for 1 full week. It sounds more painful than it really is and will be so rewarding. Imagine finding an extra $10 a day to put towards your debt! That's over $3600 a year and means that you can achieve a debt free life much more quickly than you may have imagined. Definitely worth it!

So here goes. Take a sheet of paper and list each day of the week. Create a column on the left for the types of expenses you have during the day. We are not talking about bills you have to pay here. This is where we look at the little bits of money we spend every day.

Create headings like:
  • Lunches/eating out
  • Coffee/tea
  • Travel (gas,tolls and fares)
  • Kids lunches
  • Snacks/vending machines
  • Bottled water and Soda
  • Newspaper and magazines
  • Cigarettes
  • Cell phone

Click here to go to our Track Your Spending sheet. Print it and keep it handy.

Get receipts for everything you buy, if at all possible, so you don't miss anything. At the end of the week, total it all up, day by day, and you can see how much you are spending on little extras.

Now determine if there is anything on that list you can cut back on. Here are some ideas:

  • Bring lunch to work twice a week to save on eating out expenses.
  • Cutting back on fancy coffe purchases alone can save you several dollars a day.
  • Send the kids to school with a home packed lunch a few times a week instead of giving them lunch money. They may eat healthier too - an added bonus.
  • Buy bottled water and soda by the case at the grocery store and bring a bottle or can with you. It is much cheaper than buying bottles individually.
  • If you are a real magazine person, just buy 1 or 2 magazines you really love. Do you really need to read them all?
  • Check out different cell phone plans to see if there is one that conforms more to your real calling habits. You can often save a significant amount of money by just cutting back on your usage a bit.
  • Bring snacks to work or have snack foods ready at home to avoid the vending machines and impulse snack purchases.
  • Consider car pooling to work with someone who lives near you.

Have you found your $10 a day? Or more?

If you really want to get rid of credit card debt and get on the path to financial freedom, use this debt management solution. You will amaze yourself with how much money you spend on these items.

Once you have determined how much you can save by changing your spending habits or reorganizing your life in these small ways, add it up and determine how much extra money you have just found to pay off debts. This little debt management solution can help you get out of debt much more quickly than you may have thought possible.

Another debt management solution is to pay more than the minimum payments to get out of debt quickly.

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Notable Quotes

quote openMy problem lies in reconciling my gross habits with my net income.quote close
~ Errol Flynn

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