Live Frugal by Reducing Debt

If anything good comes out of this recent recession it might be that people will learn to not rely on credit as much for day to day purchases and that is one of the most important debt reduction tips anyone can learn. Of course, many times people get into trouble because of circumstances beyond their control such as a job loss, medical issues or other unexpected expenses. No matter what the cause, it's never too late to take control of your financial destiny and get yourself out of debt. The sooner you start the sooner you'll be able to breath again.

First and foremost you need a plan and when it comes to your money the best plan is to make a reasonable budget. I say reasonable because many people get very motivated and sit down and make up a really strict budget. The only problem is that they aren't going to stick with it because it's simply too strict. You want to be strict with your budget but you also have to be somewhat realistic about what things you're willing to give up and what things you aren't going to give up.

For example, if you absolutely love your expensive cut of gourmet coffee everyday on your way to work it might not be realistic to plan on going without, but still try. You might be better off on cutting something that you don't enjoy so much from your budget. Of course, to make your finances work you will have to be willing to make some sacrifices, just make sure that the things you plan on sacrificing are things that you really can live without. This is one of the best debt reduction tips.

So, step one is to determine the exact amount of money you make every month. Make sure to include all the money coming into your household. If your pay varies from one month to the next just take 3-6 months worth of pay and average it. That will give you a very good idea of an average months worth of pay.

Once you know what you have coming in, you need to make a detailed list of what you've got going out, all bills and expenses for every month. Again, it may be necessary for you to average out certain expenses that may not be made every single month or may not always be the same amount. Start first with the 'easy' things such as car payments, house payments, and utility bills, then include the cost of gas and groceries (make sure to include prescriptions too). Then expand out to include more obscure things such as your daily cup of coffee, pet care costs, dry cleaning, subscriptions, health club dues, etc.

To make sure you haven't forgotten anything look back over you check book register for the last several months. Your budget will only be as good as the numbers you've plugged into it. If you forget a lot of things your budget will be virtually worthless.

Getting a handle on your monthly expenses by making up a detailed and realistic monthly budget is one of the most worthwhile debt reduction tips I can give you and it's the best place to start.

Dean Vinson retired early and lives a frugal life. Review his tips on how to live a frugal and simple life at Frugal Living.

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