2006-09-03T17:06:00.000-07:00

My Debt Problems and the way I reduce them today.
I’m struggling paying my bills, my mortage and I need to take drastic action RIGHT NOW to stop things getting out of control.
Contrary to what the TV adverts for debt consolidation companies would like you to believe, re-mortgaging isn't the answer. Yes, I’m ending up paying less every month, BUT I end up paying thousands in interest over 10-25 years.
Below are 5 things I put into place that show the reasons of my overspending and help to tackle my debt problems before its too late.
SPENDING DIARY - Every single day I make a note of EVERYTHING I spend money on. It is amazing how the trivial things soon add up to some money every day. This will really highlight where the daily cash is frittered away.
BUDGET – I rote down EVERYTHING you spend your money on i.e. car tax, maintenance, food, kids sports, gym membership, gas, electric, a loan with high morgage rates, holidays, birthdays. I find out how much I need each month (for annual expenses, multiply by 12). This will also highlight how much is spent on things like work lunches and kids school dinners. Comparing my monthly expenditure to my monthly income so I could see how much I have spare or how much overdrawn I will be at the end of the month.
LOSE ALL LUXURIES - Cancel or reduce mobile phone contracts, dvd membership, expensive cable/satellite t.v. packages, gym membership, cut out weekly/daily take-aways, cancel school/work dinners (take a packed lunch - work/school dinners are a big expense). These are all luxuries so at the very least should be cut down, on or got rid of all together if I’m really struggling.
MEAL PLAN - Four people should be able to eat very well on $150 a week - yes really. It is very easy however to wander round the shops buying anything that takes your fancy (if the kids are with you its even worse, if possible leave them at home). The solution is simple. Make a meal plan, write yourself a shopping list and stick to it.
REDUCE SPENDING ON CREDIT CARDS - Credit cards are just so easy to put money onto and if you are not paying off the balance in full every month, the interest is crippling. If you can, transfer balances to 0% cards. If you are refused new credit cards, then pay off the card with the highest interest first, then CUT UP THE CARD and CANCEL IT! I think I may need a card for emergencies, and just have one and hide it in a drawer. In long term I don't plan any loans, morgage, etc.
I was able to reduce my debt problems without getting stuck with a morgage, the calculation with a mortgage calculator show up me just this and I'm happy about it!!!!

Tip: When you have dificalties to pay your bills, work out with your creditors setlments and make the payments confortable for your finances and satisfying the creditors. Otherwise apply to a company to manage your finances and, in fact, to set up setlements with your creditors.

The way I reduced my debt problems.