Once you have been in debt for a while you start to realize that some changes have to be made. Even if you can meet your monthly payments, it still is a good idea to take a look and see what can be done to get rid of some unnecessary payments. After all, giving your money away on interest payments is a waste of your hard earned cash.
The first thing you need to do is to collect all of your monthly financial obligations and document them all. Make a worksheet and fill out every payment that needs to be met every month. Once you have this on paper you will create a clear view for yourself from which you can move on.
Right away there will probably be some costs attracting your attention, and making you wonder if they are really necessary. For the time being set those thoughts aside and concentrate on what is necessary first.
Next you take another piece of paper or worksheet on your computer and start making notes on what is really necessary. This can be different for everyone, but the basics are of course your mortgage or rent payments and utility payments. These are the payments that make sure you have a place to stay and where you can turn on a light.
Next we have insurance payments, maybe for your home, liability or health. You have to decide which are really needed and which ones are not necessary because the risks being covered are not so high at all. If you do not have any dependents, it is likely that life insurance is not a necessity.
The next priority is groceries. See what you are spending on food and household items (cleaning products, etc) each month and how you can reduce that amount. Of course your groceries are needed, but when you pay a little more attention to where you buy them, what you buy and what brand you use, you can save a lot of money. And of course there are other money savers such as coupons!
The next step in getting your priorities straight is to take a look at your casual expenses. Is your work location five minutes from home. If so, do you really need a car? Are your children buying lunch at the school cafeteria or are they bringing their much healthier (and less expensive) sandwiches from home? Do you really need your clothing renewed every month or is twice a year enough to keep up? Do your children really need you to pay for their privileges such as their hobbies, car or telephone bills or are they old enough to take on after school jobs?
Once you have established your financial priorities, you will be able to take the unnecessary obligations and cut them back so you will can have a clear conscience and know that you are not wasting any money on things that aren’t necessary. Once you know you can do without these things, it will be easier for you to decline any of these expenses in the future.