Part of the problem that a lot of us have with debt comes from the same root problem in other areas. We are trained to react rather than act. Because so many of us don’t have a plan in place, we are at the mercy of the moment or our perceived need at the time. Heaven forbid if an emergency strikes, because we might have some retirement savings, but statistics say that only a small percentage of us actually have any kind of emergency fund.
If you’re truly serious about getting out of debt– you’re going to have to get serious about planning where your money goes. I mean, let’s say that you average over your entire working years (20-65 for this example) only $30,000 a year. That means you will have, over that time $1,350,000 pass through your hands. All that money and what are you doing without a plan!?
What my family does it to construct a spreadsheet. Across the top we place the money we know is coming in for a given month. Going down the side we place every item that we are going to spend the money on, broken down into groups. We have a group of bills we have to pay, things that we are going to get out as cash (to help us control spending), our debt and our savings. The spreadsheet is set up with formulas on the bottom and right hand sides to make sure all the columns add up, and the total at the bottom (after we’ve spent the paycheck) is to be 0.
Now, this budget doesn’t have to be restrictive. This is just the plan, and it can start out lax and get more tight as you compare actual spending to planned spending. It also allows you to plan for savings, plan for big things that are coming up, and to have an easy tool to make a decision when the time comes.
One of our biggest enemies in our race to get out of debt is emotions of the moment. Don’t let the salesmen or the sale price talk you out of doing what’s best for you and your family.