Are you worried about your debts and looking for ways to solve them? Here we bring to you a step by step guide that will help you solve all your financial problems and also manage your money properly.
Live On Cash
Start using only cash for your day to day purchases. Debit card and credit cards have made many people develop bad money spending habits. Living on cash will allow you to spend only what you can afford to pay for. Besides, it will be easy for you to tell how much money you have spent on what. So, the very first step that you can take is to deal with your financial problems is to put away all your cards and live on cash completely, at least for two weeks. No matter what you need to buy, use only cash.
Increase Your Spending Awareness
Once you have implemented using cash only, it will be easy for you to understand about your spending habits. Ask yourself if it was easier or harder for you to part with cash or your plastic cards. Consider if you had only bought things that you needed, or there was extra cash left with you, which you could easily spend on other purchases. Check how much cash was left at the end. Various studies have revealed that when people use plastic cards they are likely to spend 15% more per purchase. Spending more than what you can afford will add up over the years and get you into debts. So, be aware of how and on what you are spending your money.
Find Out Where Your Money Goes
Your next step should be to keep a track of your spending for at least two weeks. You can either use a notebook or use any app or software to make a note of where and how you are spending your money. Having a written note will make it easy for you to keep a track of how much you are spending on which types of expenses.
Create A Plan To Solve Your Financial Problems And Prevent Them In Future
The smartest step that you can take to solve as well as prevent your financial issues is to create a monthly plan for your spending. Having a proper plan or budget is like having a guide that will let you decide how much money you want to spend and for what purpose. Such plans will make life absolutely easier for you. When creating your budget you should consider your monthly income. You can also try out the various interactive budgeting resources that will guide you through the entire process. Check out for expenses that you can cut out of your budget and stay stick to it.
Find Replacements For Large Expenses
Changing habits and cutting out an expense is easy. Try developing habits that will replace the expensive ones. For example, if you want to stop buying expensive coffee at work, consider replacing that habit with a new one. You can consider buying yourself a new travel cup and purchase coffee that you can easily make at home and carry to work. This way you can easily change your habit of buying coffee at work. So, start finding the expense that is taking a toll on your budget and try to find the best replacement solutions.
Identify Expenses That Can Be Reduced
Try to identify the areas of your budget and look for ways to decrease your spending. Simple steps such as doing laundry with cold water instead of hot, turning the heat down and the lights off when you’re not home, cancelling cable TV, changing your phone contract are some of the steps that can be taken to reduce your expenses. Also identify the services and products that you no longer need but still paying for them.
Pay Off Your Debt
You may have some sort of debt which can slowly accumulate over time if you do not take any realistic debt solution. So, do not delay and create a plan to pay off your debt. If you need any help dealing with your finances and debt then go for it. You can seek out for professional advice so that you can deal with your debts with ease.
Last but not least, educate yourself about how to manage your money and debt better.