How To Manage Money: Eliminate Debt Step by Step Part 1

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Part One of Two

Is there a way to manage my money and eliminate debt step by step? Well if there were a sure fire way we would all be doing it every day, week and month of the year. However, I have discovered a number of steps that can only help and if you attempt to follow each as closely as possible you will be one step closer to eliminating your personal debt. You can start tomorrow and it can change your life.

The First Step: Assess your current financial situation.

Are you currently in the red or black? Do you turn to your credit card to manage your money and daily expenses? This may be a clear indication that you are in a state of financial trouble. Here is a free tool at the following link that may help quantify your current situation.

http://moneycentral.msn.com/personal-finance/calculators/evaluate_your_debt_calculator/home.aspx

The Second Step: Analyze your spending habits.

Take a look at your weekly and monthly spending habits. Do you find that many of your purchases are unnecessary? When it comes to spending, there really is no ‘grey’ area. There are things we all need to purchase and there are things that we don’t. You may have to re-discover how to manage money if you discover that half of the money you spend is on eating out, entertainment, fancy clothes, alcohol etc. Here’s something you may want to try.

The Third Step: Budget.

I’m pretty sure I’ve mentioned this once or twice on this blog but making a budget is probably the most important step to take. A simple way to begin to budget is to go through your credit card bill and make list that list what you NEEDED and what you DID NOT NEED. This will only take a few minutes but it will show you how to manage money in a very simple way. You could even go through a few months of bills. The first thing you will probably discover that you can cut your bills in half! Now, when it comes to buying things in the future you will know exactly what deserves the ‘green’ light for necessary spending and what is ‘red’ flagged. Suddenly you have the start of a budget.

The Fourth Step: Eliminate those ‘Red Flagged’ purchases.

This step will take the most determination, dedication and will power on your part. The key of how to manage money is to know where the money is going and why. You don’t need the latest fashions, an expensive bottle of wine, football tickets or that new pair of shoes if you are already having difficulty with your financial situation. The only things you really need are a roof over your head and food on the table. Make an effort to live a very modest lifestyle for a month and you will probably amaze yourself with how much money you will save.

In my next post I will go through the remaining steps of how to manage money and eliminate debt step by step. Life isn’t always easy when it comes to money and living expenses, it is however manageable. Until next time, happy saving!

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