When you're trying to get out of debt, it's important that you really have a handle on how your money is currently being spent. Most people have a pretty good idea of how much is coming in and how much is going out on major expenses like rent and utilities - but they neglect all the little things that add up. Keeping an accurate track of everything from monthly loan payments to that morning bagel will allow you to figure out exactly where your income is being spent.
Once you have subtracted your actual spending from your income, you'll know exactly how much you have left over at the close of each month, or how much of a deficit if you're spending more than you make. Not much left over? It's a good time to take a look at your spending habits and see if they can't be adjusted to meet your financial target:
If you are struggling to make ends meet, or unable to save anything; start by recognizing costs that can be cut easily. Spending a few bucks a day on coffee? Try brewing it at home and taking it in to the office. Eating out a lot? Cook at home more often. Small purchases in big numbers can quickly add up to hundreds of dollars each month which could be used better elsewhere.
A little digging will usually show that your monthly bills can also be lowered if you're willing to do without some luxuries. Are you paying more than you should be on phone bills or paying for extra cable tv/internet services?
If you have already done everything you can to decrease your expenses yet you still find yourself in the hole, you should see if it's possible to decrease your carrying costs on any debt balance you have. Perhaps it is possible to get a better mortgage rate negotiated, or lowered interest rates on your credit cards. If you are losing a lot of your income to interest charges, a consolidation loan or other kinds of credit counseling might be something worth considering.
While it's not something most people look forward to - taking a good look at your financial situation will reveal where you actually stand, which will assist you in altering your spending habits and seeing where you can save.
