Reduce Debt
If you're in a position of high debt and have an income you can plan your way out of financial stress. It's a simple statement to make 'reduce your costs and increase your income' however practically it's not so easy.
Focusing on your debt and current costs which you high influence immediately, you need to focus on what will give you the greatest benefit and least impact to your lifestyle. First thing you should do is write down all your expenditure on paper or computer and organise your costs from the most expensive to the least expensive. Work on a weekly basis and convert any monthly costs to a weekly cost. The formula to convert to weekly costs is :
(Monthly Cost * 12)/52 approximately.
Next think you should do is in another column mark whether you can act on that cost short term (2 weeks) or long term - mark short term as 'yes'. In a fourth column mark a 'yes' if you can live without that item or a reduced item right now, today !
You should have something like this:
| Item | Weekly Cost | Short Term | Right Now |
|---|---|---|---|
| Rental | $400 | No | Yes |
| Auto Repayments | $100 | No | Yes |
| Eating Out | $100 | Yes | Yes |
| Cellphone | $80 | Yes | Yes |
| .... | .... | ... | ... |
| Snacks | $30 | Yes | No |
| Bottled Water | $20 | Yes | Yes |
What you should do is find all the 'yes-yes' items and act on them immediately. You can probably save $100 per week in minutes. The point of this is to identify items which won't affect you emotionally or impact your lifestyle immediately. What should you do with that additional cash - put at least 50% of that towards your credit or short term loans to accelerate your debt reduction.
You should do this exercise at least every 6 months in order to make sure you're making the most of the money you earn. Sometimes you are spending money on services or products that you don't even use so you may as well cut your expenses and pay off your loans.