If everyone knew the answer to that, nobody would be having financial problems. The problem is that some of us know what the answers are and do not follow, but some of us simply do not know. We are guilty of not planning and thinking that we can do more than what we really are. The sad part is that most of us are a paycheck away from bankruptcy – if we were going to be laid off, we would have no cushion to protect us. With today’s economy and employment uncertainty, everyone should have at least two months’ salary in a savings account.
The original question was how to get out of debt. The first thing to do is to get rid of credit cards – at least until you repay. Develop a plan in which you pay one, and then add what you pay to the other the second, and so on until you have paid every bill you. During this period, you also want to avoid adding any new debt or increase any payment in any way, including its move into an expensive house or apartment, or even adding a cell phone if you do not have already. Repay all old debts before adding something new.
Once the debts are paid, you must develop a plan to stay out of debt. If you are a person who loves shopping, so stay away from either credit card or have their credit limit reduced so that they become an “emergency” tool. Make it a habit to practice more when you can pay billing cycles unless it is an emergency, and it does not mean a new pair of shoes or jeans. We are talking about a car that does not work, or a sick relative out of town, or perhaps a city wedding that was not planned early enough for you to save money. You should also start saving money every payday so that if something does go up, like marriage outside the city, you have the money in the savings account to cover the card without using credit.
Keep your costs low. You do not need to go out to dinner three or four times a week, and even if you are late and do not feel like cooking, at least go to the supermarket and buy something to put in the microwave oven. It’s cheaper than stopping at McDonald’s and better for you too. Take your meals instead of eating to save money. Certainly, you can go to lunch or dinner on occasion, but limit it to once a week for each. If you tend to be one-stop “on the way to work for breakfast” person, break the habit, too, and start to buy things at the grocery store that you can take to work and eat.
That sounds like a lot to give, but if you want to stay out of debt, you have to make some sacrifices. You came all this way, and you do not want to go back to where you were. Follow the plan and you will find more money for the things you need.