Showing posts with label budget. Show all posts
Showing posts with label budget. Show all posts

Friday, 22 January 2010

Reduce debt by reducing how much you spend

Sit down with a pen and some paper.

Write down a list of all your expenditure; mortgage/rent, fuel, mobile phone, clothes, food, etc.

Categorise them into:

Fixed (eg mortgage)
Essential but not fixed (eg fuel, food)
Non-Essentials (eg mobile phone, treats)

If you really put your mind to it you can make significant reductions in the essential but not fixed category. Heating, for example: During winter, do you have the heating turned way up? A lot of people go overboard with the thermostat, and turn their home into a furnace.
Reduce your heating bill by turning the thermostat down and adding a layer of clothing. Think of it as adding a layer of protection from the debt monster lurking in the corner.

Non-Essentials (also known as the Debt Creation category)
This is the category that has most likely contributed to your debt problem; so it makes sense that reducing the items in this category will reduce your debt. Before you begin reducing the items in this category, be certain that you haven't "mistakenly" ;) listed items in the second category that really should be in this one.

If you really cannot survive without your mobile phone, and you have a contract, then consider switching to pay-as-you-go.

Create a Budget and stick to it. Easier said than done, I know. Just try it.