Question for the Money Doctors
Question submitted on Nov 26, 2013.
QuestionI have a problem managing my money. I am currently living from paycheck to paycheck simply because I don't have much skill with regards to money management. I work very hard but its almost a year still I don't have a dollar saved in my account and I am loaded with a lot of debt. What advice do you have with regards to situations like this?
I know it can be frustrating. The debt treadmill can take you nowhere fast. First thing you do is mentally prepare yourself for a season of short-term sacrifice. Secondly, look at what you are spending your money on and need. You need to pay your rent you need to keep the lights on you need to buy groceries and pay for health insurance. You may want certain items like cable TV, home internet, a smart phone, going out to eat, a car payment, gym membership etc - but you do not need these items.
For a short season in your life - maybe 2-3 years - challenge yourself to cut out "wants" out from your budget plan. Be honest with yourself. The pain will not be as bad as you think, and will last only a short while.
Use the savings from these cuts to lowest balance credit card first. While doing that, pay only the minimum monthly payment on the other credit cards. Once your pay off the debt with the lowest balance, you will be making progress and will be well on your way.
Continue that process paying off the lowest balance credit cards until they are all paid-off. Then move to auto loans, and then student loans. Once your are done, you will be free. YOU WILL BE FREE! You can do this.
If you need more help, find a CPA/PFS in your area by visiting www.findacpapfs.org
For additional information visit http://www.360financialliteracy.org/