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Six Steps To Improve Your Financial Situation

Step 1: Let the Past Be the Past
So you’ve made some poor decisions in the past, and maybe you’ve let one too many people take advantage of your money. It’s going to be difficult, but you’ll have to let it go. Try not to blame others for your debt, and most importantly: Stop blaming yourself. Taking responsibility for your decisions isn’t the same thing as constantly badgering yourself with guilt. The only way you’ll be able to solve your debt problem is to focus on the present and plan for the future.

Step 2: Figure Out Your Current Financial Situation
This step is going to be painful, but it’s necessary. First, you have to figure out how much debt you currently have. Then you’ll need to figure out exactly how much you’ve been spending -- grocery bills, utility bills, date nights, movie tickets… every single thing you buy has to be accounted for. How much of this stuff is essential? How much of it isn’t?

Step 3: Cash-Only
Whenever you’re trying to spend less, try this strategy: put away all the credit cards and the debit cards, and only use cash. This doesn’t mean that you should cancel your credit cards -- cancelling lines of credit at this point can hurt your credit score even more. Instead, simply take all those cards and put them in a safe place (or ask someone trustworthy to hold onto them for you).
Why is this step so important? First of all, you won’t be able to add new debt onto existing debt if you don’t have access to your cards or accounts. You won’t even be tempted to do so. And second of all, something about exchanging cash when you make a purchase -- literally counting out your money and handing it over -- makes you more aware of how much you’re spending. Studies have shown that people who use cash rather than credit cards are less likely to make impulse buys and tend to find it easier to manage their money.

Step 4: Find a Way To Make Some Extra Spending Money
This might mean taking up a part-time job, or taking advantage of a money-making hobby you’ve been cultivating. It doesn’t have to last forever, but finding creative ways to make a few bucks here and there will alleviate the stress of paying off debts. It may be a bit exhausting for a while, but sometimes you just need the reassurance that you’re capable of working to pay off those debts.

Step 5: Know When To Cut Back on Certain Expenses
You’re going to need to make some sacrifices, and you probably know that by now. It’s important to make a budget, but it’s even more important to follow that budget -- and that’s the tricky part. Although slip-ups happen when “really great deals” appear, remember that these “deals” only provide immediate gratification. Making a double payment on a high-interest credit card bill certainly won’t be as fun as attending the next NBA game, but it will alleviate stress later on. Remember: the sooner you’re able to pay off your debt, the sooner you’ll be able to spend extra money on non-essential things without feeling guilty about it.

Step 6: Time Is Money
It might be cliche, but it’s true -- especially when debt payments are concerned. The more time you spend procrastinating, the more debt you’ll rack up due to interest fees and/or penalties.
Once you’ve decided to do something about your debt, figure out how much your household essentials will cost, and how much you can put toward paying off debts. If you can’t decide on the right plan of action, don’t hesitate to consult an adviser who will be able to assess your situation and provide a personalized plan.
Whenever you’re paying off debts, the first few months are guaranteed to be the hardest. Don’t let this deter you from your payment plans. Every dollar you can pay off now is a dollar that won’t accrue more interest to be paid later.

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