The Average American spends a great deal more than they make every year. This results
in a financial pitfall to them later in life. If you find yourself digging deeper
into the empty wallet there are ten steps that you can use as a crutch to help free
you of the overwhelming financial burden of debt.
Create and follow a budget - Creating a monthly budget will help you to track
where your monthly income is going. In order to do this, you should add up how much
your expenses will be for the month and then add up your monthly income. Once you
have calculated how the money should be spent you should have some money left over
for emergencies.
Stop spending what you don’t have - When you spend what you don’t have your
debt is only climbing higher. If your monthly budget disables you from making a
purchase, then the purchase should wait until the money is within your reach.
Learn to distinguish between wants and needs - In a world filled with televisions,
computer games, luxury cars and other costly trinkets, our perspective on wants
and needs at times becomes distorted. A need is something that is essential to your
survival. Although sometimes we think that we will not be able to function without
that big screen TV, waiting until the money is in the bank and paying cash for large
purchases is a better option.
Spend less than you earn - After you have covered all of your monthly expenses
there should be a little money left over. If not, adjust your monthly budget. You
never know when an emergency may arise.
Track your spending - Many people who are in debt are unaware of where their
money goes during the month. If you carry a notebook around and write down every
penny that you spend when you make a purchase, you will be able to see where your
money is going.
Pay yourself - Building up your savings monthly will only ensure that you
do not fall into debt again. It is always good to have a little extra money stashed
away.
Use a credit card responsibly-Credit cards are convenient for record keeping
and budgeting, but can be dangerous if used improperly. You should not make purchases
that you can not pay off at the end of the month.
Use a debit card - Debit cards will not allow you to spend more than you
have in your account because it draws directly from your bank account. This way
you cannot spend what you do not have.
Remember that the key to escaping debt is spending less than you earn.
Alan Olsen is the managing partner at Greenstein Rogoff Olsen & Co., a top Bay Area CPA firm. He focuses on developing innovative strategies for business enterprises and individuals. A specialist in income tax planning, he frequently lectures and writes articles on tax issues for professional organizations and community groups. His website is ranked among the top in the nation for accounting firms, featuring tax tools and business leadership articles: http://www.groco.com
