The first step to get out of debt is to get a grip on your finances. Maintaining a firm understanding of your income in comparison to your expenditures will help you begin to make necessary adjustments.
Here are a few tips to help you start.
Know how much you have
Before you can spend, you should make it a rule to always know how much money you actually have. Then, to set in the reality of how spending lowers your funds, check your bank account after you spend as well.
This way, you’ll always have a number in your head of how much money you have left before your next paycheck. While you’re trying to get out of debt, try not to spend any funds you don’t actually have by using a credit card.
Know your needs
There are some expenditures you absolutely cannot cut out — and no, that doesn’t include your Netflix subscription. Calculate the cost of your rent, utility bill, electricity bill, loan payment, car payment etc. to know exactly how much money you need to spend.
Then, start calculating what you spend on groceries, experimenting with cheap recipes and brands names that you can use to spend less.
Once you know how much you need to spend on basic necessities, you can put this money into your savings account right away to remove the temptation of spending it on anything else.
Know where your money goes
The “flex” money you can use on non-necessities should be left in your checking account. These funds can go toward leisure items and activities. Use an app or your banking company to look at what types of things you are buying.
This will give you an idea of the leisure expenses you’ll need to give up.
When you can’t meet the basics
If, after tracking your expenses, you find that you’re not able to pay off your bills or other basic necessities with the funds you have, it may be in your best interest to look into filing for bankruptcy. An attorney can help explain which options you are eligible and how they can help you get out of debt.