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Step #4: Make a plan

So you have your budget and your debt in black and white, laid out on spreadsheets forcing you to deal with the reality of your finances. Now it’s time to make a plan. A million suggestions are on-line with steps to take to reduce those bills. Here are a few of the most popular:

1- Memberships. Do you use your gym membership? Netflix? Cigar of the Month? Take each of these and evaluate it’s use against it’s cost. If you are paying $30 a trip to the gym, either step it up or give it up [1].

2- Credit Cards- any of your rates seem ridiculously high? If they do and you have been making your payments faithfully, call the company and ask them about lowering your rate. People are defaulting on credit cards right and left nowadays, so they may be willing to work with a good customer. (I have done this. I called and said I wanted my rate lowered and he said “okay, the computer will let me lower it to ____. Is that acceptable?” It took all of 3 minutes.) If they can’t lower your rate, look at doing a balance transfer [2] to a card with a lower rate.

3- Monthly bills- check the amount of your utility bills for the month. Are they too high? You may be leaving things on during the day or have other reasons for the high usage [3]. Perhaps spending a few dollars on a programmable thermostat could help. Check the websites of your utilities, many of them have programs designed to help you save money by either agreeing not to use utilities during peak usage time or by averaging your usage out over the course of the year.

4- Food/Essentials- this is where most people waste their money. I previously spent an incredible amount of money on food without realizing it. Set a grocery/essentials budget and take that amount out of the bank in cash on pay day. Once the cash is gone, make do with what you have in your house. Find ways to cut corners or make substitutions [4]. Use coupons [5].

5- Start saving something- contact your Human Resources department and see if they can transfer $50 from every pay check into a savings account. Use an on-line bank or an institution where you do not keep your checking account, so that it is harder to get to the funds but not impossible. Assuming you get paid twice a month you will have saved $1200 by the end of the year without doing anything yourself.

Wherever you see problems, try to see possibilities. Throw around ideas with the other people involved in your finances- great ideas can come out of brainstorming sessions! Remember that you control your money, your money does not control you!