Dig Yourself Out of that Financial Hole

Okay, let's get down to business. If you've got financial woes, if you're in debt up to your eyeballs, then you need help – serious help – and you need it right now. Today, we're not going to pull any punches, and it may get a little rough. But if you're really in trouble, and you're seriously looking for a way to dig yourself out of it, then you should agree that it's probably time for a little tough love. Let's face it; unless you or a member of your family fell to a serious illness or you lost your job for reasons beyond your control, if you're like the vast majority of us, your debt and credit problems are largely of your own making.

That, believe it or not, was Step One. And true to the famous Twelve-Step program, you've first got to realize that there is a problem before you can do anything about it. When you grab yourself by the throat, pull yourself kicking and screaming over to the mirror, and come to the conclusion that the person you're staring at is the cause for the lion's share of your problems, then you're well on your way. So, we've gotten past that hurdle. Now let's take a good hard look at what we can do about it. But reconcile yourself to the fact that, whatever is necessary to get you out of your problems, it's likely to demand a double-shot of discipline. Yes, the dreaded "D" word; the word that most people would do almost anything to avoid – the word that, because it was avoided, has them in the predicament that they now face financially. The more it's put off the worst things will become, so just buckle up and let's do it.

There are a few concrete steps that you can take. This is not the time for any theoretical mumbo-jumbo; these are simple, straightforward things that you can do to help yourself now. Of course, for some of these items the horse may already be out of the barn, but they're still important things to keep in mind for future reference.

  • Hammer out for yourself a solid, realistic budget, and then stay with it! If you're undisciplined financially, then one of the best things that you can do for yourself is to get a written plan. Your budget will act as a roadmap to get you where you want to go. But take note of that word "realistic." The main reason most people fail to stick with their budget is that the budget they set isn't workable. They make it too difficult to stay within, typically because they've not tracked their spending in sufficient detail. To get an accurate picture of where your money's going, you need to annotate each and every expense that you normally incur. Yes, each and every one; from gasoline to coffee, soft drinks and vending machine snacks. This is crucial because it will show you all of the little nooks and crannies that you're absentmindedly tossing your money into. And once you know exactly where every penny is going, you'll be in a much better position to determine where to cut spending so that it won't affect your lifestyle too terribly. For example, passing up that gourmet bagel and cup of coffee on the way to work each morning and reducing your movie-going from three or four times- to once a month could actually save you thousands of dollars over the course of the year, and your life wouldn't necessarily be too traumatized by it.
  • Do your utmost to avoid sales and impulse buying. Just don't go around them! Madison Avenue knows precisely how to push our buttons. They set things right in front of us and make them clever, attractive and above all, convenient. Be aware and alert to that fact. And don't buy something simply because it's on sale. This is where you'll need to push your discipline to the forefront of your mind and keep it there (at least until you get out of the store). You'll have to remember that unchecked spending (in some form or another) is a root cause for your monetary troubles. Make a quality decision that you're only going to buy what you need. If you're used to treating yourself to every whim that travels between your ears, this will take some practice. But with continued effort, you'll be able to master it just like anything else.
  • Put your credit cards away! If you've got a handful of them, you might even consider canceling some of those that you don't need or use (but not your oldest ones; that could actually hurt your credit score by making your credit history same younger than it actually is). And do your best to use the ones that you keep (most Americans carry an average of four cards) less frequently; the interest only adds to your debt. Here's good habit to develop: if your purchase is less than ten dollars, use cash.
  • Stay away from large house or rent payments and extravagant car payments. If you've already got one or more of these, well, other than selling your house or car or moving into a less expensive dwelling, you'll just have to find a way to reduce your total expenditures with an appropriate budget. A common rule of thumb states that if your housing and vehicle expenses come to more than one-third of your total net income, you're likely going to feel at least some financial pressure. So stay below that amount if you can.
  • Get quality, affordable medical insurance that meets your family's needs. Lack of discipline aside, health care expenses not covered by insurance are a major contributor to the financial difficulties of many. Even with coverage, a protracted illness can often be economically devastating, not to mention the emotionally-draining effects it can have. But it's certainly better to have coverage than not. As a matter of fact (and ironically), people without medical coverage typically are charged more for medical services than those that have insurance.

There, that wasn't too difficult, was it? Now it's up to you. If you're truly tired of being under the pressure of failing finances, it's in your power to do something about it. Take control of your circumstances by taking control of yourself. If you make the decision to apply the discipline and persistence necessary to change your own views and habits about money, you'll eventually find yourself in a completely new and different existence – one in which you control your finances and not the other way around.

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