Sitting in a Financial Mess? Here’s How to Get Out
After my first year of college, I came to the stark realization that I had several thousand dollars in student loan debt and a credit card bill that was getting a bit higher each month, and definitely was not moving in the right direction. I had next to nothing in savings, and even worse, I had a $2000 tuition check to write in the fall. I knew that if I was going to turn things around and be able to attend college, some changes would have to be made. I was in a financial mess, and I needed to make some changes.
In order to begin this process of taking a 180 in my finances, the first thing I did was try to figure out where I was at and what I was doing that put me there. I made a fancy spreadsheet in Excel and looked at all the things I spent money on in the last couple of months. In the column next to each of the expenses, I wrote if they were essential purchases or not, and most of them weren’t. I was spending way too much money.
I knew that I had to cutback and do so dramatically if I was going to get my head above water financially. I went through each purchase that I made and asked myself whether or not I –really- needed it. A lot of stuff I didn’t. I wound up canceling quite a few different things, such as the two MMORPGs I was playing, and a lot of wasted money in fast food. Especially as I was living with my parents at the time, I really didn’t need to spend much of any money at all! When all was said and done, I cut my expenses in half per month quite easily. You might not be able to do that much, but chances are you can cut it out a few hundred dollars a month to help yourself get out of your debts.
The next thing I did was take the extra money that I saved every month, and started putting it on my debt. In addition, I talked to my boss at work and managed to pick up a few extra hours to make for some more cash-flow. I sold my DVD and CD collection, as well as a lot of other books and miscellaneous items on eBay. I found additional employment for the school year so that I would have more income when I moved back to college. In about a month, I was wholly done with my credit card, and by the end of my sophomore year of college I was done with my debt completely, was back in the positive, and moving in the right direction.
The mathematics of turning yourself around are extremely simple, yet very difficult to follow. It involves dramatically changing your behavior, which is not always the easiest. We have to be able to tell ourselves “no”, spend a lot less money, and throw everything we possibly can at our debts. In most cases, we have the cash flow to achieve our goals, we’re just not using it effectively.
If you’re in a mess, be honest with yourself, something has got to change. If you keep doing what you’ve been doing, you’re going to keep getting what you’ve been getting. For the sake of you retirement and your children’s college fund, make a commitment to move in a positive direction.
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Thanks for participating in this week’s Carnival of Family Life hosted by Pickel at My Two Boys. The Carnival will be live on Monday, April 7, 2008, so make sure you stop by and check out all of the other outstanding entries included in this week’s Edition!