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Credit and Debt Management

The very first thing you must do is spend less money than you are taking home each month. As long as you are spending more than you are earning, your situation will continue to get worse. If you have been spending more than you are earning you are living beyond your means. You may have already found that you can do this for a short period of time, but ultimately it will lead to a financial crisis.

Account for Yourself

Start recording all your daily expenses immediately. Get a small notepad and record everything, or use this worksheet. Don't just record that you took $40 cash from the bank machine, record everything you spent it on. When you do you will instantly change the way you spend your money. You reach a new level of accountability to yourself. This can really work because it is now on paper for you to see and remind you of where your money is going and how the situation can change if you really want it to.

Categorize your expenses monthly and you will probably be surprised by how much you wasted. You will be able to identify areas where you can reduce your spending.

Keep in mind that most businesses do this every day and produce a financial statement every month. Without this information the owners would never know if they were profitable or not, and it helps them make adjustments to maintain profitability. You have to do the same, any profit (leftover money) is additional money that you can use to pay off your debt. Keeping track of expenses will identify areas of wastage.


  • Record your expenses on a worksheet, then you are ready for a spending plan.
  • Spending plans are more effective after you have completed the expense recording exercise becuase you get a clearer picture of your spending habits and can produce a more realistic budget.

    Credit Cards: How Much Does it Really Cost?

    You must realize the cost of credit. Institutions charge very high interest rates, and it can take some people forever to pay off the cards. This is exactly what the financial companies want; the longer it takes you to pay something of the better it is for them.

    If you use credit to get a bargain when you are short of cash, but you can't pay the bill when it is due, your bargain purchase will eventually cost more than the regular price.