"All of us who are intimately familiar with overspending know that it is very easy to five-and-ten dollar ourselves into oblivion. The good news is that you can five-and-ten dollar yourself right back to financial health, too." --Mary Hunt, The Complete Cheapskate
It's important to take serious stock of your finances if you're having trouble paying your monthly bills. I'd like to suggest you follow these next steps so you'll know exactly where you stand financially. It won't be an educated guess, you'll know where your finances stand with certainty. Here are the steps:
1.) Using your credit statements, make a complete list of everyone you owe money to -- both individuals and companies.
2.) Write down the total amount owed on all your debts and add the numbers together to find your total debt load.
3.) Now, add up the total amount of payments you need to make each month.
4.) Add together all income you're certain you'll be receiving for the month.
5.) Subtract from your total income, the absolute bare essentials -- rent or house payment, food and utitilities.
If you find that you don't have enough money left to make your minimum credit payments, it's time for some serious work on your financial condition.
This might seem like common sense, but the first step to getting out of debt is admitting you have a problem. Often people get behind in their payments or get in over their heads but find it hard to admit they've made a mistake and need to reorganize their thinking and their spending. It's much easier to get into debt than it is to get out, so it's sometimes difficult to step out onto a path that's going to be challenging. If you've identified a problem in the area of personal debt, you'll need to set about remedying the situation.
--Portions of this article were excerpted and adapted from the new book, A Simple Choice: A Practical Guide to Saving Your Time, Money and Sanity, by Deborah Taylor-Hough (Champion Press, 2000). Used with permission.