Debt seems so be on a lot of American’s minds these days. Although many politicians and personalities in the media seem to think, “Americans are doing great in this economy” the truth is, middle class America is hurting. Many families today have mounting debt that is becoming the center of their thoughts and their focus at all times. No one wants to be up in the middle of the night wondering if they can pay all of their bills for the month, if they can keep a roof over their heads and feed their families, but that, unfortunately is not uncommon recently. With everything becoming so expensive, it’s almost impossible to keep up. It doesn’t seem to matter, how many jobs you have, how hard you work, or how many hours a week you work, with taxes going up and the prices of everything around us skyrocketing, sometimes it really does feel like there really is no way to stay out of debt, so why bother stressing over it?

Obsessing and stressing over debt will not fix your problem, so the best option is to stop obsessing now and start fixing your debt situation. If you decide your not yet ready to tackle the situation that is your decision, but know, there is no way to make the worrying and sleepless nights go away, until the debt monster on your back is vanished for good.

Once you have made the decision that you are ready to get started and give yourself the freedom you need, want and deserve. Take a look at your monthly expenses and do the calculations to see if your out going expenses exceeding your income on a monthly basis. For many people, simple budgeting mistakes and miscalculations, are the cause of their money troubles and all it takes is some reorganization along with a period of tightened spending to pay off the debt accrued while the budgeting mistakes were happening. It can be hard for people to budget their income. “I work hard, so I want to enjoy it! Not spend it on bills!” “I just want to go out and enjoy the evening with friends not think about paying the rent.” “It is just so much easier to order in after a long day of work, why not just put it on the credit card.” “I can pay it off later.” Life gets hectic and people don’t even realize sometimes that they are spending more than they are making each month just because they are caught up and not spending the time to set a proper budget! Then they end up putting extra expenses on credit, that adds up quickly and the minimums over time, make it so that they can’t actually afford their own lifestyle. It really is a vicious cycle that leads to a dark road that can start with a small backup and end with a deep pit of interest that can bury you and make it feel like it is impossible to find your way out. So look at your current spending habits and bills on a monthly level, if you don’t have a list, spreadsheet or app to organize your bills and spending you may want to make one to get organized, and decide what your next steps are based on: 

1. Calculate how much you have going out and coming in each month total.

This step is the base of understanding for what the problem really is with your budgeting. You need to know how much over your true budget you are spending and why often you need to put so much of your weekly budget on credit. Once you understand what all of your expense are, you can follow the next steps to calculate what fits into your current budget based on your income and also start paying down the debt that you will no longer be obsessing over, because you will be in the process of getting rid of it for good.

2. Make a list of what you spend on each month, utilities, food, misc. etc.

Most of the time when people have a list like this, it includes basic utilities to make sure they pay their bills and credit cards. It does not include the rest of their miscellaneous budget and those things can add up also. You need to know how much money you are spending on everything down to that second cup of coffee out for the morning, because it all adds up to running out of cash and using credit if your cash flow is not budgeted properly.

3. Make a decision about what the necessities are and cut out what you don’t need.

This part can be mentally difficult. We all work very hard for what we earn and to have to feel like we can’t use our money the way we want to is even harder, but remember, bills are a part of life and the less you pay in interest to the bank the more you are spending on you. So budget smart now, set things up so you have no more debt and spend properly in the future so you won’t have to cut like this again.

Look through your list of expenses and cut out the non-necessities. Anything you can make at home such as your coffee or make breakfast/lunch and bring it with you. These things will cut down on your weekly/monthly costs.

Also look through your online subscriptions and make sure you are only paying one those that you need and use. There are other options for TV to cut costs now as well such as using apps for live channels rather than cable that can save money. These options can be very helpful.

Another option to look at on your list of expenses that can save you on your monthly cost is how much you are paying for services such as your phone bill, internet and insurance. See if you get catch a deal and get a quote for a lower price that will save you money without changing the level of service you are getting. Very often, if you catch these companies at the right time, such as around holiday weekends or if they are having special deals, you can cut your cost and not your service.

4. Add up how much your new total expenses outgoing are each month andcompare them to your old outgoing expenses.

Do a price comparison to see how much your new price changes and cuts have helped. Look at your income amount again and make sure you are no longer spending more than you are making. Knowing you have made these important changes will take a lot of the pressure and stress off of having the debt and new restrictions, just because you will know you are on the right path to financial freedom and living on a healthy debt free budget.

5. Set up your new budget and stick to it.

You have all of your new bills amounts, you now know how much you need to spend on living expenses each week and how much you “should” be spending in order not to over spend and stay within a specific amount that you set for the new budget. Now look at what is left, decide how much you want to put into a rainy day account for emergencies, how much you want to put into a miscellaneous account for anything that comes up that doesn’t fit into the weekly budget, such as an expensive dentist appointment and the rest should over pay those credit cards. If you over pay the minimums each month, your debt will go away faster, your credit score will climb, and your budget will free up sooner. As you pay off one card, you can up the amount you are paying off on another, by rolling the minimum payment amount over into what you are paying on the other. Before you know it you will be on a free flowing budget and you will be debt free!

6.If you have debt in collections, settle the debt amount and set up payments to fix your credit as well!

Since you are in fixing and saving mode this is the best time to tackle all of your worst debt nightmares. If you have any debt in collections, contact the collection agencies to set up a settlement. (For more information on this topic please see “How To Deal With Debt Collectors