When you are living paycheck to paycheck, it becomes difficult to keep a positive outlook and it’s very easy to just give up. You may begin to feel there is no way out. The truth is, though, you can get out of the financial quicksand. It won’t be overnight but you can do it with commitment.

Honestly assess your situation.

  • Make a list of all the things you own that have value:
    • Your home.
    • Your vehicles.
    • Furniture.
    • Collections.
  • Make another list of what you owe:
    • Mortgage.
    • Vehicle loans.
    • Credit card bills.
    • Student loans.
    • Medical bills.
  • Set up a plan to, over time, pay those bills.

Get rid of stuff.

  • Walk through your home and look at everything, paying particular attention to items you no longer use, need or want. Don’t forget to look in the closets, storerooms, attic and garage.
  • Gather the items into one location.
  • Take pictures and sell them on a site such as CraigsList or have a garage sale.
  • Donate items that don’t sell to your favorite charity.
    • You will be helping the charity.
    • You may be able to take a tax deduction on your tax return.
  • Take the cash you made and pay off some of your bills.

Many folks are surprised at how many items they have that they no longer use, need, or want. They are also surprised when they discover how much money they can make selling those items.

Set up an emergency fund.

  • If you have $1,000 sitting in a savings account for emergencies, you won’t need to use your credit cards.
  • Does $1,000 sound like a lot of money?
    • Do you buy a $2 lottery ticket every day? If so, you are spending $730 over the course of a year. Even if you win a few bucks here and there, the chances of it being greater than $730 are quite small. Put that $2 each day into your emergency fund.
    • Do you stop at a coffee shop each day or buy soda at the quick shop? If so, you are probably spending about $5 per day or $1,825 a year. Whoa! That’s way more than $1,000.

Honestly evaluate your spending.

  • What small changes can you make to reduce your spending? Every dollar you save on your spending can be used to reduce your debt and set you on the path to being able to save money instead of living paycheck to paycheck.
  • Just a few suggestions:
    • When you go out to eat, order water to drink. This could save you up to $10 to $20 for a family of four.
    • Take your lunch to work. If you routinely spend $8 each day for lunch, taking your lunch could save you $160 a month or $1,920 per year.
    • Instead of meeting your friends at the sports bar to watch the big game, invite everyone to your home. Each person brings food and drinks to share. Savings could add up quickly.

Remember, with commitment you can get out of the financial quick sand.

Please share your ideas and suggestions.

Judith Ackland has more than 26 years of experience in accountancy and financial planning, including seventeen years as a CFO of a diverse business. She started Crystal Financial in 2010 to help a wide array of individuals, families, and business owners better understand their finances and how good financial management could help them achieve their goals. Judith has an MA in Professional Accountancy from the University of Nebraska at Lincoln as well as a Certified Public Accountant Certificate and a Certified Financial Planner designation.

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