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Now that the holidays are over, and due to the fact that some of us might have spent a little bit more money than what we had originally budgeted for, it is time to regain
control of our financial lives and create feasible and realistic budgets for the new year. Many have decided that in 2012 they will restructure their finances and plan ahead to be able to rid themselves of high interest credit card debt and other bills which consume most of their disposable income. What most have to realize is that in order to reach financial freedom and deal with financial problems effectively, it is imperative to commit to fixed budgets, to carefully analyze and consider all of the different choices available to us, and to make the best decisions available to us after considering all the surrounding circumstances.
The first step is to create a list of your fixed monthly expenses. Include bills such as utilities, membership dues, rent, mortgage, insurance, etc. Next estimate how much money you need each month for flexible expenses such as entertainment, food, and clothing. Subtract these expenses from your monthly net income. Hopefully you will have money left over to place into savings accounts. If not, you will need to revisit your flexible expenses list and look for ways in which you can reduce or eliminate the amount of money you spend. Since most people tend to spend more money than normal over the holidays, the best way to balance these additional expenses is to cut back during the months that follow. Consider the small ways in which you spend your money. Do you really need to stop at your favorite coffee shop on the way to work? If you eliminate that two dollar coffee each morning you can save ten dollars a week or over forty dollars a month. Being conscious of spending at all levels will help you to save in the end.
Once you have evaluated your expenses, take the time to set some goals. The first should be to determine a date when you would like to have paid back all of the extra money you borrowed or used during the holidays. Then you will be ready to create a budget. Calculate how much money you will need set aside each month in order to reach your first goal. This amount will now become a new fixed expense and you must view it as such. If you do not plan to pay this amount each month, chances are that it will not happen.
Setting goals is important; however, complying with those goals is equally important. Make it a point to revisit your financial goals periodically, for example on a monthly basis, and assess how you are doing. Are you on track? If not, review your goals to see if they are realistic and make adjustments as needed.
With a positive attitude and discipline you can manage holiday debt. Just remember to be honest about your spending, set goals and maintain them. |