Stay Debt-Free Year-Round

The case of the disappearing bank account seems to be part of life for more and more consumers these days.

While the cost of everything from dairy products to snack foods to toilet paper is be on the rise, incomes are not keeping pace. Trying to keep your head above water and your credit out of the dumpster is becoming increasingly difficult.

Perhaps the most important strategy to take is to create a simple spending plan that delineates how much you can spend within a specific time frame, such as one month. Once the limit has been reached, there’s no more spending. With a strategy like this one, you’ll need to list necessary expenses first. These are the ones that must be paid or life will not go on as before.

Break down your expenses

The first tier of necessary expenses includes vital items such as the monthly rent or mortgage payment, medical prescriptions, groceries, electricity, water, gas for home use, fuel for vehicles, car payments, doctor and dental fees, and taxes. On the secondary tier, you’ll list such expenses as credit card payments, home repair, and phone and internet service. Finally, less essential expenses such as dining out, streaming and cable services, and clothing will appear in the bottom category.

If the amount of liquid or disposable cash is eaten up before you get to the third tier, then cutting back on some expense becomes absolutely necessary unless you can generate more income quickly. The first step in deciding where you can possibly cut back is to look at each expense and find at least one strategy for lowering the cost.


Start restructuring the budget with the third tier since that is where the expenses are more or less optional. If you cut back on credit card usage, the very next bill will be smaller than the previous one. Therefore, simply by incorporating a cut back in your charging habits, you can lower your monthly living costs.

Reconsider your costs

Next, find a way to cut back your use of television or internet services. Call the company and request a downgrade in services or shop around for a cheaper company. For your electric, gas, and water bills, look for small ways to cut back. Perhaps something as simple as using surge protectors that you turn off at night can help to save a lot of money on electrical appliances such as TVs and computers.

To potentially lower your car payments or mortgage, check into refinancing the loans. To lower insurance costs, utilize higher deductibles or shop around for better rates. Next, consider downsizing your fleet by selling off the spare car. Carpooling can save on fuel. If you look long enough and hard enough, you can find small ways to improve on your spending habits. Over the course of a year, you might just save up enough to pay off your debts in full.

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