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Book I: Taking Charge of Your Finances
Even if you can cover your monthly obligations without using credit cards
and while paying more than the minimum due on your card balances, don't
assume that you shouldn't reduce your spending. You must be concerned
about how much you owe to your creditors, or you probably wouldn't be
reading this book. Cut back where you can, and use that additional money
to pay off your debts as fast as you can, starting with the debt that has the
highest interest rate. After you've paid off that one, focus on paying off the
debt with the next-highest rate of interest, and so on. When you've paid down
your high interest debts, use your surplus to start building up your savings.
Finalizing and Sticking to Your Budget
When you've reduced your spending as much as you can and decided what
you will and won't pay if you can't afford to pay everything, you can final-
ize your household budget. Make a fresh copy of the worksheet from Table
3-1. Label it "Monthly Household Budget" and record your revised monthly
spending amounts, as well as your monthly income amounts. Now you have a
written plan for what you're going to do with your money each month.
Review the budget with your family members, and post it in a visible location
so everyone can see it -- maybe on a bulletin board in your kitchen or family
room or on the refrigerator.
Steeling your resolve
Now comes the hard part: living according to your budget. Having a budget
is meaningless if you and your family aren't going to stick to it. Sticking to
your budget won't be easy, but keep your eye on the prizes: less financial
stress, fewer debts, less damage to your credit history, and (eventually) more
money to spend the way you want.
As you go through each month, be mindful of every dollar you spend, every
check you write, and every time you use your debit card or go to an ATM machine.
Cut up your credit cards, or use them only in emergencies. Refer to your budget
regularly to make sure you're staying on track. If you find that you have overspent
in one area, try to compensate by reducing in another area.
If your kids ask for things that you haven't budgeted for, remind them why
your family is trying to spend less. If they're older, maybe they can earn the
money they need for what they want.
