A study recently conducted by the National Foundation for Credit Counseling has found that, as a result of the Great Recession, Americans are more interested than before in paying down our debts. But, it seems, we still don’t quite have the financial habits that will get us to that goal.
Eliminating Debt by Watching Your Money
The study found some interesting nuggets of information about the way we tackle debts in this country:
- More than half of poll respondents reportedly noted that the economic slowdown had inspired them to pay down their debts; but
- Only 37 percent of those polled indicated that they had a good idea of how they spent their money each month; and
- Only 20 percent said that they planned to begin budgeting their expenses in order to get on track financially.
The good news from the poll’s findings is that we seem to have had a collective wake-up call about the real cost of debt. But, clearly, we aren’t all on the same page about what kind of financial habits will get us to a debt-free lifestyle.
Steps for Getting out of Debt
Representatives from the NFCC and other financial gurus often offer similar advice for getting on target with financial goals. In fact, the steps to debt elimination are almost identical to those for rebuilding and maintaining healthy finances after filing for bankruptcy:
- Track your spending: In order to seriously pay down debt, you have to know where your money goes each month. Luckily, this step is fairly easy to accomplish, once you decide to do it: for a month, write down everything you spend money on, including rent, utilities, food, clothes and entertainment. No purchase is too big or too small to count – and if you leave anything out, you won’t have a realistic idea of where your finances stand.
- Create a budget: Armed with the information about how you currently spend your money, you can devise a plan for spending and saving your money more effectively – that might mean putting more money toward credit card bills and less toward new shoes, or switching to home-cooked meals most nights of the week. Be sure to give yourself some breathing room so you don’t feel deprived by your budget and give up.
- Start saving money: Now that you’re actively, consciously managing your finances, it’s important to put some money aside each month so you’re ready for any unexpected event (such as illness, injury or job loss). Don’t be daunted if you can only save a little each at a time – anything at all is better than nothing, and your funds will build up over time.
Remember: good intentions are important, but they won’t get you out of debt and back on track financially unless you act on them.
