Dealing With Debt Stop Spending & Keep A Record

 If you are in serious debt then it is probably a safe bet to assume that you are spending more than you are making.
This could be for a number of reasons; perhaps you are poor at your money management and like to spend your money as soon as it arrives and so ‘forget’ to keep some by for your regular bills and commitments; or perhaps you have lost your job and now have to manage on a lower income than that with which you incurred the debt; but whatever the reason it is fairly obvious that you must cut back somehow on your spending and/or

Most of us spend money needlessly. It might be little treats that don’t cost a lot, but over a week or a month soon add up to quite a bit. Or it might be that you just can’t resist buying just one more pair of shoes, or have to have that holiday. Or perhaps you like to socialize and go out for drinks with friends on a regular basis. Whatever it is, the vast majority of people spend money on things that they don’t really need.

Even if you don’t see yourself as a big spender you are probably still spending more than you think on unnecessary items. “But I’m already on living on the breadline!” I hear you scream, and that may very well be true (it was for me when I was struggling).

The best way, I have found, of finding out just how much you spend and on what is to keep a record of your spending. You might only do this for a month, or you may find it useful to continue over the longer term as I have, but either way, I strongly suggest you get into this habit at least in the early days of your debt recovery. It can be very illuminating! Get yourself a little notepad or book and every time you spend money on anything make sure you jot it down in your pad. 

You may prefer to set up a simple spreadsheet if you are computer savvy, but find some way to record your spending. If you find it difficult to keep your entries up-to-date on the go, the try to get into the habit of remembering to ask for receipts for everything, however small, and then every night take out your receipts and note down all the spending.

I like to put it all into a simple home-made spreadsheet which has category columns such as rent, groceries, car, utilities, junk, leisure, etc. This is especially useful for keeping tabs on how much I am spending in any particular area. I keep all my receipts and enter them into the spreadsheet as I go and I also keep a very small notebook in the car to record little cash spends during the day that I haven’t got a receipt for (coin-operated air pump, small bar of chocolate, a stamp, a donation to a charity box, etc).

This exercise helps you determine just where your money is actually going. We often don’t realize how much we spend on the ‘little’ things. It also has the benefit of having to make a conscious decision to buy as you know you will have to record it, so often that will make you think twice and help save on a few unnecessary expenses.

But there are also some more obvious ways to help curb your spending or reducing your expenses.

If you own any credit or store cards, it is a good idea to cut them up to avoid the temptation to use them. You should also contact the companies and cancel the accounts if possible; otherwise they will reissue the card when it expires. Credit cards are probably one of the main reasons people get into debt they make it just too easy!

It can be a good idea to keep hold of one (just one) if you need it to pay in certain situations (i.e. online payments), and you have the discipline to use it wisely. Make sure that you only use it to pay for what you can afford in cash and pay the debt of that purchase back to your card as soon as possible.

Look at ways of reducing the cost of some of your regular commitments, perhaps visit some comparison sites online and see if you could get a better deal elsewhere. Look at things like: switching to a cheaper credit card (don’t forget to cut up or cancel the original though); switching to a cheaper gas or electricity supplier; you might also look at cheaper phone, television and broadband packages; mobile phone suppliers; if you have a mortgage, could you move it to a cheaper lender?

Can you take advantage of cheaper tariffs by paying by direct debit, or paperless, or online deals that many companies offer now?

I looked into changing my gas and electricity supplier online recently and discovered that I could save £250 per year with my current supplier by applying to go on their social tariff that I was unaware of previously, plus a cash-back of another £100 by changing to direct debit!

Have you shopped around to see if you can get a better deal on your home or car insurance, if it is due soon? Do you check the prices of the petrol, gas or diesel at your garage, or do you just use the one that’s nearest assuming they are all much the same? I keep an eye on all my local garages price changes and often find the best deal about a mile away (there are several closer) where my petrol is usually between 2-5p cheaper per liter than the one nearby. That’s a saving of about £1 on my average fill and about £104 per year on average.

And what about some energy saving tips that help both your pocket and the environment? Consider: energy saving bulbs; switching off lights and other electrical equipment when not required; turning the heating down even 1 degree or putting it on a timer; substituting a couple of baths for showers; ensuring you have proper insulation (in the UK, a lot of home-owners and tenants can get this free with grants); and, walking instead of using the car on short, local trips.