7. Kick your credit card habit. High interest rates on credit cards can be a huge drain on your monthly income. Also, with the interest on credit card purchases, you end up paying a lot more for your purchases than you originally intended to. The first step to banishing your addiction to plastic is to pay all of your credit cards off, as quickly as possible. Take look at your credit card bills; can you consolidate all of your balances on a single card with the lowest interest rate? This can help to lower your monthly total. If you can afford it, pay more than the minimum payment; anything extra that you pay will count purely towards knocking down your principal balance. Also, make sure that as you are paying off your credit cards you are not continuing to contribute to the balance. Unless it’s an absolute necessity, don’t charge anything to your credit cards until they are completely paid off. After that, never charge anything to your card that you can’t pay off that month.
8. Be honest with yourself as you trim the fat. During this step of the budgeting process, it is very important to be realistic—in two different ways. First, you must be brutally honest with what you simply cannot afford. If your eating out budget is astronomical, you might need to think seriously about bringing your lunch in to work each day or making coffee at home. Second, however, you need to be realistic about your lifestyle. If you love to go out to nice dinners, don’t cut them from the budget entirely. Sticking to a budget is a lot like sticking to a diet: you need to build in cheat days; otherwise, you’ll end up giving up and bingeing. So if you’re used to eating out twice a week, try cutting it down to once a week, or maybe once every two weeks. This can also serve to make eating out special; you can use the occasion to have date nights, or let your kids take turns choosing their favorite restaurants. Instead of simply being a way to avoid cooking and cleaning, eating out can become a time that you set aside to spend together as a family, sans distractions.
9. Make a plan of attack, and be creative! As you are trimming your budget, it’s important to be thoughtful about how you are going to accomplish your goals. You need to have a game plan, or in the heat of the moment you could slip back into your old habits. Don’t take lunch to work because there’s no time in the morning? Try prepping your lunch the night before, having easy lunches that you can prepare at the office (e.g. a can of soup heated in the microwave), or making extra dinner and eating the leftovers. Planning meals (lunches and dinners) in advance can help to ensure that you have everything you need on hand, which will help you to avoid the temptation of hitting Subway. Too tired to make your own coffee in the morning? Invest in a coffee pot with a timer, and prep it the night before. If you forget to have it ready, have some instant coffee on hand for emergencies. Buy a lot of groceries? Think about switching to store brand or buying in bulk at Costco or Sam’s Club. Spend a lot on gas? Think about carpooling with coworkers (or even your spouse, if reasonable). You might also consider transferring to a location closer to your home (or vice versa), if possible. Be prepared to make accommodations for this new arrangement; for example, if your car pool partner has to get to work three hours before you, try to think of ways that you can use the extra three hours at work to your advantage. You could also talk to your supervisor about shifting your schedule to coincide with that of your carpool partner.
Continue to Part Four.
Return to Part Two.