The recent economic slowdown has changed the life of many people and today they have realized the importance of saving. Now they won’t mind saving penny-wise as you never know when these savings will be helpful to get out of debt or pay your mortgage payments.
Its not that you will have to sacrifices many luxuries. You just need to follow a spending plan. It’s easy to create this spending plan. It can be a simple hand written graph listing your expenses or it can be as complex as a fancy computerized program tracking every dollar you spend through PDA and laptops.
When you follow your spending plan and keep it to the minimum necessary, you will be generating a surplus amount of money each month. You can use this surplus money to pay your debts until you are debt free.
Many of us have the bad habit of using credit cards even for ordinary purchases. The appeal of credit cards is the ability to pay later for items that you buy now. But using credit instead of cash is a bad habit, more so when you don't pay your credit card bills in full each month. Hence for your everyday purchases like groceries, gas, clothes, and entertainment, you should use cash instead of credit cards.
When you use one credit card to pay off your other cards and loan payments, you're not paying off anything actually. It’s like using debt to pay off debt because when you use debt to pay off debt, you end up in heavier debt than you were in the beginning.
Living below your means is the real secret to personal financial success. You can also use the surplus savings to build an Emergency Fund, which you can use for your children's college education or for your retirement plan.