How to Fix Your Finances

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By wisemcternan
User-Submitted Article

Article Rating: (3 Ratings)

Fixing your finances and getting out of debt is not easy, but if you follow the steps below, you will get there.

Difficulty: Moderate

Instructions

Step 1

First, gather copies of all your current bills. Write down the minimum amount you owe every month, the due date, and the total owed. If it is a bill that varies from month to month, such as an electric bill, just take the current amount for now. Make sure you are including expenses like commuting and food.
Step 2

Now you need to get a handle on how much money comes in every month. Get your most current paystubs and add up the totals. Write down the amount, how often you get paid, and any other incoming money (child support, ehow earnings, etc.)
Step 3

Start comparing the dates that you get income with the dates that bills are due. If there are a lot of bills that come due all at once, such as the 15th of the month or at the end of the month, make a note of that. You can call the service providers and ask that your due date be moved to a more convenient time, if it eases your financial burden.
Step 4

Add up the total amount of money you owe each month using the minimum amount due, then the total that you earn. If the earn column is bigger than the owe column, you are in good shape. If the owe column is bigger that the earn column, you have some hard decisions to make.
Step 5

Take a second look at all of your bills. Are there any that are extras? Can you get rid of these expenses? If you can, do it now. If not, can you reduce them? For example, you can call your cable or internet provider and often negotiate a reduction in price just by asking.
Step 6

If you have more money coming in than going out, then life is a little less complicated. Sort your bills by total amount due, putting the biggest amount last. Write down how much money you have each month, and start subtracting the bills due, keeping a running total. Don't forget food and commuting!
Step 7

When you have figured out how much money is left at the end of the month, take out a set amount to pay yourself with. This is a non-negotiable expense.
Step 8

After that is taken out, earmark the rest of the "extra" money to help pay off one bill at a time. Put a little extra towards the same credit card payment each month, and the total will start to go down, slowly at first, but then more steadily as time goes on. Once you have paid off one of the cards, then start putting the old monthly payment plus the little extra towards the next card, and that amount will go down faster than the first!
Step 9

Check your credit card statements next. Is there a recurring charge on your card? If there is, do you know what it is for? Now take a hard look at what you are charging every month. Is it necessities (food, bills, etc), or is it extras (dinners out, clothes, etc.)? The extras need to be significantly reduced, if not removed altogether!
Step 10

If you continue this process each month, your bills will start to go down, and you will have a better idea of where your money is going every month. Over time, you will get out of debt!