Budgeting Money Share Tweet These days it’s easy to amass a large mountain of debt. Whether you covet the latest in technology or are struggling to keep a roof over your head, debt puts all of us on shaky ground. Maybe you made a few mistakes and perhaps you’re dodging creditors like a boxer on steroids; this doesn’t mean you can’t get started digging your way out of debt. Digging Your Way Out Of Debt Real People Budget It might not seem very manly to sit down with a pen, paper, calculator and bank statement, but it’s essential for digging out of debt. Take control of your finances by learning exactly what money is coming in and going out. In this instance, knowledge is power. My wife and I were forced to dig ourselves out of massive student loans as well as the burden created by misuse of credit cards. We discovered that the only way to systematically pay down our debts was to create a family budget and actually stick to it. Eventually it becomes second nature. Once you figure out your income and expenses, you can allocate funds to specific areas. You should have reserves for emergencies, such as plumbing fiascoes and car problems, but the rest of it should go to household expenses and to digging out of debt. Dump the Cards It is true that cancelling credit cards can hurt your credit score, but it’s worth it to eliminate the temptation. If digging out of debt requires attaining that elusive zero balance, you’re probably better off without them. Keep one credit card on hand for emergencies, but rip the rest of them up and cancel your accounts. It will be much easier to eliminate that debt if you aren’t constantly adding to the burden. Of course, everyone handles their finances differently. If you’re the type to carry no balance and use credit cards for rewards instead of impulse purchases, you should probably hang on to them. Maybe your debt is related to student loans or an upside-down mortgage; you must be able to evaluate your individual situation with objective eyes. No Man is an Island If you’re digging out of debt on your own, you’re making a mistake. Involving family, friends, advisers and other supporters can be enormously beneficial, and might lead to faster results. Family men, for example, can get the whole family involved in digging out of debt. Be honest with your wife about your financial situation, and discuss the best methods for paying it all down. If you have kids, talk to them about effective money management and make it a learning experience. This doesn’t mean you have to share your financial situation with everyone—in fact you shouldn’t, except when it comes to your spouse. Telling the kids you can’t afford to pay next month’s mortgage is a bad idea, but asking them to help you save money wherever possible or helping them to start a savings account is a great lesson to learn from your mistakes. Your first instinct might be to internalise the emotions you feel about your financial troubles, but digging out of debt takes a village. You need reliable advice and a strong support system to help you work through the problem logically. Feel Free to Celebrate What I have discovered is that digging out of debt is easier when you allow yourself to celebrate your accomplishments. If you’ve maxed out 10 credit cards, for example, paying off one might not seem like a big deal. However, if you let yourself celebrate that victory you’ll be more motivated to resolve the other nine. Spend a day with your kids, take your wife out to dinner, kick back in front of the TV with a beer. Choose a small reward each time you reach a milestone in digging your way out of debt.