“Dear Steve,
I’m married own a home and pay all my bills on time, but I am so over my head. Each month after all the bills are paid we are left with less then $150. It is so stressfull. It’s taking a toll on our marriage and our children. We absolutely do nothing, but go to work and go home.
How can I lower my monthly bills while significantly decreasing my overall debt. So that I won’t get hounded by creditors or have my wages garnished.
Chloe”
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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Hi Chloe,
I am so sorry you are having a rough time. Here are some steps that may help. They have helped me tremendously.
1.First and foremost sit down with your hubby and talk about dreams. Sounds odd, I know, but it is key to the muck and mire you are struggling in. Let yourselves dare to think about what would be scream-from-the-rooftops fantastic, e.g. start your own business, travel through Europe, quit your job and… Whatever it is write it down on a piece of paper. Don’t let your negative brain argue you out of it.
2.Second, write down what you really, really want out of your your life: debt, stress, fighting, hopelessness, your boss, etc. What is it, when you are old and gray, that you want to look back on and smile.
3.Prioritize each list.
4.Combine lists and prioritize again.
5.Choose the top 3.
6.Set up a 3 tiered spending plan (I hate the word budget)
On the top of the tiers you have to place the “gottas”–the things you must pay: insurance, mortgage, utilities, MINIMUM payments on debt, kids school expenses, transportation, etc.
The second tier is where the magic begins. And the hope. And the stress relief. Dedicate as much money as you can in this tier on your top 3 priorities. If its paying off debt then put extra money on your payment of your lowest balance/highest interest rate debt. It its buying a reliable car then put money in a savings plan for a car. If you want to work from home put money in a fund for that.
The third tier contains all of the things you can control, such as groceries, entertainment, clothes, etc. Become very very frugal in this area. I have cut my grocery bills by 2/3rds by changing my habits and setting limits on how much I spend.
Focusing on your dreams will magically eliminate a great deal of your stress. Remember that money problems are not permanent, they are temporary. One of the things you must do is analyze how you got where you are and stop doing “that”. I didn’t believe I could live without credit cards but I do. Because going on the debt merry go round is not what I really, really want out of life.
Do whatever it takes to reach them: get a new job, earn extra money (by doing something you really enjoy), involve the kids and make it an adventure.
Best of luck to you!
Morgan at The Debt Dance.com
Morgan at TheDebtDance.coms last blog post..How Much Money Would it Take?