Eliminate Unnecessary Expenses And Reduce Debt

Reducing household expenditures has been a strategy millions of people have employed to weather the current recession

. Most of us make purchases each month that are unnecessary, sometimes even extravagant; this means it is possible to reduce expenditures and still have a reasonable standard of living. Cutting back may seem like a depressing task to many consumers, but for companies, budget cutting is a way of life, something that is done anytime the business cycle turns down. It's not considered depressing or negative; it's just a part of business life.

Consumers can approach the process the same way companies do, and hopefully make it as painless as possible. The first step is to get a handle on your current spending. Look back over the last 3-4 months and make a list of every single expenditure you made, even ones that may seem small, like the $5 cup of coffee you purchase from the vendor near your office. If you pay cash for some of these expenditures, try to think back about the typical week and what you typically buy. Make an estimate if need be. The point is to figure out exactly where you are spending your money.

Now, organize the expenditures into categories. Food (groceries), food (eating out), recreation, clothing, home repair, auto maintenance and repair, insurance, pet care, office supplies (if you have a home office), kids' allowance, these are all key categories. But you may some others you think of as well. You can of course list your fixed costs such as mortgage or auto payments. But we're really trying to discover categories where it is possible to cut back.

Now, set a goal for how much you want to cut back. A 10% reduction in expenditures might do just fine as an initial goal. If you spend on average $5,000 a month, this means your goal would be to spend $500 less. That might sound like an impossible goal but it's not if you break it down.

Select several categories to cut back like entertainment, eating out and personal care. Substitute less expensive options rather than cutting out the category completely. For example: Instead of going to the movies and spending upwards of $50, rent a movie, order a pizza and have popcorn and soda at home. Cut out one dinner out per week and that's close to $75 for a family of four at a mid-price restaurant.

Take the $500 and pay down your credit card debt. In one year you could pay off $6,000 worth of credit card debt savings another thousand dollars in interest payments.

by: Dee Power

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