Debt is a major problem in today’s world. It’s easy to get so far into debt that it seems like your every move is blocked by an insurmountable wall. But with the right plan, the right mindset, and a little bit of work you’ll be able to break that wall into smaller chunks and before you know it you’ll be on the other side…debt free!

The first thing you should do is sit down and size up your situation so you can figure out exactly how much debt you’re in and where all of your money is going. This is a vital step that you can’t afford to skip.

People who skip this step are missing the point…no matter how good their intentions are they will just never break the cycle of debt. You see your debt is about more than just dollar signs and interest rates. Your debt is about you. Your desires, your temptations, your weaknesses. In order to truly understand your debt you must first understand yourself.

There’s an old episode of The Honeymooners where lovable loser Ralph Kramden vows to transform himself into a success. He understands that there are certain qualities all successful people have in common, so he sits down to size himself up and he makes a list of all his strengths and weaknesses.

You’re going to do the same thing except instead of strengths and weaknesses you’re going to list all of your income and expenses. Just grab two pieces of paper and get started. On the first piece list your monthly salary and any other income you receive from interest, divorce settlements, part-time jobs, and anything else that generates income.

On the second sheet write down all of your expenses. Include your mortgage, rent, car payments, insurance, student loans, credit cards, utilities, and any other payments you must make each month.

What we’re trying to do is figure out exactly where your money is going. You need to total up all of your income and all of your expenses. Then subtract your total expenses from your total income. Hopefully you’ll have a nice amount of money left over which we can then use to form a debt reduction plan to start paying down your debt.

If your expenses are higher than your income it means you’re actually spending more than you are bringing in. This is a dangerous situation and if you don’t resolve it quickly you’ll only dig yourself deeper and deeper into debt. You need to take a close look at your expenses to see where you can cut back, and it wouldn’t hurt to pad your income a little with a part-time job until you get out of the red.

So there’s your assignment for tonight. Draw up a nice list of your income and expenses and jot down some ideas for cutting down your expenses a bit. You may be shocked when you see where all of your money is going.

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Money is tight for just about everyone right now, barring the cell phone company CEOs who are raking in more money than they know what to do with because you’re paying too much on your cell phone bill. Sometimes bills are inevitable to avoid, but there’s an answer to the question on everyone’s mind –how do I save on my cell phone bill?

• Avoid Texts. This is a no-brainer. There are about a million applications out there that offer the same type function of text messaging without having to set up a costly contract with a major company. Check out some alternative apps like WeChat or TextPlus. Instead of paying for unlimited texts through your cell phone provider, get a free SIM card through Mobi-Data that offers coverage 97% of the UK without long-term contracts. By using data only plans like these, you still get all of the functionality and then some without having to worry about a huge monthly bill.

• Avoid Calls. Video chatting has become the next big thing in communication, allowing a much richer form of communication than chats on a telephone call. Before locking into a several-year contract, try out your other calling options. By going outside your service provider with your calls, you only have to worry about data usage and not about how many minutes you’re clocking and with whom. Many contracts give you free night and weekend minutes that can be complicated to take advantage of or some may allow free calls but only to certain members of a plan or fellow users. Instead, go with something free and take advantage of all it has to offer.

• Avoid Contracts. You’re not alone if you’ve ever been wooed by a cell phone company with the glittery promise of a ridiculously cheap phone at contract signing time. It can be baffling how little they’re willing to let you pay to walk away with a new phone but you’d be foolish to think they aren’t making money that way. Mainstream cell phone companies rake in the money with deals like this because they make their money back (and then some) with the contracts you’re locked into. Chances are your phone will break before your contract is up or you’ll have to pay a cancellation fee to switch carriers. These things add up quickly. Instead, buy an unlocked phone for a little bit more and enjoy your freedom. Look at it as an investment for the future as it will save you money in the long run.

While you could forgo the cell phone altogether to keep your monthly expenses in check, you’d certainly be in the minority. The best advice that can be offered is to not settle for a large monthly payment when there may be options out there that can help you tremendously. By assuming you have no other options you’re only making it true. Review your current situation and search for alternatives – there’s more than you might think out there!

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