Debt Consolidation

Debt is not much fun and when faced with it, people sometimes look for complicated debt solutions and often overlook the many simple ways that you can save money. Believe it or not, one of the simplest and most effective debt solutions is to get hold of a pen and a piece of paper and make a list. By this I mean that keeping a daily record of your expenditure can reveal some interesting facts about your spending and point you in the direction of how you can make easy savings right away. My Father first introduced me to this, showing me the little piece of paper that he kept in his wallet. But at the time I just rolled my eyes and ignored his advice – big mistake. It was only a few years later when I wanted to try to seriously start saving money in order to make a dent in my mortgage loan. But this debt solution is not only useful for helping you to pay off a mortgage debt, but also credit cards and student loans and many other types of debt.

At the beginning of each month, I would just tear a piece off an old envelope and write my salary at the top and then immediately subtract the amount I want to save in order to pay off my mortgage debt. I could then clearly see how much I money I had to get me through the month. I then simply subtracted everything I spent when I spent it. The key to this is to writing down absolutely everything, no matter how small. I found that it was really easy to do – I would either write something down on the list as soon as I spent the money or take two minutes in the evening at home to go back over what I had spent during the day. Whenever there was a fairly large sum on the list, I would just write down what it was next to the amount, so that I could remember.

Once you have kept your list for a couple of weeks, you already start to make some fascinating discoveries. It was not the big amounts on my list that had to be dealt with, as I had imagined. These were essentials, which there was no way I could do without. However, the small amounts on my list were doing the damage! I was well aware that I was buying something to eat EVERY morning before going into the office, but I was totally unaware of what it was costing me. I was spending 2.75 British Pounds every morning on this. That was adding up to around 55 Pounds per month! As soon as I realised this, I started making my own. In addition to this, I could always turn to my list at any point during the month and see how much money I had left until the next pay day. This way, there was never any danger that I would have to go into the overdraft on my bank account.

This in itself represented a real saving that I started making each month and once I had cut one or two other unnecessary expenses revealed by my lists, I was making very significant savings, which I then put towards paying off my mortgage debt. Keeping a list of this type is a simple yet powerful tool because it will clearly and simply show you where your money is going, and give you the control to make some changes.

Emmanuel Mendonca is the webmaster of Debt Genius at http://www.debtgenius.com which provides free advice on debt consolidation, how to get out of debt and on saving money.