by Diane Perez

Created on: August 21, 2009

It is very possible to get out of debt and become financially secure. The easiest way is to make a series of small changes in your habits that will not upset the smooth flow of family life. The method of achieving these changes will be presented in a step-by-step format. Read through the entire article to learn how to stop spending money you don't have.

1. The first thing that you need to know is who you owe and how much. Gather all of your monthly statements and invoices. Include everyone in this tally: housing payment, utilities, secured creditors (such as an auto loan), credit cards, personal loans, medical bills, repair charges, household services (lawn or swimming pool service), etc. Make a list with each creditor's name, total amount owed, monthly payment amount, and whether the payments are current of past due.

2. Now make a list of all other recurring expenses such as groceries, car maintenance and insurance, health insurance, prescription medicine, school lunches, mass transit pass for bus or subway, day care, pet care, tithing, dry cleaning, clothing and shoes, etc.

3. Add the current monthly payments (not the past due nor total balance owed) from #1 and the amounts from #2 together. This is the amount of money that you are currently spending every month. Don't faint at the amount. We will work toward getting it under control in a few minutes.

4. List all forms of monthly income including wages, side jobs, retirement or pension, and investments. Subtract the income from the expenses to see how much money you have been spending that you don't have.

5. We need to shave the expenses to 10 percent less than your income. Here's how:

a) Call the electric company and sign up for budget billing. This will completely avoid the wild swings in different seasons since your payment will be the same amount throughout the year. Many electric utilities will toss in the past due balance as part of the budget billing program which will make your account current without additional payment.

b) Visit your auto insurance agent and make the necessary adjustments to lower your policy amount. These might include making sure that you have all of the discounts for which you qualify, canceling unnecessary coverage on old clunkers, increasing the deductible, and whatever else your agent recommends. However, remember that your agent works on commission.

c) Sell all vehicles that have large loans and choose to either ride mass transit

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