Save Money

Perhaps you have a stack of credit card bills and an empty savings account. Unfortunately, hoping to win the lottery isn’t the path to financial recovery. It’s time to set up both a healthy spending strategy and a plan for decreasing your debt over the next 12 months.

A healthy financial profile is like a successful fitness plan that helps you feel good about yourself. You’ll transform the thrill of spending money into the thrill of having money!

Map Out Your Spending.

Start now by recording your daily expenditures. Jotting down each expense will make you conscious of your spending, giving you a better feel for how you divvy up your paychecks. Next, take stock of your yearly expenses, including rent, food, insurance, bills, entertainment and special spending like birthday gifts and vacations, then determine what’s most important to you and where you can economize.

Pay Attention to What You Buy and Why.

Don’t allow shopping to become your form of therapy. “People get a rush from spending money,” says Claire Debattista. Take a list with you every time you go shopping, and stick to it. If you see an item you want that’s not on your list, give yourself a few days to think it over. Ask yourself why you’re buying a fifth pair of running shoes: Because you need them? Or because the purchase makes you happy? If there’s something you need don’t impulse buy, as there’s a strong chance you can get it cheaper. Try out discount shopping tools, search online and look in other stores first.

Take Control of Credit Card Debt.

“Every financial planner will tell you the fastest way to decrease your credit card debt is to pay as much as you can on the bill with the highest interest rate, and pay the minimum on the others,” Fowles says. Also, look out for red flags: Only paying the minimum on your credit-card bills, maxing out two or three credit cards, being denied credit or not having any savings are all indicators that you’re headed toward risky financial territory.

Sort Out Your Credit File.

Get a copy of your credit report and make sure the information is correct. Any mistakes could be impacting your credit score, which in turn affects the rates you get.

Consolidate Your Payments

If you haven’t consolidated your loans, do it now before interest rates rise.

Create an Emergency Fund.

While it’s most important to pay down credit-card debt first, the next step is to have an emergency fund. Try to deposit about 10 percent of your income in a savings account each month, and don’t touch it. You’ll be glad you have the cash when your transmission clunks out.

Seek Help.

If your debt has become unmanageable, don’t ignore it and hope it will fade away. The sooner you act, the better!