Answer by Faisal Khan:
Couple of things that will help you. I was in the same boat a couple of years ago, and the following helped me get out of the hole.
- Savings: Most people get an income, then minus their expenses and whatever is left, is considered savings. This is wrong. When you get an income, minus what you want to save and then whatever is left is what you have for your expenses, now learn to live within that.
- It takes time to get out of the hole.
- Track your expenses. Believe me you will be surprised where your money is going. Track everything, from the smallest expense to the largest. Do this for a month or two and group them up into categories.
- From your expense tracking, see if you can unilaterally cut down 1/3rd on expenses, and perhaps 10% on utilities. Don't say it cannot be done. Its doable. Have you tried it?
- Small expenses add up. Be very cognizant of that.
- All your life you have been writing with one hand (either the left or the right), for financial discipline, think of it as changing the hand with which you usually write with, to the other one. It takes time for the switch and to be proficient. But you must not give up.
- Seek advise of a financial advisor who specializes in the deflation of debt and help people get out it. Even if you have no debt, it is your financial behavior that is causing you to be poor. You can certainly improve upon it.
- Aim to increase your income and decrease your expenses. Easier said that done, but if you can reduce your expenses by say 30%, try to see if you can increase your income by 10%.
- Pay off the highest interest items first (like credit cards, etc.)
- Cut and throw away your credit card. Learn to live within your means, and not on borrowed money (try it for a while anyways).
- Your debit card is all what you need.
- Eat at home. It saves a lot of money, same with boozing. Drinks at bars and clubs are extremely expensive.
- There is no shame in going generic. In all manners. The goal is to save. No one can tell if you're wearing a $100 cologne/perfume or off the shelf Brut! No one will ponder how come you are wearing $25 jeans. No one. No one will care if you don't show up at a club or a party or at the cinema. You are doing this for yourself.
- The money you save, will make you happy. It can come in handy sometime (for an emergency, or a vacation, or buying something needy).
- When tempted to spend. Just drop the thought. Impulse is the biggest killer of savings.
- Only you can discipline yourself. If you're a family man, explain it to them. They will understand. Sometimes you might give in to pity, that's okay too, we are all humans, but think of it as a bad habit. If you improve yourself, you and the family become the eventual winners.