So, let's talk about variable expenses and how you can tame this wild debt beast.



You're on a budget and abiding by it the best you can, but we're only human, and there's a tendency to over-spend on certain things. It's happened to us all: We go to the grocery store for food and we frequently come out with a few 'extras' - things we really don't really need, but we decide to get anyway.

Individually, these are minor expenses, but they do add up. Quickly. In the interest of debt reduction, these expenses need to be controlled. Here's a good way to do it.

Instead of writing a check or using a debit card you should pay with cash only. You may think it doesn't matter how you pay for these items, but it really does. What I'm asking you to do is to play a minor psychological trick on yourself.

The fast food industry has discovered that people who pay with cash equivalents (checks, credit & debit cards) tend to spend about 10 percent more than those who pay with cash. You don't really think they take these other forms of payment because they like you do you? They take them because you'll spend more. This is financial warfare. You're battling for your financial future so I want to arm you with...cash.

HERE ARE THE STEPS TO TAKE...

On payday, I want you to withdraw in cash the amount of money you have budgeted for variable expenses. I'm talking here about groceries, gasoline, clothes, lunches, miscellaneous - all of it. Now separate the money into small piles based on category. Place the smaller piles into their corresponding envelopes (write the category names on the outside of the envelopes) and put them in a safe place. What I want you to do is pay for your variable expenses out of these envelopes. When the money you've budgeted for a particular expense is gone, you're done spending on that category until payday rolls around again. If you decide to order a pizza or get fast food, that's fine, but realize that it's coming out of the envelope.

You're going to have to curtail your spending to keep cash in the envelope, or you could wind up walking or singing for your supper. It takes work, but with careful planning you'll actually begin to have money left over at the end of the week. And then the sheer beauty of this plan can kick in.

THE BENEFITS:

At the end of the week, take all 'leftover' money out of the envelopes and count it. Deposit it into your checking account. Immediately write out a check and mail it to the creditor with the lowest balance. It might be a credit card or a personal loan. Whatever the case is, mail the check. If it's only $12.37, mail it anyway. It's not the amount that matters.

NOW YOU'RE ON YOUR WAY!

By mailing your envelope leftovers, you're making progress on your debt situation. Have you ever heard the expression "You're nickel and diming me to death!"? You probably had a parent when you were a child that made that complaint when you would constantly ask for a very small amount of money for something you wanted.

This is that same principle in reverse: You're n ickel & diming yourself back to life. It may not seem like much, but if you can find just a little extra to send to a creditor every week, using my example, that's over $600 in a year's time. And that's not loose change.