How to Become Financially Sober
- 1). Make a budget. Get a handle on debt by planning out each month's expenses. List your family's net monthly income. Make a separate list of monthly expenditures, such as housing, utilities, debt obligation payments, food and entertainment. The money left over should be allocated to paying off debt. If there aren't funds left over, cut costs.
- 2). Trim monthly expenses. Identify opportunities to cut costs in each category of spending. For the most efficient cost cutting, evaluate the largest categories of spending, such as housing, food and transportation. For example, reduce your transportation costs by downgrading your vehicle or joining a carpool. Cut housing expenses by taking on a roommate or choosing a less expensive housing alternative.
- 3). Change financial behavior. If you struggle with impulse purchases, freeze your credit cards in a bowl in the freezer. You will need to wait until your credit cards thaw to make purchases, providing sufficient time to consider the purchase. Before buying a big-ticket item, ask yourself if you can afford the product and if you need it. If the answer is no to either of these questions, avoid the purchase.
- 4). Sign up for credit counseling. If you are still struggling with your finances, seek a reputable credit counselor. Credit unions and universities offer these services for a low cost. A credit counselor will evaluate your situation and assist in creating a plan for paying off debt obligations.
- 5). Seek assistance from a debt management plan (DMP). These programs negotiate payments with lenders. Based on monthly payment arrangements, you make a monthly deposit with the DMP administrator. The company pays the lender each month. This makes you more accountable for paying off debt. Contact the local housing authority to find reputable programs in the area.
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