Managing your debt often requires reducing expenses that are unnecessary. Fixed expenses such as your revolving credit, car and mortgage payments, alimony and child support do not fall into this category.
If you learn to reduce payments for items that you really don’t need, managing your debt will get easier by the day. This is because you’ll have more money for your fixed payments as you divert your funds away from unnecessary payments.
Cutting Your Variable Expenses
Reducing or eliminating variable expenses requires reducing expenses that are unnecessary. An example of a variable expense might include a gym membership, magazine subscription, charge card to an expensive clothing store, or monthly spa visit. These purchases that you make on a regular – or semi-regular – basis are not necessary for your survival and can be cut in order for you to focus your money on your fixed expenses.
If you are interested in managing your debt correctly, it’s important that you determine what is an important fixed expense and what is variable.
The Process of Managing Your Debt
When you’re ready to begin managing your debt, you will have to begin reducing expenses that are unnecessary. A great way to get this done is by jotting down on paper all expenses that you think fall into the category of variable. Some additional items to make this list might include cell phone and/or high-cost features, vending machine runs, eating out for lunch at work, long-distance calls on the landline, dry cleaning, and cable television.
After you’ve created the list, in a column next to each expense, you can jot down your monthly cost. Adding up your monthly total can give you a vivid picture of how much you might be spending frivolously. By reducing expenses that are unnecessary, you’ll see how much you actually have available to better manage your fixed costs.
It’s not hard to manage your debt if you give it an honest effort. Try it for yourself. You’ll see that by reducing expenses that are unnecessary, you’ll be able to get your finances in order in no time.