One line item should be savings. To get ahead you should start paying yourself first. Some suggest 15% of your income, but if you can’t afford that, start with what you can afford and increase it over time. Many people think they can’t afford to pay themselves first. Why work all the time and have nothing to show for it? If you think you don’t have any extra money for this, take a look at what you have been spending your money on and see where expenses can be cut.

Live within or below your means. If you constantly spend more than you make each month, you will continue getting in deeper debt.

One way to get your expenses under control, is to track your expenses. For one week, write down everything you spend money on each day. At the end of the week, you will see where your money is going and can determine if there are ways to cut expenses.

Saving is a discipline and needs to become a habit. Have the discipline to wait until you have the money saved to purchase something you want. Too many people give into the instant gratification of purchasing items that they want that they cannot afford. Live below or within your means. It’s also important to have an emergency fund in the event of unexpected medical expenses and job layoffs, etc.

Once you get in the habit of making a monthly budget and living by it, it will get easier and not feel as restrictive as you may think.

Every budget starts with examining your spending habits and determining exactly where your money goes on a day-to-day basis. If you don’t know how much you’re spending and on what, you can’t decide where you want to spend and on what.

After you get over the horror of your daily spending, the next step is to make a list of what you need to buy or do over the next three to six months. These could be physical purchases (like new tires for the car, airfare for the family vacation) or financial plans (such as paying off a credit card, maxing out this year’s IRA or adding to your emergency fund). Do the same for planned long-term (one to five years) purchases.

Suddenly, you have a “spending plan” (so much nicer than the word “budget”). Now, every time you pull out your wallet, you have a tangible list of money goals to help drive your spending decisions and propel you financially forward.

Also consider the emotional uses of your money. First list five uses of your money that will positively affect your life in the near-term and the long-term. Then, list five uses of your money that will add little to your quality of life in a decade or more. Thinking about what you really want to do with your money can greatly affect your plans for spending and saving it.

With your money goals in hand, determine how much each item on your “wish list” is going to cost you on a monthly basis. Simply divide the total amount for that vacation by the number of months until you plan on taking it. With your targeted spending plan in place, direct your money towards your goals.

Keep in mind, the best way to save your money is to keep your cash out of spending reach by diverting it to a separate savings account — one different from the checking account you use for everyday expenditures. Set up automatic recurring cash transfers from your main checking account into your separate savings account. With your savings on autopilot, all that’s left to do is stay out of your own way. Make sure you cut out mindless overspending.

Initially you should take some time to collect all of your bills and financial papers, so you have an accurate picture of where you stand financially.

You should choose a company that will customize their program to your individual needs. It’s possible to take all your payments and reduce them into one while they negotiate with your creditors for better terms, like lower interest, a lower balance, or perhaps even stopping late fees.

You will pay a fee for this service. It will be part of your monthly payment and is compensation for the work that they’re doing to secure betters terms for your debt.

It’s important to take the time to learn about budgeting and how to stay out of debt. You really don’t want to endure the stress of unpaid bills again and the collection efforts that your creditors will use.

Do everything possible to stick with the new plan. If you find that you have some extra money, send it in and you’ll be out of debt even faster. Most of the time you can pay off the debt through one of these programs in just a matter of months.

Make that first step of taking a realistic look at what you owe, choosing a provider and a program that is right for you and can be customized to your situation, and then following through with one monthly payment. In a few months you should be breathing easier and enjoying your life again. The sooner you start, the sooner you will be debt-free.

It’s important to understand how you can use your credit card so it works to your advantage, not against you.

Credit cards have several pluses. A credit card can: be more convenient to carry than cash; offer free use of funds, provided you always pay your balance in full, on time; help you establish a good credit history; provide a convenient payment method for purchases made on the Internet and over the telephone; and give you incentives, such as reward points, that you can redeem.

On the other hand, credit cards have their minuses. They can: allow you to build up more debt than you can handle; cost much more than other forms of credit, such as a line of credit or a personal loan, if you don’t pay on time; damage your credit rating if your payments are late;  and they have complicated terms and conditions.

A credit card is more then a simple piece of plastic, it is first and foremost a flexible payment tool accepted at millions of locations worldwide, and if the balance is paid off every month, then no interest is charged on purchases made so, essentially, short-term credit is granted without the consumer paying any interest. Before you decide to use your credit card, carefully consider all of the factors and weigh them against your personal needs and values.

There are ways to use credit cards responsibly. Use a low or no-fee credit card and save on the annual fee that some companies charge. Only charge to your credit cards what you can pay off in full when the bill comes, you might not use your credit card as much if you start believing that you have to pay off your entire balance at the end of each month. Also, if you make only the minimum monthly repayment you may never get out of debt.

Handling money and credit cards wisely is a talent few of us are born with. But it is a skill that can easily be learned. The place to start is with budgeting. A budget is simply an organized way of managing your finances. It gives you an overall picture of where your money is coming from, when it’s coming in and how it’s being spent. A budget should be flexible, changing according to your circumstances. 

Budgeting helps us achieve short-term goals like paying the monthly bills on time; it’s also for longer-term financial goals like buying a home, a car, paying for an education, a wedding or a vacation. When you take control of your financial affairs, you’re more confident about the future. A budget is key to financial control. It gives you a “snap shot” of where you stand financially and where you’re heading.

The main advantage of having a credit card is convenience but if you’re not good at budgeting and managing your finances, the over-use of credit cards can leave you with a debt that’s very difficult to pay back.

The good news is that once you’re ready to eliminate your debt, it can be done – but you have to be serious about changing your ways and making the sacrifices necessary to get yourself out of the hole. Here are some suggestions to help get you on the road to healthy finances.

First, figure out where you stand. You can’t realistically expect to get out of debt if you don’t know exactly how much debt you have. Learning the details of how much you owe is relatively easy, free, and can be completed online, over the phone or via mail. Get a copy of your credit report from each of the big three reporting bureaus (Experian, Equifax and TransUnion). 

Once you have the numbers, review them carefully. Most people underestimate how much they owe, this may be difficult, but you have to know exactly what you’re facing in order to overcome it.

Next, outline a plan. Your plan of action will depend on how far behind you are on payments and how much money you currently owe. Those with less debt or who are just beginning to realize they need to tone down the spending may be able to work out repayment strategies for themselves.

If you have delinquent accounts or cannot make even minimum payments each month to your creditors, you may require the help of a professional credit counselor. Get a list of government-approved credit counseling agencies in your area. Also, research your options: many types of loans have programs for those in financial crisis (student loan deferment, mortgage help, etc.).

Don’t discount filing bankruptcy - in certain situations, it’s the best way for consumers to get out of debt and receive a fresh financial start.

From this point you need to devise a new spending schedule. This begins by formulating a budget. Basically, you’re going to have to spend less money and/or earn more money to eliminate your debt. This may seem impossible, because you may feel as if you’re already spending as little as you can to get by.

You don’t have to make big changes. You can save a lot of money by adjusting the way you spend small amounts. These so called “small” expenses add up quickly. Things like brewing coffee at home and packing a lunch instead of hitting Starbucks every morning and dining out; eliminating expensive cable channels; turning off the lights when you leave a room; adjusting insurance coverage; walking, biking, carpooling, or taking public transportation instead of driving; buying generic instead of name brands. 

When you review your monthly spending, you’ll likely find several ways to carve a few dollars from your costs. After a while, those dollars will add up to serious savings.

Once you’ve limited your spending, it’s time to funnel money toward eliminating your financial deficits . One effective method for getting out of debt involves paying off your highest-interest debts first while making only minimum payments on all other debts. 

Make rent/mortgage your first priority. After making sure you can stay in your home, pay down your costliest loans one at a time. Prioritize accounts that have been sent to collections. If unpaid, these can be particularly damaging to a credit score. Contact your creditors and negotiate with them. Let them know what you’re doing and ask for a break on interest rates, extended payment periods, etc. Most creditors are willing to work out a deal, since they’d rather get paid something than nothing at all.

If you’ve cut back in every way you can and still can’t manage to make payments on your debts, consider filing for bankruptcy. A bankruptcy lawyer can help you decide if this is the right choice for you.

Part of your financial recovery is establishing a healthy relationship with credit, which will be reflected in a strong credit report and improved credit score. Especially if you choose to file bankruptcy, you must not let your credit report go dormant.

One of the most effective ways to rebuild your credit is to borrow money and repay it on time. This can be done through credit cards, a mortgage, a car loan, student loans, etc. Opening a savings account, too, allows potential creditors to see that you’ve developed financial responsibility and will be able to cover any debts you acquire.

The fast track to getting out of credit card debt begins by unequivocally stopping the credit card charging madness. In other words, consumers must decide to no longer add any debt to their current indebtedness. Use a debit card tied to a checking account or simply cash for little and impulse purchases, since these purchases add up to become big debt burdens over time. 

Also, it is crucial to pay more than just the minimum amount due. The minimum amount due is usually barely enough to cover the interest rate, while leaving the principal of the outstanding credit card debt untouched. As a result, the consumer may be paying diligently for years, to barely see the balance due budge at all. Pick one credit – preferably the one with the lowest balance – and make extra payments. When it is paid off, all the money that was paid to this card on a monthly basis should be added to the minimum payment due on another card, and so on.

Getting out of debt also requires the meticulous examination of spending habits. A budget that details expenditures empowers consumers to eliminate spending that is not necessary or even redundant. It also gives a concise figure of monthly expenditures, presenting a base amount from which monthly income can be subtracted to reveal the amount of disposable income. If it turns out your income is less than your expenses, serious soul searching and expense slashing is needed. This may be done by avoiding the impulse purchase, shopping with a list, and saving up for major purchases.

Consumers also need to be aware of the interest rates their credit card issuers are charging. High interest cards should be paid off quickly to maximize long term savings. Contacting a debt settlement agency has the potential for fast tracking the repayment of credit card debt. Debt settlement negotiators will work with debtors and creditors to lower interest rates, outstanding balances, and empower the consumer to repay the outstanding amounts due in three to five years. Make sure you seek out reputable companies, check them out with the Better Business Bureau.

Bankruptcy’s fresh start fails for some people, mainly because you can’t get ahead after bankruptcy if your income falls short of your expenses. It may seem obvious that the fresh start in bankruptcy will help only if future income is sufficient to cover future expenses, but many people don’t consciously think about that. Instead, they emerge from bankruptcy expecting that, since they’re out of debt, their financial problems will simply disappear. Failure to budget after bankruptcy and make sure that income exceeds expenses is the first and most dangerous mistake most bankruptcy petitioners make.

Although most bankruptcies are the result of major life events such as serious medical problems, divorce, job loss, or death in the family, those financial problems are often aggravated by spending practices that make the situation worse instead of better. These included living on credit cards, using one source of credit to pay another, or borrowing from payday loan stores or other high-interest, high-fee sources that prey on those in difficult financial circumstances. It’s important not to fall into the same pattern of poor spending habits after bankruptcy.

After bankruptcy, you will undoubtedly pay a higher interest rate than would an applicant with a high credit score. It’s good to be realistic, and to accept higher rates in the beginning as the price of re-establishing your credit. You shouldn’t be carrying high balances on those new credit cards anyway, so you shouldn’t be paying much interest. However, there’s a difference between paying somewhat higher rates and being hit with fees, high interest rates, outrageous penalty rates and additional charges, all for the privilege of opening a credit account that will be of little use to you. Knowing what credit cards to avoid is as important as knowing that you need to re-establish your credit. Don’t rebuild credit with the wrong companies.

Beware also of credit repair scam. If it seems too good to be true, it probably is. You’ve seen advertisements in which companies offer to “Erase Bad Credit” in one quick-fix. You may even be directly targeted by those companies now that you’ve filed for bankruptcy protection. There is no quick fix or overnight way to rebuild your credit. Your bankruptcy will remain on your credit report for ten years, and the way to outweigh it is by building a positive credit history post-bankruptcy. This may take a year or two, but it’s the only way to go.

Saving money is tough for most of us. Saving requires planning and a willingness to put up with some inconvenience and do a little work. For most people, saving is just too much trouble. But it doesn’t have to be. There are a few simple things you can do to change your outlook on saving money.

If you have frugal friends, try to shadow them for a while and pick their brains. Where do they shop? How do they live?

Repair things that break or try to make do without it rather than replacing it immediately. Buy clothing at yard sales and thrift stores, at least for a season. Find creative ways to entertain yourself  like playing cards instead of going to the movies, or cooking with the family rather than eating out.

Most people hate the thought of that sort of lifestyle and for good reason. It seems boring. It seems harder than it needs to be.

Every time you do something like this you should reward yourself by taking the money would would have spent and stashing it away. If your checking account is a bottomless pit, try to take some cash and put it away in your room.

For instance, if you normally purchase coffee during the work week, say five times a week, switch to home brewing and then calculate your savings. Let’s say you used to spend $100 a month on lattes,  and you’re now spending about $15 on home brew, be sure you pay yourself that $85. If you need jeans but get them at a yard sale for $2 instead of a department store for $100, put $98 aside.

At some point, you’ll need to transfer your wad of cash to a more reasonable holding area. Open a special bank account or, better yet, put it in a stock or mutual fund.

If you have debt, take your savings and dump it periodically into your checking account and write a check to pay down your debt. Imagine if you could live more or less at the same level and pay down your debt.

Frugality is one of those deceptive things that seems like it shouldn’t be fun (but actually is). Many Americans are faced with budgeting because they have no other choice. But for some, the decision to save is about personal choice and a desire to be free of debt and build up savings for the future. You should view frugality as an expression of your own creativity.

Other creative ways to simplify your life and save money include:

- Rent movies instead of going to the show

- Read books and magazines at the library instead of buying them

- Learn to sew, so you can repair your own garments and learn how to make adjustments to get other stuff to fit just right.

- Learn to buy in bulk and cook from scratch. If you can afford it, invest in a freezer. It’s cheapest to buy staples, cook in large batches, and freeze. It’s healthier, too.

Savings is a mindset. When you change your mind about your money, you can change your financial future.

Many families create budgets. But, you can’t simply have a budget in place, you also need to learn how to maintain that budget. When used effectively, your budget becomes one of the best financial tools you have at your disposal.

The easy part is creating the budget – the hard part is sticking to it and learning to live within your means, especially if you’re used to relying on credit to get by.

Here are some ways you can make your budget work for you:

Put it on paper

When you set up your budget, don’t try to keep it all in your mind. It will never work! You need to write it all down on paper (or in a spreadsheet or financial software) in order to keep better track of what’s happening with your money. Assign your income to the various categories of expenses and bills you have to pay and take control over your money rather than letting it control you.

Use self control

Once you have your budget created (make it realistic so you at least have a chance to stick to it!) remove yourself from activities that might cause you to stray from the plan. If walking by the store makes you want to go in and buy something you don’t really need, take a different route!

The wise person who sticks to their budget avoids making these purchases or puts them off even though they might miss out on a good deal. In fact, make it a rule that all purchases must go through a 24 to 48 hour incubation period before you actually buy them. By the time you wait it out, you might realize you don’t really need or want that item as much as you thought you did. When you do go shopping, don’t go without a list and the will power to buy only what is on that list.

Focus on the long term benefits

If you stick to a budget religiously and pay off your debt, think about how much better your financial situation will be in three months… six months… three years from now. That should give you motivation and help you stick to your financial plan. Think about the great feeling you’ll have when you have an emergency fund ready to pay for emergencies and unexpected expenses that pop up from time-to-time that previously would have caused you to get a loan or pull out a credit card. Use that good feeling as a motivator to stay with your budget. Keep telling yourself that you are in this for the long haul and that nothing is going to take you out of your plan or off of your budget.