Develop Strategies to Control Personal Spending and Manage Debt

Managing your spending and paying down your debt go hand in hand. If you are in the beginning stages of your career, you may have racked up student loans, credit card debt and perhaps a mortgage. At this stage in your life, you may have a lot of necessary living and education-related expenses, but don’t yet have a lot of income. For many who are starting out, that debt can quickly get out of control and become unmanageable.

Bobby Lendi, Chief Financial Officer for ASCP, offers some practical tips to help bring that spending more in line with your income and pay off that debt.

“It’s easy to get into the habit of spending more than what’s coming in. Everyone is pushing credit cards at us, and websites make it easy to shop by storing credit card information in your profile. It’s easy to go online and, with a couple of clicks, we have a shipment coming to our house tomorrow,” he says.

Instead, he recommends making a lifestyle change. In other words, change your spending habits.

1. Halt your credit card spending. If you make an online purchase, use a debit card.
2. If you do have a credit card linked to Amazon or another online store, delete it.
3. Cancel recurring subscriptions for retail purchases; things like Birchbox and Stitch Fix.

Once you’ve changed your spending behaviors, now start reducing your debt. If you have multiple credit lines and multiple balances, review those balances and corresponding card interest rates each month. One card might charge an 11-percent rate and another a 22-percent rate.  Prioritize paying off the higher-cost debt first.

Second, as you pay down debt and change your spending habits, other opportunities might occur. For example, you might get a raise at work.

“This is a good time to use that additional income toward paying off the higher cost debt,” Lendi adds. “This is not a short-term process. Nobody got themselves into debt in a month, and it’s going to take more than a month to get out of that debt. Don’t despair if it takes a year or two. While working toward reducing your debt, develop some short-term goals.

“Do something to reward yourself when you get the $10,000 debt down to $7,500, and the same when you get down to $5,000 so it doesn’t feel like you’re beating yourself up,” Lendi suggests.

Finally, organize your spending by creating a monthly budget. There are plenty of software tools and phone apps available to manage your budget. “They’ve gotten so good that they’ll manage your finances down to the penny,” he advises.  

Implement these strategies and you’ll be well on your way toward establishing good spending habits and starting to save, rather than watching your hard-earned money go down the drain.  You’ll be surprised how quickly debt can be paid down, and how much more financial freedom you’ll have.

Watch for more financial management tips from Bobby Lendi in future ASCP News issues!