Many of these payments are made automatically, so you don’t really think about where the money goes. Your Netflix is on auto-renew, right along with your Sports Insider membership. Making automatic, thoughtless payments for goods or services that don’t truly benefit you or your bottom line is a way to make recurring luxuries into recurring trouble.

To get a handle on this, make a list of all your recurring monthly debits. Once you have your list together, start dividing them into different categories.

You’ll have your must pay items. These should include loans, credit card minimums, and utilities.
Next, you’ll have your necessary evils, so to speak. This includes your cell phone bills, parking garage fees for work, and other items you need to function.

Finally, you’ll have your “indulgences”. You may not be thinking of them this way, but how else do you describe a gym membership you never use? Or the Fantasy Football league?

You’ll want to look at these critically. Specifically, you will want to ask yourself what is it that you get out of these payments? If your Netflix subscriptions saves you $20 a month on gas and late fees, perhaps it can stay. The gym you never go to or the magazines you never read are psychological indulgences—admit you aren’t benefiting from them and cut them out!

Some people whine through this exercise, complaining that it takes away all of the fun things. That’s not the point—the point is to ensure that you are spending money only on things that you really enjoy and benefit from purchasing. Any other recurring payment is just an unnecessary drain on your personal resources.

Actually, these kinds of promotional deals usually represent a trap. When you think you don’t have to pay until a future date, it makes it easier to whip out that plastic card and sign that purchase agreement, even if you don’t have the money right now. The problem is that you likely won’t have the money later, either.

The illusion of time plus mankind’s own natural tendency to think that things are only going to get better makes no money down offers attractive. You’ll save it by the time it’s due, or you’ll get that raise, or you can use your tax refund for it. No problem!

This kind of thinking only leads to continued financial stress and trauma for you. To really shrink your debt, you have to ask yourself if you could pay for it now. This will help you know if that flat screen television, boat, or ATV really has a place in your life. If you can’t pay for it now, you can’t afford it. It’s that simple.

“But, but . . .”

No. There are no buts. The key to shrinking your debt levels and eliminating the chains of monthly payments that keep you slaving away to make ends meet is learning to turn down the lure of future prosperity and focus on present realities. The choices you make now create the financial future of your dreams.

Thus, you can’t live in the future, spend in the present, and hope to achieve your goals. If you can’t pay for it now, you’ll really be paying for that decision later. Make the smart choice and learn to ignore these retail temptations.

The only person who should be in charge of your financial future is you. You don’t need to be squeezed on all sides by others who you’ve allowed to have a share in your life by owing them money. You may not have realized that you had ceded future control of your finances to your creditors, but when you are burdened by debt that is exactly what happens.

To take back your financial future, you need to get a grip on your debt levels and start moving them in the right direction. Many people are not even aware of how much they owe—they don’t want to put it down on paper! However, to get back in charge, you need to track down everything that you owe, and how much interest you are paying on that debt. Make note of your monthly recurring payments for subscriptions and other bills.

Once you have the numbers in front of you, it’s time to take stock and make plans. Most people do a full analysis like this once a year. To keep your eye on your goal and move the bar, track these numbers every month. Identify the debts you want to focus on and work to eliminate them and any impulsive spending habits that you have.

It is easy to ignore your true debt levels, because who really wants to look at those figures anyway? They are unpleasant. However, dealing with them head-on is the only way to make yourself the sole owner of your financial destiny. You can take control of your debts and beat the credit crunch with discipline, honesty, and the right budgeting and debt management techniques.

The first step is to honestly own up if you are not following through on your debt management intentions. If you planned to cut back on eating out, but didn’t pack a lunch for work any day this week, then your intentions aren’t matching up to your actions. You don’t need to wonder why your plans aren’t working—they aren’t supported by your behavior. Acknowledging that this is what’s happening is the first step to making a change.

The next step is to plan for action in a manner that is realistic. How can you better bridge that gap between what you want to do and what you actually do? Do you need to make a special trip to the store, or make sandwiches before you go to bed at night? Be honest with yourself, and write your answers down on paper. It can be a hard exercise, but you will find that it is a very beneficial one.

Many people are more than willing to talk about changing their ways and eliminating their debt, but very few people are actually willing to back those intentions with action. However, good intentions have never successfully paid off a credit balance or helped you find more money at the end of the month. You need actions, smart actions, to really turn your situation around for the better. Focus honestly on your failing intentions, so that you can transform them into winning actions going forward

In this case, snowballs and snowflakes refer to additional payments made on credit accounts. They represent any extra money that you can throw at your debt to literally your debt levels “on ice”. Snowballs are larger payments, while snowflakes are smaller payments.

The basic principle is that anytime you have an extra dollar, you throw it onto your mountain of debt as a snowflake or snowball payment. Cereal was on sale 2 for 1 at the grocery store? Congratulations! You just found $3.50 to put on your Visa bill.

While it may seem like a drop in the bucket approach, this mini payment strategy is actually a good way to keep you in a constant state of intention to pay off your debt. You will find yourself skipping a coffee or a snack, so that you can put the $2 toward a payment. Bonuses, birthday gifts, and other extra bits of money go straight onto your debt.

It is a good habit to build. It also works as a powerful deterrent to taking on new debt, since you will be working to remove your debt levels. Sometimes, having that extra incentive to say “no” can make a big difference in your progress.

To see more results, snowball and snowflake one debt at a time. You can designate a debt of the month, or target an entire category of debt to work on until it is gone. Whatever your choice, remember that your extra payments typically go directly to the balance of the loan rather than feeding the interest rate monster. You will be able to chip away at your debt levels dollar by dollar, and find your commitment rewarded when you have everything paid off.

Weight Watchers reminds their participants that they need to watch out for the BLT’s that are ruining their diet. These BLT’s are the Bites, Tastes, and Licks that add hidden calories to the day. Within your budget, there are also BLT’s that you need to watch out for if you don’t want to find your debt levels ballooning month over month.

The BLT’s of a budget come down to little indulgences. They are coffees, magazines, candy bars, books, parking, tips, audio files, and a hundred other little things that probably only cost $2 – $5 a piece. However, if you buy 10 of these indulgences every month, it’s a missing $20 – $50 from your budget that you often can’t account for or even remember spending.

Getting your financial house in order requires you to account for these little indulgences and factor them into your realistic budget. If you spend $10 per day on Starbucks coffees when you’re at work, budget $200 a month to pay for that. Maybe it means you need to pack a lunch—or that it’s time to stop making multiple coffee runs a day. However, until you own up to the spending, you can’t control it or its impact on your budget.

The little choices really do add up, $1 or $2 at a time. Big debts start as small debts, too. Thus, having a healthy financial future means that you need to track the small things as well as the big things to ensure that you know where your money is going, why, and what that means for your bottom line.

To build financial discipline and responsibility in the children often takes old-fashioned tactics. Yes, there are wonderful games about counting change and Monopoly Junior collections. However, while these games are fun to play, they don’t teach children about the basic principles of money, namely that if you want it, you have to earn it, and once you have it you need to plan what to do with it.

Toward that end, allowances tied to performance of chores do a good job of teaching children that if they want something, they need to expend effort. As the boss-parent figure, to make it effective there needs to be clear expectations and consistent withholding of funds for work not performed. Though many children are not expected to work in the home for their spending money on television, in the real world it works very well.

For older children, additional instruction about credit management is helpful. Though recent laws are making it tougher for credit card companies to market to teenagers and college students, there is no doubt that the temptation is there. Swiping that little piece of plastic is just so easy . . . and yet the bills are anything but easy to get rid of later.

Training children to pay cash, save their money, and budget wisely sets them up for success throughout their lives. Don’t let whining and begging dissuade you from being a good parent or mentor to a child!

One way that many experts recommend you build up your savings is by styling your savings accounts deposits as another bill that is owed and must be paid first. This strategy, known as “paying yourself first” is a way to build savings into your regular budget. It allows you to thoughtfully set aside a block of money each month to build up your financial balance sheets and cushion any emergencies.

The main pitfall of the pay yourself first method is that many people tend to rob themselves first when the slightest need arises. Thus, if you really want to adopt this strategy as your savings plan, you have to simultaneously commit to leaving the money untouched.

For some, it becomes a matter of agreement. You write out the purposes for which it is okay to dip into savings funds, i.e., layoff, illness, or broken down vehicle. Any other reason does not justify a withdrawal. If this proves too challenging, then it’s time to revisit your overall budget plan.

The main goal, with rules or without, is to create balance on your balance sheet. You can’t get out of debt and build financial cushions for yourself without saving money. To save, you have to be intentional and deliberate about putting money away. Scrounging for “left overs” out of the family budget isn’t going to get the job done.

To make a budget really work and to have a budget make a difference in your financial life, you can’t be playing a game.  Really impactful budgets are much more than words on paper.  They are a road map to financial stability and the elimination of your debts.

Just as a road map doesn’t do you any good folded up in the glove box, neither will your budget do you any good sitting in a drawer somewhere.  Until you learn to use your budget as your guide, you will stay frustrated and stay in debt.  The credit crunch was partially caused by people living well beyond their means and in total disobedience to their budgets.  If you want to avoid being trapped in your own personal credit crunch, you can’t make those same mistakes.

You have to really allow your budgets to be more than simple words on paper.  They are not projections or ways to fill the time.  They are your rules.  If it’s not in the budget, it’s not in the budget.  You may not like it at first, but it is much better than the alternative!

If it helps, think of your budget as a get out of credit jail free card.  Take it beyond a fun game on paper and really put an effort into sticking to your budget.  You’ll find that when you commit and take the process seriously, you will start to truly see results in your bottom line