Many of us try our best to stay clear of debts. Those, who were once trapped into debt and came out of it, will never forget those hard times. They spent sleepless nights and were forced to make huge sacrifice in order to get their financial cart back to the track.

Being a finance blogger, I am often asked what the most effective steps are for debt elimination. It is possible to use your debt in the right way and I have already covered the subject in one of my blog post. In this write-up, you will learn some important lessons as to how you can optimize your spending. If you can learn these tricks, it is less likely that you will ever be chained with unmanageable debt.

Is your earning reaching to where it is needed most?

Most of the service holders and entrepreneurs earn enough to live happily. Doesn’t it wonder why they make financially suicide? The problem is many of us are not expert at distributing the disposable income in the right way. We don’t feel the consequences of our failure to optimize our spending pattern. Over time, we realize that a number of small insufficiencies have ruined our personal finance.

Unnecessary expenses and impulsive purchase eat a good part of our earning. Those inefficiencies can be compared to holes through which your earning is wasted, with only a tiny part reaching out to where it should. If these holes are not plugged, you will be driven towards debt problems. Here are a few steps to try out in order to practice sensible spending:

  • Little bit of financial disciplinary can safeguard you from troubles in future.
  • Doing away with luxury will help you set up a better spending system.
  • Don’t spend on those things you will hardly need any more.

Budgets seldom work

We, like the most obedient pupils, get down drafting a budget. However, the studies reveal that close to 2/3rd of us never follow it. People have other jobs to do than writing down every single expense, which they consider most boring. You need to be extremely disciplined to keep a regular track of your spending every day. Many of us show enthusiasm but only for a few days and after that, it gets too boring that you think it waste of your time and energy.

Why is budgeting important? This is because, it prevents you from overspending. However, even without a budget, you can decide if you are spending on the right thing. You must have goals in mind as to how you can allocate your disposable income towards the most important and immediate things. At every point of your spending, you should ensure that even a penny of your income is not wasted.

For example, if you have huge debt to your name, it must be your priority to pay off dues quickly.

Save on your monthly bills. Here is a list of your monthly bills:

  • Grocery expenses
  • Cable bills
  • Cellphone bills
  • Power bills
  • Health insurance premium
  • Car insurance premium
  • Car fuel cost
  • Laundry service
  • Medical expenses
  • Watching movies at multiplexes
  • Dining out on weekend

Now consider if you can cut some expenses on one or many of the above-mentioned regular category.

You can easily drop your habit of dining out every week. Don’t stop going out for dining, instead reduce the frequency to only once in a month.

You can now watch movies on your computer. True, you will not experience the same sound effect on a small screen but look at other side of the coin – you can save a goodly sum.

You can trim your cable bills by going with customized package instead of buying a premium package. Many of us are in habit of talking with friends and relatives over phone for a long time. It only adds to our bills. Go for prepaid option and set a limit on weekly or monthly basis.

Use pull car instead of driving your own one to your office. Use your personal car only when you will go out with friends and others to shopping mall, restaurant or theatre.

There are several ways to save on your power bills and I have discussed it in one of my blogs.

While buying a home, car or health insurance policy, you should choose one that covers your necessities – not more, not less.

Kick out your habit of impulsive purchase

Easier said than done! However, ‘impossible is a word fond in only fools’ dictionary’.  With a strong will, you can restrain your habit of impulsive purchase even within a week. However, I don’t expect that much willpower from all of you but if you wish, you can do it. Believe me; the practice will turn out to be a huge money saver over time.

Cut your coat according to cloth! So many times I have quoted the phrase to instil the concept in you that there is always a distinction between necessities and luxuries the LOC (Line of Control) varies from one person to another. You just need to stay within the line if spending optimization is a priority.

Would you like to share your own personal experience of optimization spending? I am waiting to hear from you……