When you first start off to working to become debt free you are going to have to determine what are your wants vs. your needs. People have a hard time doing this so we are going to go over a little of what you should consider and what you can do to make it less painful.

Nobody likes to give up anything. Especially when it means lets entertainment and the little luxuries of life. But in most cases if you are in over your head it’s going to take just that to get past that towering debt. This doesn’t mean however that you have to give up everything but you will have to cut back costs and keep track of every little thing you spend and do.

The first step once you have laid out your complete budget on paper showing what you have coming in vs. what you have going out, is to make a list of you needs. For the average person you are going to need food, electric, internet, phone, transportation, and other items for some. Food is going to be the biggest thing because as you know without it you won’t be around long. So this is going to have to be in your budget. But there are things you can do to cut down the cost of your money food usage. For example you can use coupons and look for sales and plan ahead and build a grocery list can save you money. Another thing people do without knowing it is waste food. The average household throws away about 25 percent of the food they purchase. Just imagine if you could reduce your grocery bill by that amount.

Though you can live without electricity, in today’s age I just couldn’t imagine it. Electricity is just like food and it’s something you cannot live without. But again like food you can find ways to cut costs down by changing habits and taking notice every day of your power usage. The main cost factor coming from cooling and heating and you can help reduce this by simply buying a programmable thermostat. Then setting that thermostat to cool or heat only at the peak times when you are home. This could cut over 100 dollars a month from your heating or cool bill. I know when my bill was 400 a month I was panicking and found that making the right adjustments to the time that the air was on or off saved me over 150 a month.

You internet and phone bills can rack up fast as well. In today’s world you need both in most cases but you can reduce your phone and internet bill by downsizing your plan you are on. If you have a smart phone you could save yourself a lot of money each month just getting a regular cell phone and leave the internet to your home computer or local coffee shop. With the average person paying around 100 a month for a smart phone service plan you could cut that in half. Also if you can if you have not already get your internet bundled with your phone plan. Usually you can save a few extra a month by doing this.

Transportation today is very expensive but is a must have unless your living in a city and can use local buses etc. If you do own a car however you may take a look at what kind of car you have. Some of you will be able to trade your car in for a reduced monthly payment and also get a better model that uses less gas. This is a hard one because it depends on what you are requiring vehicle wise. If you have a large family with several kids you may not be able to downsize to a compact car due to the fact you could not hold everyone. Either way with gas prices as high as they are now you can try and watch the routes you take and cut down on the miles. Take notice if you are running over to a friend’s if you need to pick something up for the store you have to drive by. Make every trip count so that you limit return type trips if you can. You could end up cutting your gas bill by 25 percent if you make good effort in doing this.

The basic thing you are trying to do is eliminate as much as you can from the money going out the door rather than in. It may not be the thing you want to do right now but it’s what it takes to pay off your debt. There are lots of families out there making due with a lot less. Above we only talked about some of the must have items and how you could possibly reduce the your monthly costs with them. Other ways of getting out of debt when looking at your must haves and wants is to also reduce your wants.

Wants are items like going out to eat and buying clothing and renting movies etc. People can spend more than they realize doing these different things. Going out to eat can cost people up to 300 or more a month just by going out once every weekend alone. This is usually the first place people have to go to in reducing the amount they spend and to free up money. You can rent movies now for 1.00 using Redbox rather than going to a movie theater. And cook hotdogs while having some friends over on the grill on the weekends will save you money as well. Having people each pitch in a plate can create you a great weekend event for less than 5 or so bucks. Now unless you are completely broke I do not suggest you completely do away with your entertainment budget but you should drastically reduce it until you can afford it again. Everyone needs to get out but you don’t have to ever day.

By going through your budget and listing your items that you have to live with and the items you can live without will help you drastically reduce your monthly outgoing cash flow. And remember this is only temporary until you are debt free and once again can start affording the luxury items. But this time you will have better knowledge to manage your debt so that you don’t end up in the hole again.

Jason