Most families today are dealing with overwhelming debt. I have found that one way to cut down on spending is to separate my wants from needs. Those fancy $200 boots are a want. Don't listen to that saleslady that is telling you they will last you forever and that they are an investment. You can probably invest in much cheaper boots somehow! Food and shelter are a need! Designer clothing is not
If you're in debt then it only means one thing. It means you've been spending more than you earn. Write down everything you spend for one month – you'll quickly see any areas of waste where you can cut back and save money.
Even debit cards can encourage you spend money you can't afford. There is something about plastic and not seeing your balance that makes you spend more. By withdrawing a set amount in cash for the week, you're better able to manage your spending within a budget.
I have found that making lunches, drinking coffee at home and cutting out taxis can make a big difference over the course of a month. Living without cash is a lifestyle choice – if last summer's dresses are still wearable then resist the urge to splurge on something trendy and new.
Another tip is to carry cash. Basically if you cannot afford to pay for it in cash leave it in the stole. Keep your credit cards for exceptional purchases that require the use of plastic, like airline tickets or hotel reservations.
Don't let that big mortgage balance stop you from trying to pay it off. It might take awhile, but paying down your mortgage will save you heaps of interest in the end. Use extra cash, bonuses or tax returns to pay down your principal. If you can afford it, consider switching to a shorter amortization period. For example, a $200,000 mortgage with a 25-year amortization period sees you paying a whopping $148,990 in interest over that period (and only if interest rates don't rise in the meantime!). Double up on your monthly payments and switch to a 10-year amortization and you pay just $53,969. Making regular payments against your principal will also knock those costs down.
Bottom line is that we should all plan to have six months of living expenses in a savings account in case of a health crisis or job loss. This is called 'Creating a Cushion.' Without an emergency fund, even the most frugal people can quickly spiral into debt when hit by an unexpected expense.