Your Financial Freedom: Defining Your Overall Goals
After having calculated your expenses and contacted the creditors for a better deal, you should have a pretty good idea of your financial situation. Before investing a lot of money into savings accounts, you should concentrate on your debt. You should, however, try to save up enough money while you are paying down your debt to insure that you do not have to use credit when an unexpected expense arises. Define your long-term goals, such as buying a house, getting married, having a child, or buying a car. Calculate how long it will take you to pay off your debt and calculate how much money you will be able to put into a savings account or investment account once those debts are cleared.
Keep in mind that once you pay off one creditor, use the money that you were paying to that account to pay off another account. Also, each time you get a raise, use the surplus to pay off creditors rather then letting that extra money slip into perishable items. By doing that, you are paying down your debt more quickly, without the added weight on your quality of life.
The Bottom Line
Know exactly what you are spending and what you need to pay. Stick to your spending plan for paying off your debt. If your monthly spending log shows that you should have a surplus at the end of each month, then you are spending money on things that you don't even remember buying. That surplus should go to your creditors before you spend it on unnecessary things.
A sound financial plan is an investment in you and your family. If you stick to your plan, you should avoid bankruptcy, improve your FICO and credit scores, and eventually have more money to spend on the things you really need.