Add up all your debt. Credit cards, car loans, mortgage payment, etc. Next compute your debt to income ratio. Are you underwater? Spending more than you make? Then every dollar of debt you can retire is the same as getting a raise.

The good news is that changing your lifestyle to retire debt is only necessary for a relatively short period of time. Once the debt is gone you suddenly have more income to save or invest. Here are a few things to consider.

Save Yourself First

Airlines tell us to put on the oxygen mask before assisting our children. This is good advice in the financial world too. Pay yourself first. I don’t know of any retirement assistance plans, but there are plenty of loans and programs to assist with college. Make sure your retirement plan is in place and working before worrying about how you are going to afford college for your children.

Small Expenses Add Up

While doing my taxes I noticed how often I was using ATM machines to get quick money for lunches or business meetings. I was spending a tank or two of gas, or a couple of water bills every year. It would have been much easier to write checks over at the grocery store or use my bank ATM that doesn’t charge for getting my cash. With a little planning you can save more than you think.

Improve Your Lifestyle

Studies show that money spent to improve lifestyle makes people happier than money spent buying material things. Taking a class or learning a new skill will make your life more enjoyable than an expensive vacation.

Save On Driving

Going 60 mph rather than 70 mph will save you about .71¢ a gallon. Pay attention to those bumper stickers that say, “Did you move here to be in a hurry.” Consolidate trips, park in one spot and walk more and you can save even more. Make sure your tires are properly inflated and change oil as recommended for your vehicle. Avoid ethanol whenever possible. Ethanol will reduce your gas mileage significantly.

How Many is Enough?

Eight might be enough for Octomom or Kate Gosselin but when it comes to credit cards, the more you have the worse things can get. Two is the maximum comfortable number of credit cards per family. Keeping at least 70% of your available credit in reserve should help keep your credit score in good shape. Credit cards are emergency money you are usually borrowing at a high interest rate. Always pay more than the minimum and also make sure you pay on time.

Some Final Thoughts

One easy thing I did when I retired our families’ debt was to list all expenditures for each day. I would slip a 3 x 5 card in my pocket and write down every expense no matter how small. At the end of the month it was easy to see how much money I was spending on impulse buys. Things I thought I wanted at the time but in hindsight really didn’t need.

In addition, writing things down make me evaluate the real value of each purchase. It’s a lot like writing down what you eat when losing weight. If you feel guilty about not writing it down then you are on your way to financial solvency. Money is a tool. Money can’t make your life better. It can’t buy good health or bring lost loved ones back. But it can make your life easier to manage. Good money management buys the most important thing in life — peace of mind.

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