The Second Step to Financial Fitness

As I mentioned in an earlier post, a friend recently asked me for advice on getting herself on the right financial path. Obviously, I'm no expert, but I gave her a few simple steps to get her on the right track. I told her the first step was to figure out what she owed.

She came back to me, having written down the details of her debts, and she was understandably overwhelmed. She assured me she was making minimum payments, but now that she knew how much money she owed, she felt the throw all the money she could at her debts. I told her that was a good desire, but there were a few other things she should do first.

I asked her if she was tracking her expenses. She admitted that she really wasn't. She knew that she was saving enough money that she could afford to make her minimum payments, but that was about it. I told her the next step, in my opinion, was to figure out what she was spending every month and where she could cut back. While that $10 lunch didn't seem too expensive, grabbing lunch just once a week meant spending $40! Even cutting back to going out to lunch just every other week would save her $20.

I promised her I wasn't going to insist she cancel her cell phone or never ever go out to eat. In fact, I wasn't planning to tell her anything. I had a feeling that once she totaled up how much money she spent in various categories, she would want to make some changes on her own.