Step Three: Plan a Budget (and Don’t Blow It)
The point of all of this is to make sure you're netting enough extra money to pay off at least part of one bill each month. To do that you need to make a budget. Kofke says the easiest way to really keep yourself from spending more than your budgeted amount each week is to switch to using only cash. At the beginning of each week withdraw only what you've allotted for groceries and other incidentals. When you blow through it, resist the urge to whip out the plastic: "It's been shown that we spend 12–18 percent more when we use plastic versus cash because it doesn't have that same emotional connection for us," says Kofke. In fact, one study found that students were willing to pay twice as much for an item of unknown market value when they paid with a credit card versus with cash.