Okay, this will seem a little long winded, but it is my basic recipe that brought us to the ability to start paying down bills.

1. You have to be in control of your finances, by this I mean you really need to know where every cent of your monthly income is going out. Some people use envelopes of cash to budget, etc. I found just a simple spreadsheet works as long as you are truthful to yourself. You can’t track your money if you aren’t honest to yourself. If you don’t have excel and want a free option, download openoffice, it is a great free equivilant to MS Office. Now, you need to show all of your incoming and outgoing monies, get everything in there. Now you can see where your hard earned cash is going. On another sheet, put down a list of all of your debts, including balances, rates and monthly payments. You need to know where you are in order to understand your goals.

2. Start pecking at your spreadsheet, where do you have money going that could be saved? Do you have cable or satellite? Could you get by with just an antenna and save 50 bux a month? Do you spend 20 bux a week on dvd rentals? Whatever the case is, almost everyone has some fat they can trim. Even trimming 50 dollars a month at this point will set things in motion.

3. Using a technique called debt snowballing, put that extra 50 dollars a month on your smallest debt balance ( I know some people say the highest APR first, but there is something to be said about the feeling of accomplishment from making headway). Keep doing this every month until the balance is paid off. For example, if you pay 20 a month to a 1000 dollar credit balance, put that 20 plus your 50 a month to it and in no time it will be gone. Then put that 70 a month extra towards the next debt and so on and so on. In the meantime, find every penny possible and put it towards your debt. If you are like me, you are spending thousands of dollars a year in interest.

4. Find motivation. The internet is a great free source of motivation, other blogs, links and tips can really help your mindset. Books are another great source of motivation as well as entertainment, I hate sitting still, but even a good book I can get into if it motivates me. And don’t spend a penny on a book, I bet every city has a library, go borrow one for a few weeks. If you want a new title or a certain book, here is a tip… it’s called inter-library-loan, all libraries have it, they can get you any book from anywhere, for FREE!

5. Live frugally. By this I mean, find every way possible to save money. Step 1 had you looking at your finances. What are you spending money on? Hit the internet, again its free and you can learn a TON.

6. Remember what is important. It is more important to spend a couple years living without so that you can spend your whole life having what you want. You can’t put a price on financial peace of mind. Figure out what motivates you and find a way to keep yourself going. It is hard work, no doubt about it.

I will post some methods that I used and/or learned about in my quest for financial freedom soon, check back for some great ways to save money.