Debt Problems? Learn the Art of Frugality

Life is all about balance, especially when it comes to finances. Overspend your hard-earned dollars, and you could wind up in need of a debt consolidation loan. On the other hand, while being frugal will keep you out of the red, you need to be careful not to become a miser in the process.

It seems that whenever December roles around, Ebenezer Scrooge catches a lot of flack for his miserly ways. This tightwad character, from Charles Dickens' play A Christmas Carol, becomes so obsessed with money, that he can't enjoy his life. Eventually, he learns that the only way to avoid an early grave is to loosen his purse strings.

The point of Dickens' play is well taken, but in today's world of credit cards and debt consolidation loans, more Scrooge-like behavior may actually be warranted. Being frugal cuts against the grain of our national psyche. We are, after all, constantly being urged to head to the shopping malls and spend our tax rebate checks. It's possible, however, to be frugal without being a miser.

Avoid the impulse

In our society, consumers need to understand that they can't have everything. That's not an easy concept to swallow, especially when people find their mailboxes crammed with offers for new credit cards. If you over-extend yourself and run up your credit card balances, however, you'll soon be in need of a debt consolidation loan. The first step to being frugal is to avoid the latest impulse to spend.

Build a budget and stick with it

Being frugal requires following through on your pledge on a daily basis. Creating a budget is a great first step. To build one, analyze your personal expenses and your income. If you use money management software, you can generally print reports of your expenses and income over the last six months. From those numbers, you should be able to project your future expenses. Allocate the money you foresee in the future, being careful to give yourself plenty of wiggle room. There's no sense in creating a budget if you can't stick to it.

Walk the frugal walk

Once you commit to a life of frugality and create a budget, you need to be disciplined and stick to the plan. But if you take Draconian measures, your life of frugality will soon fall by the wayside. Instead, allow yourself little rewards along the way. Budget for some splurges; after all, everyone needs to have some fun from time to time.

At the conclusion of A Christmas Carol, Scrooge repents his miserly ways and goes on a spending spree, showering friends and relatives with gifts. Today, the opposite reaction might be more appropriate for debt-straddled consumers. Say "Bah Humbug!" the next time you see a cool new cell phone or a big screen TV. Frugality may not be fun, but it will pay dividends over the long run.