As everyone is very much aware, we are in an economic slump. Actually, it’s more of an economic downfall right now and we all need to think about how we can live within our means. What does this mean? Simply put, it means we only buy the things we need and if you can’t pay cash for it, you don’t get it.

How can this be done when so many of us are used to buying things impulsively when we want them or going out to eat a few times a week? Think about this – how many times do you buy a candy bar or a soda from a convenience store? How often do you make impulse purchases at the checkout of a grocery store line? Do you run through a drive-thru for lunch several days a week?

These are all things, at the time, only cost a few dollars but a dollar here, a dollar there adds up quickly to being $20, $30 and even $50 a week on things you don’t need at all. These little purchases can quickly balloon out of control.

We also overspend without thinking when it comes to recreation and entertainment; things like renting a video game or going to the movies a lot. We get in the habit of spending money this way, without thinking and it becomes habit over time. Most of these expenses are things we don’t need and we can save a great deal of money by eliminating them. Let’s look at an example:

Jon makes $1000 a week at his job and his bills total $700 a week. He also has to put gas in his car, buy food for his family and feed his dogs. After the bills and his other expenses, he is left with about $50 a week. If Jon’s only thought was, “Hey, that’s dinner out for the family each week,” he would be considered to be living above his means.

If you are on a tight budget, you’ll have to sacrifice some things you used to spend money on regularly. Instead of paying $50 or more at the movies, rent one and watch it at home. Instead of going out to dinner, cook at home and save a lot of money.

If you can’t pay cash for something you want without sacrificing paying a bill or buying food, then don’t buy it. If there is something you really want, you’ll have to save up the money over time until you are able to make the purchase. If you only make $500 a week and you have bills to pay, you can’t afford a $200 a week car payment; you just might have to buy a cheaper car. It may not be what you want, but it is in your means to pay for it and it works. Living within your means involves sacrificing many wants in order to pay for the needs.

We all have limits to what we can afford to spend and despite that, many of us spend money on things we do not need or really can’t afford. If we identify the areas where we overspend, we can start living within our means and in the process become debt free.

Credit cards allow people who have good credit the ability to make purchases and pay them off later. They are also a perfect way to have some emergency funds when you don’t have any cash. However, many people are given credit cards who aren’t able to handle them responsibly or whose financial situations change dramatically so they can no longer afford this type of purchasing. This has helped create the current nationwide economic crises, as people can’t pay off the debts they have incurred.

Credit cards lure us in with their promise of new and shiny things you want to get and the means to go the places we want to go. The mindset of “I’ll charge it now and pay for it later” is so ingrained into our minds from advertising and society we sometimes don’t even realize it’s there. No doubt, personal accountability is important but, when we are programmed to consume all the time, it’s easy to misunderstand how easily credit cards can get out of control until we are left with far more debt than we can handle.

If you end up with a lot of credit card debt, how do you now go about paying it off? The premise of credit cards is rather simple – you make a purchase and pay it off over time. Interest is added to the balance of your card each month at a predetermined rate, ever increasing the amount you owe. Most credit cards offer a minimum payment you can make to keep the card current, but that balance does not usually cover any more than the interest you owe and doesn’t eliminate the account principal. Many times, the minimum payment doesn’t even fully cover the interest.

Therefore, making only the minimum payment can still lead to your balance going up and up, even if you aren’t using the card at all. One simple way to prevent this is by paying double the minimum balance. Let’s say your interest for the month is $30 and your minimum payment is $20, if you make the minimum you aren’t covering the interest and you balance goes up the next month. If you pay $30, all you are covering is the interest and the principal stays the same, essentially meaning you just threw $30 out the window. By making double the minimum payment, or paying $40, you pay the interest and make at least a small dent in the principal balance owed.

Another option, especially for those seriously in debt is a debt consolidation service. These services are designed to help people overcome heavy debt problems. Debt consolidation services, work with your creditors, to lower or get rid of your interest payments all together, so every penny you send in goes to reducing your principal.

Other options involve calling your creditor yourself to work out a plan to get your past due account brought current. Especially in the current economic situation, creditors will do what they can to help you get back on track with your payments and, if possible, restructure your account in a variety of ways making it easier for them to get their money.

As long as you take the initiative in restoring your debt to a manageable level, there are plenty of options out there. These options are all designed to do two things: get you out of the debt you incurred faster and get the creditors the money they are owed. This way, everyone wins.