People frequently tell me they'd love to pay down debt using the snowball effect or the round robin strategy, but they just don't have the extra funds needed to pay off their cards. If you're having trouble finding the extra cash to pay down credit cards, it's time to do some soul searching and put yourself on a cash diet.

The best way to find your extra funds is to keep a journal of every penny you spend for a month. And, yes, I literally mean every penny. Carry a small notebook with you and write down even that cup of coffee you buy in the morning on your way to work. Don't grumble. Yes this is a tedious process, but if you take the time to do it for a month, what you will learn about your spending will be eye opening.

At the end of the month, it's time to analyze your spending. As you look through your spending journal, put a numeral one next to all the must pays. This would include your mortgage or rent, your utilities, your food and any other bills that must be paid. Put a numeral five next to all items that you didn't need and you could easily do without. Put a numeral two next to items you believe you need but are not an absolute necessity. Put a four next to items you didn't need and could probably do without. Put a three next to items that you don't feel strongly about and don't need, but do want.

Now remember a need is a necessity. Something you must have to live. A want is a desire. Something that you'd like to have but could live without. If you're serious about wanting to pay off debt, you're going to have to put your other wants on the back burner for a while.

Total all of your 1's, 2's, 3's, 4's and 5's. Then, to find the biggest lump you can to pay down debt, total your 4's and 5's and stop spending on those things. You can then use the cash to pay down debt. If you really want to pay down debt quickly cut out your 3's as well. Here's a sample of what an analysis might look like:

Total of 1's: $1800

Total of 2's: $ 500

Total of 3's: $ 300

Total of 4's: $200

Total of 5's: $100

This person could quickly find $300 to use toward debt pay-down just by cutting out his 4's and 5's. That could give his snowball a nice push down the debt payoff hill.

If you find after a while you just don't have that extra cash for paying off bills, do yourself a favor and keep a journal for a month. You'll probably find a bunch more 4's and 5's that can be cut.

Lita Epstein has written more than 20 books including the "Complete Idiot's Guide to Improving Your Credit Score."


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