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“A budget tells us what we can’t afford, but it doesn’t keep us from buying it”
Are you drowning in debt and don’t have any idea on how to get credit card debt relief? Well, you’re not the only one who wants to get an effective solution to your problems.
I can speak about at least 4 credit card debt solutions for hours and these are – credit card debt settlement, credit card debt consolidation, credit card debt management and bankruptcy. These solutions will help you get credit card debt relief within a few months. But, these solutions will work best when you use some brilliant budgeting tips every day to pave the path to financial freedom.
Budgeting tips to eradicate credit card debt
Budgeting is a must when you’re drowned in credit card debt. It helps you to have an idea about your financial health. It shows you the areas where you can cut costs. Remember, if you don’t change your spending habits, then beware! You would be in a bigger financial trouble. Here are the 3 budgeting tips you can follow to pay down credit card debts in 2016.
1. Calculate how much you owe and track your expenses
Use a credit card debt payoff calculator to find out how much you have to pay every month and for how long to attain financial freedom. Once you get the figure, your next task would be to track your monthly income and expenses. This would take some time. Calculate your total monthly income and the maximum amount you have to pay on bills such as electric, telephone, rent, etc. Now, subtract your expenses from your income to get the amount you can pay on your credit card debts.
If your expenses are more than your income, then you’re in trouble. It would be tough for you to pay off your credit card debt soon.
2. Cut down your expenses to pay off credit card faster
Only money can help to solve your current problem. So, you need to cut down your expenses so as to have more money on your hand. I’m not telling you to stop eating and save money. But, at least, you can reduce your expenses on entertainment, traveling, clothes, accessories, etc. Create a list of your expenses on your personal computer. Find out the ones on which you can trim your expenditures. Calculate how much you would save every month by eliminating these expenses. You can use the money for paying off credit card debt faster.
3. Use your savings to make extra payments
The more you save, the faster you would get out of credit card debt. Use your savings to make minimum payments on all your credit cards. But make sure you pay a little extra on the credit card with the smallest balance. Keep on doing this every month till this credit card with the smallest balance is paid off completely. After that, focus on the next smallest debt. Make extra payments on this card till it is paid off. Save ruthlessly so that you can pay off all your credit cards one by one in 2016.
If you have opted for credit card debt settlement, then use your savings to settle your credit cards as soon as possible. Deposit your savings in the trust account opened by the debt settlement company. Your aim would be to save enough money in the trust account so that the settlement company can start the negotiation process as soon as possible.
Conclusion
You have to pay off your debt. This is your ultimate goal in 2016. But at the same time build your emergency fund. This would help you meet unexpected expenditures in the future. You won’t get into fresh credit card debts in the future. You would not rely on credit cards to pay for the emergency expenses such as hospital bills and holiday gifts that may pop up anytime. You can use the emergency fund to have wonderful vacations with your family.
Just make sure you save minimum 10 percent of your income every month. I know it’s little hard to do when you’re in debt. But, give your best shot. Best of luck guys!
Originally published March 30, 2016
