We all want to be debt free, don’t we? Even so, we tend to use our credit cards more than ever, and many of us struggle to pay it all back. Maybe you’ve used one credit card to pay off another. This way won’t help you become debt free.
The only way to get debt free, is to start spending less and start paying more than the minimum amount due each month. I’ve made a list of things you can try, to get your finances under control.
Open all your bills – when they appear – either in your inbox or your good old mailbox.
Make up a budget of all your income, and all your expenses except your credit card debt and other debts with high interest. With the latest statements from your bank, you will have the correct numbers to put in the budget.
Also make a separate list of all your high interest debt as of today.
Go over your bank statements for the last 3 months, to make an average of what you spend on eating out, household supplies, clothes and other stuff that you pay every month.
Free Budget Planner Template
Take the leap and start your journey to financial freedom with this Free Budget Planner Template.
Just by looking at the budget, I bet you already see items that you can get rid of totally, or cut down on.
Strip the budget for things you do not really need. You do not need to buy all the clothes, shoes, candy, soda water, junk food or fast food that you do. You need to do some serious changes, you must show your lenders that you are all in on becoming debt free.
Now summarize all these numbers, and you will have the amount that you are able to pay on your high interest loans per month.
If you now take out the list of all your debt, is there someone you haven’t paid back?
You will now have to call every company and let them know the situation. Tell them you set up a budget, explain how high your expenses are, how much high interest loans you have, what the monthly charges are, and finally, that you are not able to meet all these payments.
Ask them for a reduction in your monthly charge, and at the same time, tell them to block your card for further use. This is essential, otherwise you will have the opportunity to use the card again and all your effort will go down the drain.
Most companies are willing to reduce the payments, as long as you show your willingness to pay your debt in full, and in time – every month. After you have gone through your whole list of lenders, you need to add new payments into your budget.
By doing all this, you will have a clear view of what you have left each month to spend on stuff you do not really need, but want. And, I am sorry to say it – it will be difficult for a while, but worth it in the end.
But remember, it is temporary, you will be debt free much
sooner, than if you did not do all the work above.
You can also ask your bank if it will be possible to refinancing your
mortgage, to get rid of some of your high interest loans immediately.
But before you can even begin to think about paying off those credit cards, there’s one major thing you must do, in order to never use them again, and interrupt with your budget.
Close them. Call the bank and have them closed, so that you can never use them again. Many swear to the method of paying off the credit card which has the lowest used amount. And then when it’s paid off, you put the monthly payment from that, onto the credit card at that time with the lowest used amount.
Another way is to start paying extra on all of the credit cards, this will make you debt free too, but it will take a while, since the interest is high on all of them, and takes a huge bite of the payments you’re making.
Some people start by paying off the credit card with the highest amount owed, the other way around from the first way I told you about.
The aim is to become debt free, but wouldn’t it be great to save money at the same time? That’s why you need to pay close attention to the interest and fees.
To become debt free fast and save the most money, you’ll need to start paying off the credit card with the highest interest and fees first. And continue to pay the minimum amount on the other cards.
When that’s paid off, you need to continue with the next card, with the
highest interests and fees. And if the amount owed is high, the interest conquer the fees. If the monthly fees are high on a low amount owed, the fees conquer the interest.
This way you’ll pay off your debt much faster than just paying a little amount on each card every month, and you’ll save on interest, so that the loans will not cost you as much in the end, when you see what you’ve really paid back.
I know you can do this, I’ve done it myself, and it is such a relief when the debt is cleared once and for all!
Free Budget Planner Template
Take the leap and start your journey to financial freedom with this Free Budget Planner Template.
