![]() Look at each expense you have and ask yourself what you can do to trim it (or if you even need it in the first place). Shopping around for a cheaper insurance plan.Meal planning to make the most of your groceries.Canceling subscriptions you don’t need or rarely use, like a gym membership or cable TV.Lowering your utility bills by doing things like sealing up drafty windows and turning off lights in rooms you’re not using.You can free up more money by, among other things: One way to free up extra money is by reducing how much you spend each month.įrom little tweaks to big changes, chances are there’s more room for adjustment in your budget than you might think. The more money you can throw at your debt, the quicker you’ll eliminate it. If you already have a budget, the next two steps will help you figure out how to tweak it so it serves you better. Choose whichever format is easiest for you. You can create a budget using a spreadsheet, with software or apps like Mint or You Need a Budget, or using the envelope system, where you put all your cash for the month in category-specific envelopes. Track and review these numbers each month and tweak them as needed using Steps 4 and 5 below.Adjust your monthly expenses to ensure you stay in the black each month (or, ideally, have money to spare).Subtract expenses from income to see how much money you have left over.List all your monthly expenses (bills, discretionary spending, debt payments, etc.).List all your monthly income from all sources.If you don’t have one, it’s time to create a budget. You’ll never be in control of your finances if you don’t know how much is coming in and going out each month. ![]() Step 3: Create a BudgetĪ budget is a fundamental part of money management. It’s the only way you’ll be able to set things right and prevent yourself from going into debt again. ![]() Take a long, hard look at your finances so you know exactly what you’re working with. Once you’ve stopped the bleeding, the next step is identifying what got you into trouble.ĭid you have a temporary setback like a job loss or emergency expense? You’ll need to trim your spending or earn extra money to get yourself back on track (or both).Īre you spending more than you bring in each month? You’ll need to figure out how to stop. Adding to your debt while trying to pay it off is like bailing out a sinking canoe without plugging the hole that made it take on water in the first place. It will be tough sometimes, but finding creative ways to buy things for less (or do without altogether) will save Future You money. If you have no choice but to charge something - say, your car breaks down and you don’t have the money for the repairs - charge it to your lowest-interest card and continue to do everything you can to pay off the balance. You can’t buy anything else till next month. If you’re worried you’ll still be tempted to use them, cut them up or freeze them (by freezing your credit or literally putting your card on ice).Ĭonsider setting aside a certain amount of cash for all your monthly purchases. Lock them in a drawer so they’re harder to access. When you’re in a hole, the first thing to do is stop digging.ĭon’t keep your cards in your wallet. If you’re struggling with high credit card balances, getting out of debt should be your No. I won’t pretend it was easy, but with determination, advice from experts, and a healthy dose of belt-tightening, I finally became debt-free. Part of me wanted to defect to Canada, assume a new identity, and hope my debt never found me. The prospect of paying everything down was increasingly overwhelming and intimidating. The higher the balances got, the less in control I felt. Just remembering this period makes my chest tighten. I did everything I could to make ends meet, but all too often, I had to fall back on my cards. My husband’s chronic illness flared up, and suddenly we were facing mounting medical bills at the same time he had to stop working. There was a point when I found myself in way more credit card debt than I’d like to admit as a personal finance expert.
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