1. Do you have a budget set up?
Creating a monthly budget and sticking to it is a great way to track your spending. Keeping a monthly tally of your expenditures will outline where you spend and where you can trim your spending.
Track your spending including all monthly expenses such as mortgage, electrical bill, insurance, and other incidentals such as morning coffee and other special treats. Keeping systematic record of expenses and budgeting your income, will prevent overspending and collapse into debt.
2. Do you use credit cards because you have no cash?
Having a credit card for emergency purposes and major necessities is a great way to get out of a bind but for daily regular expenses try using cash. Using cash prevents over spending and cuts down on discretionary spending such as dining out, entertainment or other unnecessary expenses.
Using a credit card can cause card balances to be ‘run up’ unnecessarily. Their convenience is proportional to the card holders overspending. Avoid over spending, cut up the cards and pay with cash.
3. Do you pay off the card with the highest rate first?
Reduce your monthly payments by paying off the card with the greatest interest rate. Once it is paid off, close it out and cut up the card. Continue to do this with the card with the next highest monthly interest until you have only one card with a favorable rate.
Also, pay down cards to 50 percent of the card limit. Balances higher than 50 percent of the limit will reduce your credit score.
4. Are you considering taking on a second job?
Part time work for short term gain may provide some respite to your debt woes. Taking on a second job to pay off outstanding bills will provide a sense of control and will increase your income.
Getting out of debt and staying out of debt is as simple as spending less than you make. Spending less can be done with discipline and control. Create a budget and stick to it and you will be on track to stay out of debt.