How to Set a Budget and Pay Down Your Credit Card Debt

Saving money is extremely important in the current economy. Money is not coming around like it used to and many of us can find ourselves in debt – even if it is not entirely our fault. Bills must be paid regardless of prices going up and our salaries staying the same. Payments must be made even if you or your spouse loses your job. So you can see how imperative to your financial stability it is to create and set some sort of budget to be able to not only pay down any debt you have, but to be able to save money as well. Here are a few tips we have compiled for setting a budget and getting rid of credit card debt.

Cut Out All Unnecessary Expenses

This may be the most obvious tip we can give you – but it is still the most important one. Learn the difference between what you need to purchase and what you want to purchase. If you can live without an item (such as coffee in the morning, however hard it may be) – put it off and wait till you have extra money to spend before buying it. If you want a new dishwasher but do not actually need it (it is possible to wash dishes with just your hands), save the money and take the extra time to do the chore yourself. Necessities, when excluding bills such as heating and gas, do not actually cost that much and you should not have to spend too much extra money. Things like toilet paper, food, a reasonable amount of clothes and perhaps a cell-phone (for job purposes) do not add up to where you should be getting in debt because of them. Debt usually occurs from purchasing things that we want, not need. Extra clothes or fancy products for your house are a luxury and should not be seen as a necessity.

Motivate Yourself by Eliminating Bills

One way to keep yourself on track and getting rid of debt is to focus on one specific bill at a time. Aim for the smallest and pay that one off first. Seeing a bill disappear is very motivational and once you see that one origin of debt is gone, your mind may feel lighter and you may find the motivation you need to move on to the next higher up bill.

Take the Shock Approach

If you aren’t quite feeling that motivation to pay off your debt yet – try a free debt calculation device online. It will be able to tell you exactly how long it will take you to pay off your debt with your current approach and how much money you may be losing by earning interest on debt or by only paying the minimum amounts. The real facts and data may be enough to finally motivate you to stray from the consecutive Starbucks runs.

Order Your Debt and Organize

There are two common yet different ways to order your debt. The first approach is to always pick out which debt origin has the highest interest rate. This is usually the debt that you want to pay off first (if possible) since you will end up paying more than you owe due to interest. The second approach is to choose which debt has the smallest amount owed so that you can get that one out of the way and clear up some of your bills. It isn’t hard to get out of debt and pay down your credit card bills as long as you set a budget for yourself and stay not only organized but motivated as well.

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