Getting on a Budget and Reducing Credit Card Debt
Credit card debt can sneak up and engulf you if you are not careful. You may have a card you use frequently, but only pay the minimum on each month, so that the card's balance has accrued interest. Tackle your credit card debt by examining your finances and getting on a budget. You may need to make drastic changes to your spending habits in order to make the debt go away.
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Instructions
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Stop using your credit cards. If you don't have the cash on hand to buy something you don't need, such as a new pair of shoes or a DVD, don't buy it. You can't get out of debt if you are continually adding to it.
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Add up all your credit card debts. You may wish to make a chart that lists the amount owed on each card, the interest rate on the card and the minimum monthly payment.
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Total your monthly, necessary expenses, such as your rent or mortgage, car payment, groceries and utilities. Also list any other expenses, such as entertainment costs and clothing.
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Figure out your total monthly income. Ideally, you should earn more than your expenses.
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Subtract your expenses from your income. If you make more than you spend, set the extra money aside to pay off your credit card debt. If you spend more than you earn, or if the amount of money left over is less than your minimum credit card payments, you will have to change your spending habits.
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Cut out all unnecessary spending. If you find yourself with $100 extra, don't spend it on a night at the movies or a new outfit. Use it to pay off a bit more of your debt. Sticking to a bare-bones budget may not be fun or easy, but you will reap the benefit in the end when you've paid off your debt.
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Tips & Warnings
Once you've paid off your credit card debt, put the money that was going to the debt in a savings account each month.
References
- Photo Credit money and credit cards image by Gary from Fotolia.com
