How to Save Money and Pay Off My Credit Cards

Living beyond your means and incurring debt is stressful. But with a little savvy saving and a debt payment plan, you can still live well while also being financially responsible. Here are tips for saving money and paying off credit card debt.

Instructions

What is Your Financial State Now

1

Take a good look at your current financial situation. You can't get where you want to go without knowing where you are now. So pull out your bank statements and determine how much money you have coming in and how much is going out. Group your expenses into categories (it helps to use a financial program) such as food, utilities, loans, etc.

2

Tally up your debt. If you want to save money so you can pay off you're debt, you need to figure out how much debt you have. Also note the interest rate and monthly payments.

3

Run the numbers. Add up all the money that is coming in (income, child support, etc) and subtract the amount is going out. If you get a negative number, your financial situation is dire. Even if you get a positive number, if it's low and you don't have emergency savings, you can still be in financial trouble.

4

Create a budget and money system. It's one thing to know where you stand financially at this moment, but to keep moving toward your goal of saving money and paying off debt, you need to have a plan. Consider getting financial software that can help track your income and expenses, as well as calculate debt payment. Some banks offer this service as part of their online banking for free. Develop a spending system, such as not carrying cash that's too easily spent. Get a debit card so that you're paying with cash, not credit, on items you need.

Start Saving Money

5

Cut expenses you don't need. If you've taken a close look at your budget, you should be able to see some expenses that you can cut or reduce right away. Do you really need 800 cable channels or every feature under the sun on your phone? Fun activities such as manicures or going to the movies can be reduced by doing your own nails and renting videos (it's free if you borrow from the library).

6

Find great offers and use them on items you need. Use coupons and shop at grocery stores that have the item on sale and double or triple the coupon's value (use coupons only if it is an item you normally buy and it really saves you money). Use the Web to find great deals and rebate offers on things you need.

7

Save at home. Start by turning off lights and appliances when you're not using them. In fact, plug them in a power strip and turn off the strip when not in use. Items plugged in the wall still use energy even if they're off. Weatherize your home by making sure that doors and windows are weatherstripped and that you have good insulation.

8

Live large for less or free. Saving shouldn't mean you don't enjoy things in life. It just means you need to do it for less. Check your community events calendar for fun activities that are free or low cost in your area. Use the library for books and videos. Many even have Wii and other system games. Have exchanges with friends and family for needed items such as toys and clothes.

Tips to Pay Off Debt

9

Save for emergencies first. There is a debate among financial people on whether or not it's better to focus on paying off debt over saving money. Most do agree, though, that you should have a month's worth of savings for emergencies. If you can't save that much, try to save at least $1,000.

10

Use the money you're saving on living expenses to increase your payments to credit card companies. Paying the minimum amount on credit cards not only means years of payments, but also paying way too much interest. So use your extra money toward debt.

11

Pay the smallest debt first. This is another financial tactic that gets debated, but by paying the smallest debt first, you'll gain a sense of accomplishment that can help keep you motivated toward your goal. When it's paid, take the money you used for monthly payments and apply it to the next credit card.

12

Pay the card with the highest interest rate next. The interest charges are really what add up in credit card debt. If you can, try to negotiate a lower interest rate. If not, focus on paying the cards in order by those with the highest interest rates.

13

Apply the money from paid-off debt to other credit cards. Each time you pay off a card, use the money that went to that card to add to the payment of the next card.