Planning for the future may get you into debt. The same kind of planning can help you get out of debt. Optimism often drives debt, but the future may not always be optimistic. Plan for and anticipate change. Interest rates go up and down and businesses open and close. Individuals with debt sustain the most damage. You can get debt under control with planning and action.
Review and Analyze
Make a list of all of your essential expenses by reviewing your past payments, including quarterly and yearly payments. List credit card debt separately with interest rate and payoff amount so you can work with it individually. Tally your income from all sources so you know what you have available. Put yourself on an austerity budget, with a notebook to record all expenditures every day. Assign yourself a weekly cash amount and do not go to the bank or ATM if you run out of cash. Wait until the same day the next week to get new funds.
Identify where the leaks are in your spending. Eliminate discretionary spending until your debt is under control. This includes clothing, entertainment, eating out and any nonessential spending. Take your lunch to work or buy lunch at the grocery store, not the nearest eatery.
Spend Wisely
Pay the bills that are secured debt such as your house and car payments. Pay utilities on time to avoid additional charges. Develop a plan for paying your credit card and other unsecured debt. Contact your credit card companies and ask for interest rate reductions. Choose the credit card with the highest interest rate and target it for payment. Pay the minimum amount on all other credit cards and the maximum you can afford on the targeted card. Once you have the highest interest card paid, use the money you were using on the card that is paid off plus the minimum on the card with the next highest interest rate until it is paid. Use money you have been spending on entertainment and incidentals to pay down your credit card debt.
Make More Money
If your debt exceeds your income, find a way to make extra money. Work overtime or take a second job. It is less stressful to work another job than to worry about debt. Do what you need to do temporarily to resolve your debt issue, but do not spend money to make money. This is not the time to launch a new business or buy into a business. You need to make extra money using your work skills, not your purse.
Stay Away From Temptation
If you cannot resist making purchases, shop infrequently. Limit grocery shopping to once a month. Think twice before visiting big box stores. Learn to use green products for your home cleaning and laundry to save money. Consider a purchase at least overnight to avoid impulse buying. Leave credit cards at home. Take a snack and a cold drink with you if you are going out. Stop the leaks in your wallet to control your debt.
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