Keeping to a monthly budget is a wise move that could enable you to become debt-free in a relatively short time. Following a stringent personal money management plan can help you to take control of your finances, become more financially aware and have constant available cash.
Draw up Budgets Detailing your Monthly Expenditure
Take one month to review your spending habits,drawing up spreadsheets detailing all outgoing expenditure, whether essential or personal spending. You should be able to spot trends in your spending habits by analyzing just where your money is going. Do you max out on clothes and personal knick knacks every time you get paid? Do you spend a lot on dining out? Is your luxury foible a case of taking taxis after a night out instead of waiting for any available public transport? Do you spend too much on luxury foodstuffs or DVDs or even magazines?
Take a long and hard look at your personal monthly expenditures because if you want to clear your credit card debt, you will need to utilize this money. Cut up most of your credit cards and store cards; if you no longer have them then you cannot use them again. In themselves, credit cards are not a bad thing, they can allow you almost two months of interest-free lending, however if you have abused your cards and your debt has spiraled you must make a break.
Start your Personal Money Management Plan & Clear Credit Card Debts
Make a resolution to spend no more hard cash on frivolous items or inessentials and use this excess money to clear your debt instead. Ideally, you should start paying your excess income off one of the cards that you owe the most on and with the highest APR, however the decision is yours. You may feel that paying off the card with the highest balance will take too long, so why not start off with one of your cards that has a balance you know you can clear in three months?
Make the minimum monthly payment to all your other cards and start a further spreadsheet detailing the credit card or store card you intend to pay off first. As soon as you have been paid make the highest payment you can afford off this card. Once you start to see your debt dwindling, your resolve will increase dramatically. As soon as you have paid off the first card, start chipping away at the debt on another.
As part of your personal money management plan, you may prefer to transfer your highest debts to interest-free cards for a year or consolidate them into a low interest-bearing loan. Research all available options, before coming to any decision but bear in mind that this is still part of your long-term strategy to clear your debts and not a final solution.