How To Avoid Debt And Save On Credit Card Expenses

Avoid Debt By Saving Money

If you are living paycheck to paycheck, you may find it impossible to sit down and come up with a family budget because you are carrying too much debt. Debt can be the result of poor financial planning, but it can also be because you simply don’t earn enough money to make it in today’s economy. However, no matter what the reason for your debt and out of control credit card expenses, there is a sensible and easy way to get back on track and on the road to financial freedom.

Getting to a Place of Financial Freedom

           The first thing to do is to sit down and calculate your monthly fixed expenses. This would be your rent/mortgage, utilities, insurance, transportation, and monthly payments to your creditors.  Anything else, including food, is something that can be worked out as you go. If these minimum expenses meet or exceed your income, you will have to do something else before you can get yourself out of debt with a budget. This may include getting a second job, finding a cheaper place to live, or taking the bus to work.

           Once you have your expenses covered and have some disposable income, you can start working on getting out of debt. The first thing you will have to do is stop charging on your credit cards if you have them. You will never get out of debt as long as you carry balances on your cards. A good strategy is to take the smallest balance and pay it off first. This means that you will have one less payment per month, which can be put into savings or used for the other cards.

           In the future, if you have something that you would really like to buy but can’t afford, find a store where you can lay it away. Many large department stores will let you make payments on an item for a small fee as long as you pay it off within a certain period. This way, you can still treat yourself to the things that you want and not incur more debt.

           Another thing that you have to really be aware of is the interest you are paying on your credit cards. A credit card with a high interest rate may mean that only a small part of your payment is going to the principle, with most of it going to the interest. Look at your bill to see how much you are actually paying per month. It may be wiser to borrow money from somewhere else and pay back the credit card in one lump sum than it would be to pay high interest with no hope of ever paying of the credit card.

           Once you have a plan to get out of debt and stop spending on your credit cards, the next step is to use budget planning software. This is computer software that will help you with cash flow, so that you can pay all of your bills and save money at the same time. 

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