Debt management budgeting can save you money that you can use to speed up your debt payments. If you see that you have more debt than what is comfortable, think ahead and plan out how you will repay it or at least reduce your debt. Devise a way to pay more than what is required of you so that you will have a reduced payment schedule.
How much do you usually pay your monthly bills? Did you know that how you pay your debts can affect how soon you will finish paying them off — even if you keep paying the same amount every month? Of course, you might be able to get a consolidation loan, but if you’re not eligible or are not interested in using a loan then there are several other things that you can do.
Step By Step Debt Management Budgeting
The following is a course of actions you want to take to eliminate your debts:
- Create a list. List your smallest debts first followed by your largest high-interest debts and then your largest low-interest debts. Plan to pay the minimums on all debts.
- Pay small bills first. They may not be the highest interest, but every bill that you are paying some interest on means you are usually only paying minimal amounts on the principal. Multiple debts are also a sure way to bring your spirits down. Paying off small debts first is a quick way to start checking them off – and freeing your mind.
- Move the payments along. When one debt is paid add the funds to the next debt. For example, say you’re making $50 payments to a small debt. When the debt is cleared add the $50 to the next debt on your list. If the next debt had a minimum payment of $75, you will now pay $125 until it is paid off. When that one is finished, take the $125 and add it to the next payment and so on.
- Save the cash! Don’t forget that when your debts are cleared you have set yourself up for a better financial future. The best way to take advantage of your new situation is to use all the money you were spending on debts and start investing or saving it every month.
If you use this strategy your debts will clear faster and you will see progress as you clear small debts first. In addition to the benefit, you will not be tempted to use the funds for personal use other than for debt repayments.
Debt Reduction Follow Up
When you start investing or saving the money you’ll on your way to get out of debt. Seeing that goal comes sooner and teaching yourself money management discipline sets you up for a brighter financial future.
So before your debt gets out of hand, take charge and get back to basics. Put these debt management budgeting solutions into practice and make the most out of what you have to develop new spending habits.