Starting a debt management budgeting strategy to control your debt level is important if you have received phone calls or letters about delinquent bill payments.
Here are 5 easy steps that you can take:
1. Cut All Your Credit Cards
This is the fastest way to stop charging credit cards because you can no longer use them. Leave a credit card if you think that you still need one for emergency situations such as paying for school tuition fee or electric bills. Cutting all cards or keeping for emergency purposes can help you avoid the temptation of spending money that you don’t own.
2. Cut Down Expenses
Write down in your budget every debt you have. Number them according to importance and then learn all possibilities that you can do to save some money to pay off debt. Could you cut down expenses on utility bills, transportation or other expenses? If so, find out how much would it raise to add up to pay off your highest priority debt.
3. Save to Pay Off Your Debts
Effective debt management budgeting includes finding ways to save. Although you want to settle your debt, don’t allocate all money that you have to pay off a debt. Set aside a percentage of your income just to settle debts and another percentage for emergency purposes. So you can still pay off debts and you’re not penniless when rainy days come.
4. Find Ideas To Save More Money
It’s time to compare the income and the expenses. Are your expenses larger than your income? If so, you are going to have to look at cutting corners. The easiest way to do so is on expenses that requires our discretion such as grocery bills or the entertainment expenses. Using the grocery store coupons and watching movies on video are examples of reducing discretionary expenses. Here the extra money you save could be used towards something that you really need, or want.
5. Restructure Your Debts
Approach your creditors and negotiate to restructure your debts. Calculate how much you can afford to pay each month and find out how your creditors can help you manage your debts. Talk to your credit card companies to lower interest charges. You may also contact your mortgage lender to restructure your debt and stretch your monthly payment to suit your budget — allowing you to save on interest charges due to late payments or avoid repossession of your home.
In no time, you can reduce your debt in 5 easy steps using the above-mentioned debt management budgeting strategy.
Get more comprehensive tips for managing debt so you can live in a less stressful, debt free life.