If you’re in debt, chances are that you’re also pretty stressed by it. Financial stress can have a negative effect not just on your health but also your family life. It can seem hopeless, but with a bit of patience and persistence, you can improve the situation and perhaps even become debt-free. It’s also worth it to get the help of a debt counsellor because they can show you exactly what you need to do. Here are some tips to start you off.
1. Create A Budget
This is a good idea and a good starting point. Look at your bills and expenses and write these down. Come up with some categories for each of your expenses. Set a limit and try not to go above it. List your income. If your budget is greater than your income, then it’s time to sacrifice some items.
2. Minimum Monthly Payments
If you can, always pay your bills on time and try to make your minimum monthly payments on your credit card. That way, you won’t incur any penalties for late payments, which will end up costing you more than what you should be paying.
3. No More Than 2 Cards
Try not to have more than two credit cards. You’ll need one card for sure, you could perhaps have one more, but that should be it. This will make it easier to be in control of your finances. Whatever you do, don’t fall for any gimmicks and offers that arrive in the mail or some other form of solicitation to get another card, no matter how tempting. Arguably, you could, if you only have one card, but if you have two, leave it at that. Forget about free gifts and store credit cards. A free gift is nice, but store credit cards have a higher interest rate.
4. Ask 3 Questions Before Using A Card
Before you pull out your credit card to buy something on credit, ask yourself 3 important questions:
- Do I really need this?
- Can I do without it?
- If I had to pay cash now, would I buy it?
5. Balance Transfers
Assuming you have only one card, you could get another and transfer the balance from one card to the other. This gives you a great way to save and pay off your debt. Usually with an introductory offer, you get 0% interest for six months (or something similar). A word of warning though; this is not for everyone. If you know you can make minimum payments and pay off your debt within the offer period, then consider it. If you know you absolutely can’t, then do not do it. After the six months are up, interest rates will go sky high. You’d be in bigger problems. Use your discretion.
Have you considered working with a debt counsellor? Debt counsellors can help you manage your finances so you can take control of your life. When all your other efforts have failed, this will help you pay off your debts with some hard work and proper guidance. Perhaps this is all you really need.