If you fail to pay your credit card balances in full, then you are going into debt every month. This is a bad situation that can quickly turn worse if you do not regain control of your money fast. Following are some tips to help you shape your financial future into a better one, one month at a time.
- List your income and expenses.
The first step to stop making more debt is identifying your income and expenses. The point is to have enough income to cover your necessities like food, rent, and utilities. If you do not make enough to cover the basics, you must earn more money and slash every other expense on your budget outside of the essentials.
- Create a monthly budget.
A budget is important because it shows you where your money is going. When you are able to track your money, you can quickly spot trouble areas and fix your spending habits. Also, a budget stops you from spending more on an area when you already ran out of money for the month.
- Cut back on impulse spending.
While you are fixing your finances, you may want to switch to a cash-only lifestyle to make sticking to your budget easier. Place your cash on separate envelopes so you can see when it is out or close to running out. Of course, this only works if you do not rely on your debit or credit cards once you hit your limit. Stop using your credit card for the moment so you are not creating more debt while trying to get rid of the old ones.
- Start an emergency fund.
Most people get into debt because of a big unexpected expense. They pay it off with their credit card and the interest battle begins. If you have an emergency fund, you will save yourself from this trouble. A good amount to start is between $1,000 and one month’s salary. Increase your contributions to your emergency fund once you are out of debt to ensure you will not get back into it again!