As with all things this will only be possible if you are really disciplined. You must not add to your debt pile or borrow any more money until you pay off the current cash. Give yourself goals and timeframes when you’d like to achieve things. For example; to pay my store card off before Christmas. If that’s not realistic then extend the date. You have to push yourself with this though. You’re literally throwing hundreds of dollars away each month of your hard earned cash. First thing’s first; STOP SPENDING!
1. Cut up those cards!
If you don’t have the discipline to refrain from using any store or credit cards then they have to be cut up. It’s too tempting to say ‘I need that shirt; it’s only $20 I can afford it’. No you can’t! If you have debt on store cards that charge you high interest rates then they have to go. Only treat yourself to that shirt at the end of the month once you’ve saved $20.
Store cards can typically charge around 30% APR. That means every year that you have $100 on that card you will pay $30 just in interest on that amount. Now how many people have store cards with $1000 on them? Just imagine now $300 of your hard earned cash going straight down the pan! If you have $3000 on store cards, that’s almost $1000 before you’ve started! Credit cards can charge similar amounts but if you shop around you can get much better deals. See below for Credit Card tips. http://mysweetoutfit.com/
These are probably the most expensive cards that you have, so get rid of these first. That should be your first main goal. Look at which ones you have and how much you owe on each, then target the first one with a timeframe of paying that off. Push yourself you’ll reap the benefits much quicker and be out of debt fast. Only then will you see how far your income actually goes each month. You will be amazed!
2. Switch credit card provider
If you absolutely must have a credit card make sure it has benefits such as a 0% introductory offer for purchases or 0% balance transfers. This is ‘free’ money providing you learn how to control your spending habits. Some credit card providers give this for up to 12 months. That should be enough time for you to get your house in order shouldn’t it?
However, it is possible that your credit rating is shot and you can’t get a new credit card. This isn’t such a bad thing trust me. If you’re in this debt ridden situation in the first place that last thing you need is people throwing offers at you that you can’t pay off when the introductory offer ends!
You can even try using only cash each day. I understand credit cards are convenient and sometimes the only way to pay. See if you can get used to budgeting with what you have each day in your purse to use, instead of throwing that plastic around like there’s no tomorrow!
3. Stop the overdraft
Again, another expensive way of saying ‘use me when you’re really tight on cash’. The overdraft facility is there for emergencies only, not a target each month of what you’ve got to spend! Typically around 19% APR is just way too expensive in the current economic climate, particularly when the interest that you earn on savings (SAVINGS! What savings, I’m in debt!) are only 2-5%. Talk to the bank manager and ask for a reasonable amount on your account as a buffer zone. This overdraft must only to be used when things get tough.
Best option is not to have one at all. If you can discipline your spending so that you don’t spend all of your income each month then you’re already saving money by not using the overdraft.
4. Pay off the loan(s)
If you have more than one personal loan then again as with the store cards, target the highest interest rate loan first. Calculate how quickly you can feasibly pay that one off without having to eat bread and water each month. If you have two or three different loan providers see which one has the lowest interest rate and enquire about switching the other debts to that provider. You may find another bank or provider with much better interest rates for the aggregated loans sum.
If the amount you pay each month is $200 for one loan, try and stretch yourself to increasing the payments to $250. This will get the debt out of the way much quicker. Or decrease the term remaining to finish the loan. This will automatically increase the monthly amount payable. As long as it’s manageable then push the amount up as far as you can to repay each month. The temptation is to think if I get an extra $2000 we can have that holiday we talked about! NO! The exercise here is to start getting rid of the debt so that you can holiday more frequently with your own CASH!
5. Switch utility providers
How many companies are there now that you can turn to? In the UK I can think of 8 different providers that offer joint gas and electric supplies. You’re not usually tied in either often so you can switch whenever it suits your circumstances. Some may tie you in for one year but that’s not a long time. https://www.airataloha.com/
They all have different offers depending on the size of family living in the home. It’s all here online so make the most of the search engines and even the comparison sites to help your decision making. This is time well spent to save hundreds from your bills. Look in detail at the offers and when do you actually use the main part of your gas and electricity. If it’s peak time as you’re a stay at home Mom then look for the best deal for daytime tariffs.