For most people who need help with debt they really need a boost to their income not a reduction in debt. Well, you need a reduction in debt also, but that is not your main issue. Unless you are making over $100,000 per year (which most of us aren’t) you likely don not have much of a spending problem, you just got a behind a few times with no real ability to catch up.
You will find your first real jump in income will happen as soon as you decide to take charge of your financial life. Help with debt problems can only happen when you want it too. No one is going to offer their help to you when you are fighting it and no new opportunities will be apparent to you when you are not looking. Remember when you were able to live off so much less money. You were probably just as happy back then. Your spending habits haven not become out of control, they have just become lazy. You tend to buy when you need something because you can afford it, instead of creating an upfront plan to make your money last the whole month like the old days. It is time to get back to the old days.
A Plan for Every Dollar
Before you needed help with debt you needed help with income. In order to make your dollars stretched further you knew exactly what you were going to spend your paycheck on days before you got it. Just because you are making more money now doesn’t mean you should stop doing this. You just can probably cross a few things off your list that you had years ago like money to go clubbing or speeding tickets.
You want to start off with paying the minimum payments on everything you owe. If you are unable to make the minimum payments on everything then you want to leave your unsecured debt for last. This generally means hospital bills do not get paid and then credit cards. Neither one of these debts will be quick to sue. Hospital’s bills are generally use to settling later since they make enough money to cover their expense off the insurance companies. Credit cards know that people generally don’t have much to sue for and taking cases to court often cost more than they will receive by waiting. It doesn’t mean they won’t harass you endless though.
Once you choose how the bills will get paid you make their payment as soon as your paycheck comes in. Don’t wait until the day the bill is due because you’ll be more likely to “need” the money for something else. If you can setup the payments to automatically deduct from your checking account this is the best setup. It can be tricky to get the dates to line up so what I do is have a separate checking account for outgoing “automatic” bills which I have no checks or debit cards for. Then when my paycheck comes in I just transfer enough money to that checking account to cover all the automatic bills regardless of what day in the month they are due. Since I transferred the money out it feels like it’s gone and I don’t feel tempted to raid the other checking account.
Increase Your Efforts
The worse part about working extra hours is often the extra money just vanishes into the mix and you don’t feel like the extra work did you any good. After a few months of time away from the family you get frustrated and quit. The difference this time is you already have your money under control if you followed the plan above. Now there is nowhere for you extra money to go to except to help with debt. Even if you just earn 10% more per month than you currently do now that much extra money slammed onto your debt will begin to destroy your debt. Most of us aren’t in debt more than one year’s income not counting our homes. Mathematically it’s just difficult to get further into debt than this. The minimum payments generally pay off 15% or so per year of debt. Getting your budget under control will generally find you another 15% of your income to put towards your debt with the interest already covered it all goes to principal. Add another 10% from part time work and you’re looking at not needing help with debt in two to three years.
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.