The Basics You Should Be Doing to Manage Your Debts

10:10 05 October 2019

A simple way to manage your debts is to set a realistic household budget and stick to it. Knowing your income and outgoings will allow you to identify where savings can be made. It will also help you keep track of those small hidden expenses that can quickly add up over the course of a month. A coffee each day on your way into work is a prime example. You will also be able to spot where you can cut a budget for example, on your home entertainment package, to save for rainy day contingencies such as an unexpected car repair or luxuries. Just knowing for certain where you stand financially means you are able to make your income work better for you. Even a saving of $200 dollars is a sizable chunk to knock off a debt. Just foregoing your morning coffee can account for a quarter of that over the month.

Create an Emergency Fund

The road to debt elimination is not going to be easy and to deal with the bumps, it makes sense to create an emergency fund. It’s not being prepared for such eventualities that often end up leaving your short with a knock effect that can impact your finances for several months. Ideally, you should set aside an amount that would equal at least 3 months of living expenses. It will be hard but there will be a time when you will be relieved that you did it. Set up an automatic transfer into an account to take advantage of interest as you save. With an instant access savings account you won’t have to resort to your credit cards and end up paying extra as interest.

No matter how much planning you do, an emergency can arrive any time and if you're not prepared, it will throw all your debt elimination efforts down the drain. But, you have to make sensible choices and know what falls in the category of ‘emergency’ and is not just another opportunity to tighten your belt.

Arrange Extra Money to Settle Your Debts

A good idea to help eliminate your debt in a timely manner is to find some extra cash. There are many different ways to get a supplemental income. For instance, consider selling big-ticket items online. Craigslist is a great choice but there will also be other buy and sell sites in your area. Similarly, you can consider holding a yard sale to get rid of your unwanted items for the money you can use to pay off your debt. Similarly, you can raise money selling books, computer games, fashion, and sports equipment to stores dealing in second-hand items and online.

Managing a budget is all about watching the pennies. It doesn’t mean missing out on the things you enjoy. Those things you can build into your budget. Just keeping a careful eye on your expenses means you can catch any wastage and plan ahead more effectively for the expected increases in your in outgoings, such as at Christmas, which is when a lot of us reach for a credit card.