How to take charge of your debt
To have a successful budget you need to create a strong foundation and you need to be 100% committed to your budget to make it successful.
Make a list of your debts (total amount, who it is with, weekly, fortnightly or monthly payment, interest charges and due date)
Having all the debts infront of you will allow you to see the bigger picture and stay aware of your debts, remember to update your list every 3 months!
Pay your bills on time each month as late payments incur fees, set up a system that will work for you by creating a monthly bill payment calendar.
Freeze spending on your credit cards. Make sure you have all minimum repayments covered to avoid going backwards.
Look at your spending and determine what is a need and what is a want, look at how you can adjust your current spending habits to create extra money to put onto your debt.
Decide which debits to pay off first. Paying off credit card debt first is often the best strategy because credit cards have higher interest rates than other debts. The one with the highest interest rate usually get priority on repayment because it is costing the most money. Use your debt list to prioritise and rank your debts in the order you want to pay them off. You can also choose to pay off the debt with the lowest balance first.
Not only do we have to make changes to our bank accounts we also need to make changes to our spending habits.
We need to look at how we are spending our money, we need to determine what in our everyday lives are a need and what is a want.
Need: Is somethings you really can’t live without. That is basic food, clothing, health care and accommodation.
Want: Is everything else. It is the things you would like to have.
Be honest with yourself and with your budget. You are allowed to have wants, you are allowed to buy your wants just make sure they get put into their own category of your budget and be brought when money has been put aside for them. Also make sure before buying a want that you weigh them against your long term goals.
By looking at how we treat our wants and our needs we can pass this skill onto our kids. In turn helping us make better financial decisions.