Spring time is often synonymous with the phrase ‘spring cleaning’ – an action that can apply to a variety of household tasks. One of the areas of our lives that does require continuous attention – and also one that can certainly use a good old fashion spring cleaning . . . is our finances.
In all reality, debt is something that most of us dread. Often times debt can accumulate with extreme quickness, requiring integral steps be taken to manage it effectively. If you are in a financial position that requires immediate attention, here are 3 steps to take this spring to dig yourself out of bad debt.
Step 1) Revisit your Budget
The first step you can initiate is to take a closer look at your personal budget. While you may have already designed a budget in recent months, one thing to be aware of is how quickly your finances can change. This is why it is important to keep checking in with your budget to see if you are on the right track. If you have been struggling to stay on top of things and find you are either spending beyond your means – or not being able to keep up with your payments – then revisiting your budget design may be necessary.
Additionally, it may also be beneficial to then revise your budget. If your debt has grown too large, then you may look for areas in your current expenses where you can cut back and where you may be able to save some extra funds towards any outstanding debts.
Step 2) Set a Plan to Pay off 20% More Debt for the Next 3 Months
Once you have revised your budget you can look at how you can perhaps tackle 20% more of your debt – with a goal to have this portion of your debt paid off over the next 3 months. Not only being realistic about how much you can pay off, as well as setting a timeline for when you plan to make this happen can help you remain committed to paying off your debt. Figuring out how you will pay off more debt and which debt will you pay off first, will likely factor into this part of your plan. Will you target your credit card debt, pay off more of your car or other personal loans??
If for example, you plan to pay off some more credit card debt, you can choose to focus on how much you are paying off each month right now. If you are only paying the minimum balance each month – or slightly above this amount, chances are you are not really making a huge difference in lowering your balance. With that being said, if you want to make sure to pay off 20% of debt in the next 90 days, you will need to step this up. In this instance, paying as much as you can each month and if you can’t make one later credit card payment, then perhaps making two separate payments each month can help get you there. Looking at implementing this strategy for other monthly balances, wherever additional payments are allowed – can also help you work toward paying off more each month.
Step 3) Identify 3 Ways You Can Save More Money
In order to make the above mentioned payment strategies a possibility, your next step will be to find the specific ways you can free up this money. There are some simple methods of saving money that you can implement in your daily life to help save some more here and there and get rid of that debt as soon as possible.
Firstly, you can look at making a change such as starting to make coffee at home each morning versus buying coffee at a cafe each day. Since coffee, particularly some specialty coffee drinks can be quite expensive – this can quickly add up. If instead, you opt not to buy coffee each day, by the end on month one, you have the potential to save anywhere from $100 to even $200.
Another area where you can save money is to be a more efficient food and product shopper. Each and every time you go to the grocery store, you can be more frugal by selecting certain brands that can help you save some money. There are certain food brands and products that can do a similar job and yet are less expensive. Some generic brands – or super sized products and bulk food packaging options can help you reduce your overall costs as well. There are also many other grocery store smart shopping strategies, such as taking advantage of coupons and sales that can help you save even more. By looking to cut down your cost of daily/weekly necessities shopping – you can also free up more money for you debt payment plan.
One third method of reducing some of your current costs, is to attempt to cut down on some of your entertainment expenses. This of course does not mean you have to avoid having fun at any cost, it just means that maybe you can examine how much money you spend each month on entertainment and re-adjust. These areas of entertainment maybe include, eating out, going to the movies, driving out of town to a show and other activities. Once establishing how much this sector has been costing you, you can identify areas where you may be able to cut back. If your goal is to have 20 percent of you debt cleared away in the next 3 months, taking a step back from certain entertainment outings can help you reach this objective.
Being organized and prepared for how you will save can encourage you to remain even more dedicated to achieving your plans for debt-relief. Once you have looked at your budget, determined some areas where you can cut back, save, as well as which debt areas you will pay off first, then you can put your plan of spring cleaning your debt into motion. As the winter begins to finally thaw and signs of spring begin to appear – take action now and dig your way out of debt as you make your way into a new season.