Budgeting and dealing with debt can be a struggle, here are some tips for creating a budget and paying down your debt.
First, identify and track how you’re currently spending your money. Then set your financial goals and create a budget around meeting those goals. Continue to track your spending to make sure you’re staying within your budget. You can make budgeting simpler by using an app or purchase personal finance software.
Once you’ve created your budget and know where your money is going, it’s time to start paying down your debt. A good tactic for dealing with debt is Dave Ramsey’s Debt Snowball Plan.
The plan works by focusing on one small, manageable debt at a time. Here are some tips to implement this plan:
- Make a list of each of your debts, including the balance.
- List them from smallest to largest.
- Make minimum payments on all your other debts and funnel all of your extra funds into the first (smallest) debt.
- Each time you pay a debt in full, work on the next smallest debt on your list. Funnel your extra funds, including the payment from the first debt into the next debt.
- Continue this program until you reach the last debt on your list.
- Know how it feels to live debt-free!
By starting with your smaller debts, you see results quickly, which helps motivate you to keep going. You’ll be surprised by how much progress you can make in a short amount of time.