Initiate a credit card debt reduction strategy by adopting a reasonable budget plan.
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"Money is better than poverty, if only for financial reasons."
- Woody Allen |
No one likes to hear the B word... BUDGET - because we associate it with PAIN. However, the well planned budget is a powerful tool that should be more accurately associated with the word FREEDOM.
Despite the hooplah on television commercials, credit cards do NOT equate to freedom. Credit card payment terms can often be so misleading, consumers really should avoid using credit cards at all.
It is of paramount importance to establish a program for reducing your credit card debts in order to attain financial freedom. Household budgeting is a skill that will allow you to overcome your debt burden, improve your finances and let you regain control of your financial life.
Budgeting, as a money management tool, can enable you to save anywhere from five to twenty-five percent in the very first year alone.
Budgeting helps to make extra cash available. This extra cash can then be applied toward your credit card debt reduction plan, a key step towards eliminating those high priced credit cards.
Imagine life with no credit card debt. Visualize yourself with extra income at the end of each month. How much better would you sleep at night? Debt free living is a realistic goal for anyone willing to plan for their future responsibly.
It is very helpful if you can enlist the support and guidance of a debt management counselor to help you create an achievable budget. However, you may want to go about this exercise on your own. If so, check out our free debt ecourse, 10 Steps to Conquer Debt.
While creating a budget on your own, it is essential for you to do some serious soul searching to determine what is most important to you and what goals you want to achieve.
Long term financial planning is essential. Identify the important aspects of life that can be impacted by personal finances. The result of your research should inspire you to create a balanced budget program for your credit card debt reduction plan.
As you begin the debt reduction process, realize that your mistakes are "normal". Sadly, in American society, going into debt at a very early age is almost considered a right of passage.
The difficult part comes when you realize that you are no longer in control of your debt, debt is now controlling you. This is where credit card debt reduction becomes a necessity.
Debt can also be accumulated as the result of a crisis like illness, job loss or even a natural disaster. Living your life on a solid budget plan allows you to more easily cope with these emergencies when they do arise.
So take a close look at your personal finances to prepare your cash flow budget i.e. monthly cash inflow and outflow.
Begin with all sources of income, including salary, bonus, interest, dividends, social security and all other sources of taxable and non-taxable income to get your monthly cash inflow.
Cash Outflow would include car expenses like fuel, maintenance, loan repayments, repairs and insurance etc; home expenses for utility payments, repair, cleaning maintenance, rent/mortgage payments; other expenses on clothing, baby food and toys, dining out, groceries, gifts, health and insurance payments, etc.
The ultimate purpose of your budget and cash flow analysis is to determine how much cash is available and how much remains at the end of each month. Until you have eliminated all your credit card debt, you need to apply that leftover cash toward your debt.
Sooner than you might think, you'll be living a debt free lifestyle.
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"Money is a good servant but a bad master."
- Francis Bacon |
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Debt is NOT your friend. It's not a wonderful "tool" for building wealth. That's a myth.
