5 Steps to Tackling Your Debt in 2017 Jan 16, 2017 by Sarah (Day Styles)
If you’ve been thinking about getting your spending under control, 2017 is the time to stop throwing your money away and take control of your personal finances. Debt is something that can weigh heavy on your shoulders, but just imagine how great you’ll feel once you pay it all off. Here are five great ways to get your spending in check and lower your debt.
Figure Out Your Starting Point
You need to take stock of your basic financial situation before you can figure out what you need to do next. You’ll need to go through all of your bank statements, credit card statements, and any other financial commitments like loans, student debt, mortgages, or lines of credit. You need to know your real savings, debts, and monthly needs. We know it’s hard, especially if you don’t think you're very good at managing money or just want to avoid the subject. But once you know your situation, it’s much easier to set realistic and attainable goals for your repayment plan. If it’s truly outside of your comfort zone, ask your bank to meet with one of their financial advisors and get a professional to look at the situation.
Track Your Purchases
Tracking your spending is one of the most powerful things you can do if your goal is to become debt free in 2017. It’s definitely one of the more daunting tasks when it comes to personal finance, but it’s well worth it. It can help you realize where you’re overspending. If you don’t like the idea of keeping receipts and tracking spending manually, try downloading an app like Mint, where it syncs directly with your bank account and tracks and groups spending categories for you. It’s a great way to really dig in and find where you can cut back on spending, and what money you can put towards that debt!
When you’re really bad at personal finance, the word budget can be overwhelmingly daunting and scary. But if you do your budget properly, you can still allow yourself room for the things you enjoy, from purchasing new clothes to going to the movies. It’s when you start budgeting that you can start getting really creative with your funds, and cut out spending that you probably didn’t even realize you were doing. Don’t cut out all of the things you find fun when you’re budgeting, because that’s a great way to break your budget on a whim. Instead, keep your budget balanced and that way you won’t feel like it’s such a heavy burden on your current lifestyle. Just put aside an amount every month to start paying down your debts.
Plan For Disaster
It’s been said, if you fail to plan, you plan to fail. It’s always great to factor in a contingency plan with your finances, just in case something unexpected happens. If you’re trying to pay off debt, chances are you don’t have a lot of money left over at the end of the month, but try your best to assign some of your funds to an emergency account just in case. Start small and gradually build your emergency fund. Keep it in a separate savings account that you can’t touch with your debit card so that you won’t spend it. It will help you in the long run if you have a sudden expense like car repairs, medical bills, or other accidents. That way, one unfortunate event won’t cripple your finances.
Cash-based spending is like putting your money on a diet! For example, take the amount of cash you have budgeted for groceries with you to the grocery store and leave your cards at home or in the car. This way, you can only spend the cash that you have with you, and you can’t go over your budget. If you find that you’ve spent too much, ask the cashier to remove an item of your choice and get the total under your budget. Try this approach with different areas of your life, like at a restaurant, or when you’re at the mall. If you limit yourself to only the cash you have on hand then you won’t overspend with money that’s sitting in your bank account. Count those bills and watch your savings grow - and your debts shrink!
Starting with these basic tips is a great way to get your spending and debts on the right track. Don’t be afraid to ask for advice from your parents, friends, or financial institutions. If you really need help, talk to a debt counselor or financial advisor at a local credit union or non-profit. (Just make sure they are accredited by the National Foundation for Credit Counseling or the Financial Counselling Association of America.)