How to Stop Going Into Debt Each Month

Carrying weight of debt concept
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If you are using your credit cards each month and not paying off the balance in full, then you are going further into debt each month. This is a bad situation to be in because you are making your financial situation worse. It is important to take control of your finances immediately so that you can change your financial future into a positive one. If you have serious spending issues, you will need to address them in addition to taking these steps.

Start by Listing Your Income and Expenses

The first step is to create a list of your income and your expenses. You need to make sure that you are making enough to cover your necessities. These things include your food, your shelter, your utilities, and your clothing (but not designer labels). If you do not make enough to cover these basic expenses, then you need to bring up your income and slash all other expenses in your budget. You may need to look at your housing costs to see if your house payment is taking up more than 25% of your income. If it is, you may need to consider moving.

Create a Monthly Budget

Next, you need to create a monthly budget. This step is important because it gives you control over where your money is going. It helps you track your spending, so that you can find your trouble areas and fix your spending habits. It also helps you stop spending when you are out of money for the month. If your income is a real issue, you will need to take on an extra job or pick up additional hours so you can cover your necessities. Your budget should be able to cover all of your expenses that are needs, and then you can cut back on the things that you want until you are no longer overspending each month.

Find Ways to Cut Back on Temptation and Impulse Spending

You may want to change to a cash-only or envelope budget if you are having problems sticking to your limits. When you switch to cash, it is easy to stop spending because you can see when you are out of money. The key to making this work is to not rely on your debit or credit cards when you hit that limit. Leave your credit cards at home, especially when you are headed to the mall or somewhere else where you would spend money. 

Save Up an Emergency Fund

Many people rely on their credit cards when it comes to unexpected expenses. An emergency fund can help you stop doing this. A good amount is between $1,000 and one month's salary. This will cover most car repairs and other emergencies. Once you are out of debt, you can work on saving up a year's worth of expenses and have a larger emergency fund. 

Find Extra Money to Put on Your Debt

You also need to find extra money to apply to your current debt. This means that you may need to cut back on your cable and cell phone plan or cancel your gym membership so that you can take care of this debt. Make sure that you are not counting luxuries as necessities when you work on cutting expenses. You may also want to sell some items or get a temporary second job to get out of debt. The more money you can find or raise, the sooner you will be out of debt. A debt payment plan will make it easier to pay off the debt because it allows you to direct your payments to just one debt at a time. This speeds up how quickly you will be out of debt, which will give you more money to spend on the things you want.

Start Saving For Major Purchases

Once you are out of debt, you need to start saving for the major purchases so that you do not go into debt for them. For example, you can pay for your car with cash or for your home repairs and improvements with cash. Additionally, you should save up an emergency fund of three to six months' of income, so that you will not go into debt when an emergency arises.

Remember That Discipline Is Key

Discipline is essential to taking control of your finances. It does take sacrifice and hard work to get out of debt, but it is worth it. Once you are out of debt, you can begin to build wealth. This will help you to manage your money and give you true financial freedom. Your budget is the best way you can take control of your money and make changes to your financial situation.

Find New Ways to Save Money

Try these 15 ways to start saving today. This will help free up additional money in your budget to cover your needs. Instead of shopping and buying things that you do not need, spend time trying to save money on the things that you must buy on a regular basis. Cooking at home, taking lunch to work, and shopping for second-hand items can help you save money on the things you need each day. People who love to shop can become some of the best bargain hunters available.