It is harder then it sounds but these Tips To Cutting Back On Spending To Pay off Debt will help you to get ahead in the long run! If you have debt that you are wanting to work towards wiping out, then here are some steps to cut back on spending to pay off debt.
Sometimes, we spend money and at the end of the month we have none left, but by watching where your money goes, could help you in spending. Did you know that buying a coffee that cost $4 a day, adds up to $28 a week, and a grand total of $840 a month? That is a lot of money out of your budget that could go towards paying off debt. So when you think that drink or snack you buy doesn’t cost too much, look at the big overall picture.
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Now I have shared about Dave Ramsey before (See the posts -> here), I love his method it’s a great way to take baby stuff to pay things off. Below are steps to help you find ways to save money here and there, to then take that money and put towards your debt. We all want to be debt free, and if you are savvy with our money we can reach that goal in time! Don’t get discouraged and even paying $5 a month to a bill, will help you in the long run!
Tips To Cutting Back On Spending To Pay off Debt:
Assess Your Money: The first step is taking a long hard look at your finances. Make sure you are saving receipts from everything you spend money on. Even if it is a cup of coffee. You need to know how much money you have coming in each month and where it is all going. So for a month make sure to save every single receipt, and then move to the next step.
Categorize Receipts: Once you have saved all your receipts now you need to put them into categories. Like monthly bills, debt, and other expenses. Go as far as making a category just for gas, one for eating out, grabbing a coffee, etc. This will let you truly see how much you spend and where. Once you have everything listed out, then comes time to organize. Plus it will help you to be more organized at tax time as well.
Organize expenses: Organize the money going out into monthly bills you pay, debt payments, and variable expenses. Variable expenses are gas, eating out, etc. If you have a lot of money going to buying new clothes, eating out, etc you can see that maybe if you pull back on spending you will have more money to pay off some bills you are behind on.
Cutting Back on Spending: You can possibly cancel your cable, and move to Hulu to save you quite a bit of money each month, or you can lower your phone bill, and so on. You have to look at ways to cut out extra spending so that you can take that money and put towards paying off debt. A huge one is eating out, shopping, and such. You don’t have to not spend anything, just try to cut back each month a little at a time. As I said above, if you do get a coffee each day, try only doing it two times a week and making coffee at home the rest of the week. Or only allow $50 on clothes shopping instead of $100.
Looking over your Debt: For the debt, list each bill out, and start with the lowest amount of payoff first and work your way up to the highest. Write down the amount you owe on each bill that you are behind on, so you can add it up and see the total amount owed. This will really help give you a clear picture of how much you owe overall.
Build Up Savings: Building up savings is a great way to avoid more debt. Keep making your minimums on the debt payments but build up savings to handle little emergencies!
Find Out You Options: For past medical bills or even credit card bills, you might consider having options. Some creditors are willing to work with you if you make an effort. They could allow payments each month, offer a fixed payoff amount if you can pay it off, which could be a lot lower than you owe and more. You won’t know if you have options if you don’t pick up the phone and make a call. Yes, it can be scary but most places are more than willing to work with you.
- Be kind when you call, no matter if you get frustrated or not. Being nice will get you a lot farther than being rude and demanding. Tell them you are wanting to work with them on paying off your debt and ask if they have options available because you can’t afford to pay in full right now.
- If you have a budget to pay $50 a month, offer to pay $25. That way when you negotiate with them, there is wiggle room. They will feel like asking for a bit more most likely, and you can agree because you knew you could pay the max of $50. This gives you a good amount of wiggle room.
- If the person you talk to says they can’t negotiate, ask to talk to a manager. They might not be able to make deals on the phone, so asking to speak to a manager you have a better chance.
What have you done to cut back on spending?