In this article I will reveal a secret weapon that you can use against debt elimination. Before I start do discuss this strategy, let us just look briefly at the common marketing methods that are used by the card companies to recruit you as their customer.
The Credit Cards Companies Want You!
These companies spend huge amounts on advertising their credit card offers. You will find offers and ads in your mailbox, on TV, in magazines and all over the internet
If you have suffered due to credit card debt you view those commercials with a cynical eye. On TV, the sixty second ads imply having a credit card will lead to a better life. The actors are laughing, shopping, traveling and telling viewers the benefit of buying something special is “priceless”.
The commercials are meant to portray a credit card as a product you need to live a good life. We may have believed that when we applied for our first credit account. But if you are caught with bankruptcy you will never fall for these commercials again.
The Secret Weapon
You have a secret weapon that you should use as a part of your elimination arsenal.
That weapon is a “debt elimination budget“. It is not shiny and doesn’t excite you when you think about it. There is no fancy design and no happy crowd of users having a party. Yet it is what you need to fight predatory lenders and win.
Pundits can analyze and discuss debt solutions and the government can make new laws prohibiting some of the worst lending practices.
The talking and the laws may prevent some new credit users from getting into trouble but won’t help those of us who are carrying heavy debts now. It doesn’t help after the fact to point fingers or feel guilty or assign blame. What will help you is using the budget weapon with precision.
Face The Fact – You Are in Trouble
You have not been living within your means. You have charged and shopped and charged more until the debt is a frightening monster in your life.
You may panic or become depressed or consider using debt programs to solve the problem, yet eventually the debt monster must be faced.
Like diets, budgets are often regarded as depriving you of things you want in your life. In truth, budgets and diets require taking control of your life. You are giving to yourself, not taking away. To make a simple budget list all of your monthly obligations on the left side of a page.
On the right side of the page list your sources of income. Now, total the two columns. If the spending on the left is more than the income in the right hand column, you know you are in trouble.
Divide Your Monthly Payments
If the income is more than your monthly payments and yet you run out of money or have to scramble to meet bills each month perhaps you are making more cash purchases and impulse buys than you realize.
Divide your monthly payments into categories of fixed expenses (mortgage/rent, car payment, utility costs) and variable expenses (food, gasoline, and clothing.
The last category is discretionary spending. This is the money you spend by choice such as the expensive coffees, entertainment, hobby costs and impulse buys.
If you don’t know how much you have spent on a particular category in the past few months, dig out those receipts and establish a dollar figure to use in your budget. It’s not easy and a budget is not fun when you are starting it. Don’t give up and don’t make excuses for not following your budget.
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Try to be realistic when adding figures to your budget. Planning to reduce spending on a certain area won’t work if it only appears on paper. Make rules for yourself to follow such as waiting 24 hours before making an impulse purchase. Stop using your credit cards until the balances are paid.
Once you have mastered living on a budget that works, you should take further steps towards the debt control. This might be transferring your debt to a new card offering 0% interest or doubling the payments you currently make to reduce the debt quickly.
Make a budget your secret weapon against debt, follow it carefully and you will reach debt relief faster than you think it was possible!