Track you’re spending.
It’s one thing to make mental notes of things you’ve bought over the month, but it’s another thing altogether to see them add up on paper. This is especially true if you use a credit or debit card (people tend to spend more freely if they pay with plastic) or pay for things using multiple accounts (and therefore never really see the net total). Manually tracking your expenses will not only help you make better decisions, but also identify areas in which you don’t even realize you’re overspending.
Develop a budget for yourself.
It isn’t enough to just throw a random payment at your credit card(s) every month. Instead, create a strategy, put it in writing, and budget your other expenses around your credit card payments. Here are some popular ways to save money and reduce your debts:
- Think seriously about starting to save pocket money. It sounds childish, but the savings are anything but.
- Reduce your expenses by cutting costs in different areas of your life, such as spending less on entertainment or making sure your car is running efficiently so you spend less on petrol.
Spend your tax refund wisely.
For a lot of people, a tax refund is a windfall at the beginning of the year. If you anticipate getting a tax refund this year, resolve to set a sizable chunk of it aside in order to pay off some of your debt.
Sacrifice a small luxury (or three).
For example, don’t buy that coffee on the way to work every day; make one at home for a fraction of the cost. Don’t buy your books, DVDs, or CDs; just borrow them from your local library or your friends. Don’t buy lunches for work; just make them at your home. (Pressed for time? Even something as simple as a sandwich or a salad with a hard-boiled egg makes a great lunch. Prep it the night before if necessary.)
- When you’re stressed, treating yourself to the little things can feel like a necessity, and to a certain extent, it is. However, there are much cheaper ways of going about this. Instead of waiting in line for an overpriced mocha, bring a thermos of coffee to the park and watch life unfold in front of you. Instead of going out to dinner with your friends next Friday night, invite them to a potluck or braai at your place. There are plenty of creative ways to cut back without feeling like a Spartan.
Build an emergency cash fund.
Credit cards are often our go-to resource for unplanned expenses (the alternator in your car dies, you get sick and miss work, etc.), but this can undo months of payments and completely demoralize you. A better idea is to tuck some money aside strictly for emergencies.
- This doesn’t have to be a drain on your income. Remember those expenses you are cutting back on? Instead of simply not spending, try actually setting aside the money you would have paid on one or two of those expenses (for example, bar money every Friday night, manicure money every-other Saturday etc…). Create a (free) savings account, put it in a CD, or even hide it in a cookie jar…just remember where you hid it.
- Remember that this fund is for emergencies only. Break your leg? Go ahead and dip in. Want to upgrade your phone? Find the money somewhere else the end.
Don’t relax your spending habits because you’ve successfully paid off some debt.
Once you start to see that credit card balance go down, you may be tempted to treat yourself to a series of restaurant outings or a shiny new smartphone. Don’t do it; a few casual purchases can put you right back where you started, especially if something unexpected happens. Keep the end goal at the forefront of your mind––rewards that cost little or nothing are much better, like seeing a movie at a friend’s house or making your favorite rich chocolate dessert and eating it all!
Keep the goal in mind.
Remember what you’re trying to do—get out of credit card debt. Just like smokers almost never quit by cutting back, you probably won’t get out of debt if you keep adding to it by using your cards all the time. You want to try to minimize your use of cards or stop using your cards altogether.
- Freeze them in a block of ice if you need to, seriously I’m not joking! Freezing a sealed bag of water with the cards inside is a fun and mess-free way of doing this. That way, your card will be there if you need it, but you’ll have to wait for the ice to thaw, giving you hours to decide whether youreally need it.
- Get a lock box. Put your cards in a lock box and put the lock box somewhere out of the way. Either give the key to someone else or put the key at another location, like your desk drawer at work, so that when you need to use the credit card, you will have to think long and hard about doing it.
- As a last resort, take your cards and cut them in to pieces with scissors to make sure you won’t use them again.
Therefore OUDS is willing to assist consumers in this predicament with a free service of a financial assessment, assist the consumer to organise an affordable, realistic and structured monthly budget and debt management plan thereby providing consumers with a guideline for eliminating and remaining out of debt.