With the middle class going further and further into debt and salaries lagging slightly behind the rate of inflation, it might seem impossible to get ahead. But there are ways to adjust your budget so you don’t have to fall victim to crippling debt that will follow you for years.
The good news is that jobs are returning, and the stock market is finally rising, giving you an opportunity to get ahead and build a safety net. All it will take to get there is some financial rearranging and some patience, so the first thing you need to do is look at the numbers.
Retooling Your Budget
With high unemployment plaguing the nation since 2008, you and your family might not have had a budget to work with because every dollar coming in went straight to bills and keeping you from sinking. But with economic recovery underway, it’s time to set a budget that allows you to grow along with it.
The first thing you need to do is write down your income and expenses and subtract the two. You want the difference between your income and expenses to be as large as possible, and you can increase that number by eliminating unnecessary expenses and debts.
If you’re like most Americans, survival during the recession meant that you had to rely on credit cards to make ends meet. But carrying those balances into the future will hold you back financially, so concentrate on paying them down and removing them from your budget.
Taking Care of Your Debt
As you probably know, multiple credit card bills means making several minimum payments, which barely puts a dent in your overall debt. Even if you fit those bills into your budget, the debt will remain a near-permanent fixture there, holding you back financially. Instead of slowly chipping away at your balance, consider combining your credit card debt into a single bill. Brice Capital will look at your eligible obligations and give you an opportunity to roll them all into a debt consolidation loan.
Reducing your credit card bills into a single loan means making only one payment per month, freeing up the money you were spending on your minimum payments. You can use that extra money to pay down your debt quicker and escape the debt cycle faster than you would otherwise. A debt consolidation loan won’t eliminate your balances, but it will give you a clear pathway to financial freedom.
Getting Out of Debt and Staying Out
Once you see the extra money in your budget from debt consolidation, you might get the itch to use that money to buy things you couldn’t before. But if you do that, you defeat the whole purpose of consolidating your credit card obligations, and you won’t gain the traction you need to eliminate your debt for good. Working hard to end the debt cycle is no picnic, but you have to remember that you already spent that money.
You’re simply paying back the bank for allowing you to use those funds, and if you want to grow a solid financial foundation, you need to pay it back in full. Only then can you begin to grow your money in interest-bearing vehicles and have your money work for you.
Grow and Adjust Your Budget
As your debt shrinks and your finances change, you need to adjust your budget. Plan to revisit your finances every few months to make sure you’re still on track and that your plan is up to date. Evaluate the numbers regularly and make sure that your income covers your expenses without using credit cards. Since you’re leaving the debt world, you want to make sure it stays that way, and by staying on top of your budget, you increase your chances of moving forward instead of slipping back into more debt.