KNOXVILLE (WATE) – If you checked your purse or wallet right now, you probably have at least one credit card. A recent survey from Pew Charitable Trust found 39 percent of Americans owe money on their credit cards and many others had student loan debts. There are some ways you can get serious about paying off debt.
The first step in tackling debt is to rethink your budget from the ground up. Pull out your budget and scrutinize each and every line item. Eliminate everything that isn’t a need – and by need, we’re talking about things that help you stay alive, stay healthy or stay in a job. Everything else can go. Cut the cable. Eliminate the Internet. Cancel the cell phone.
Once your budget is stripped down to the essentials, you need to flex your self-discipline muscles. It’s time to stop spending. Don’t take any weekend trips to the mall, the thrift store or the art show. Only go into stores if you have planned, budgeted, purchases in mind.
Also, get in the practice of saying no. If your child wants candy in the checkout lane, the answer is no. If your spouse suggests seeing a pricey concert, the answer is no. If your friends want to go out to eat to the swanky new hot spot, the answer is no.
Of course, you need a little common sense too. So, the key to keeping things happy at home is to have a free or cheaper alternative in mind.
The next step in reducing debt is to limit your ability to spend. A cash envelope system is often used for this purpose. With a cash system, you leave the debit and credit cards at home and use cash only. However, if carrying cash makes you nervous, open a prepaid card and load it with only your budgeted amount for the week.
How about selling those things you own, but don’t need? Look around your house. What do you see? If you’re like the average American, you’re probably surrounded by items you rarely use. Try selling them at a weekend yard sale. It’s time to move those things out and bring some debt-paying cash in.
To go one step further and start bringing in extra income whenever possible, seek extra work. Depending on your individual circumstances, that could mean picking up a second job or offering to take extra shifts or overtime. If you aren’t able to commit to a regular job, you could try babysitting or housecleaning.
This next step may not apply to everyone, but if you’re carrying around multiple debts with high interest rates, you may want to consolidate. You could do this in several ways. First, if you have equity in your home, you could apply for a line of credit. These loans often have lower interest rates than credit cards. Also, you could also go to a credit counseling service and talk to them about debt consolidation.