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How to Dig Yourself Out of a Debt Hole
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How to Dig Yourself Out of a Debt Hole


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Updated: December 26, 2012
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You may find yourself wallowing in credit card debt these days for a myriad of different reasons. Whatever the cause of your current personal financial crisis, the sooner you formulate a plan of how to attack it, the easier you will breathe. Here are some tips on how to go about getting things under control:

Incorporate Monitoring Your Finances Into Your Daily Routine

If there are tasks you habitually perform every day such as reading the morning paper, jotting down a to do list or brewing a pot of coffee, develop the habit of looking online at the balances of your credit cards, checking and saving accounts as part of your routine. As you do so, make a quick comparison of the amount of money you have at your disposal to the current total of your debts. This will only take you a few moments and it will make you conscious of the state of your financial situation.

Admit That You Have a Problem.

Even if you have established a budget and feel that you are sticking to it, if you find yourself slipping in to debt little by little that means you may have underestimated a few of your expenses along the way. Sit down and revamp your entire budget after taking a couple weeks to track all of your expenditures – jot down every little thing that you buy on a daily basis. Once you have all the numbers, you can outline a more realistic budget based upon the actual amount of money you are spending and can then trim down expenses as needed so you can live within your means.

Cut Back On Your Charges

If you have grown accustomed to considering your credit cards as supplementary income it is high time to change your mindset as this attitude makes it oh-so-easy to sink deeply into debt. The best way to discipline yourself into not relying upon your credit cards is to leave them out of your wallet entirely. Hide them someplace safe and don’t even think about charging any new purchases until you have all of your balances entirely paid off.

Make Your Own Monthly Minimum

If you only send in the minimum amount as established by your credit card issuer each month, it will take you a very long time to unburden yourself of the debt and you will pay a tremendous amount in interest charges. Perform this quick calculation to figure out your own personal minimum amount to send in to your creditors: subtract the sum of your newly modified expenses for one month from the amount of your monthly income. Out of the amount you have left over, determine a fixed personal minimum that you can commit to applying towards your outstanding credit card balance until it is paid off. Make a promise to yourself to never go below that amount but if you ever find yourself with extra cash, add it to your payments and send it in. Using this method you will clear your debts in a reasonable amount of time while saving money on interest.

Save, Save, Save

As soon as your debts are paid off, you will have more wiggle room each month as far as your finances go. Instead of squandering the money, sock it away into a savings account and build yourself an emergency fund. If you save money on a consistent basis, you will soon have created a cushion for yourself should unexpected bills come along and trip you up.

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