If you’re like most parents, people told you all about the joys and rewards of having children. They told you about the good things; the love, the smiles, the milestones, and the memories you would be building. What they didn’t tell you about are the many unfortunate downsides to parenting; sleepless nights, stubborn toddlers, and the expenses involved with having a child. The costs of having a child have been skyrocketing in recent years, and many parents have gone into debt just trying to provide for the basic needs of their family. The good news is that with a bit of commitment and patience, there are ways to pay off those outstanding debts.
The first thing that you need to do if you’re trying to dig your way out from under a mountain of debt is to find money you didn’t know you had. The best way to do this is to start tracking your spending and then find ways to reduce it. You probably don’t know off the top of your head exactly how much you spend on groceries or eating out each month, and if you’re like most people, you’ll be surprised when you start tracking and see just where your money went.
Create a Budget
Once you’ve started tracking your monthly spending, you can begin to set a budget for yourself. There will be some line items that are inflexible, such as housing payment and car insurance. But there will be other expenses that you can whittle down with a bit of creativity; adjusting the thermostat a few degrees to save on your heating and cooling bill, getting rid of a high cable television bill in favor of a much less expensive streaming services. Even if you only free up $25 a month, it’s money that can be put towards paying it down.
Don’t Add New Debt
One of the biggest keys to getting rid of debt is to avoid adding new debts. It can be tempting to use the balance that you just freed up on your credit card to handle an unnecessary expense, but don’t do it. All you are doing is extending the amount of interest that you are paying each month. Your budget should include starting a short-term savings account for handling emergency expenses.
Have a Plan
One of the keys to paying down debt is developing a plan for paying down debts and sticking to it. The most common and effective method is the snowball method. List your debts showing both the interest rates and the balances, and then pick one. You then make the minimum payment on all other debts and put any extra income towards that debt each month. When it is paid off, you move on to the next one, adding the previous payment to the new amount. You’ll be taking a bigger chunk out of your debt with each one that you pay off.
If you have the option, consider a debt consolidation loan. This is where you take out a loan large enough to cover all your debts and pay them off all at once. It is very useful for turning revolving credit card debt into an installment loan, and frequently has a much lower payment than what you were spending trying to pay off the debts individually.
Once you have gotten your plan in place and have a bit of extra cash, you can try putting your money to work for you. Even if you don’t have tons of cash laying around, you can begin with something that doesn’t require a large deposit, like Forex Trading. With a minimal investment and a little bit of research, you cab begin earning money with the money you already have.
Alana Downer works at Businesscheck.co.nz and Canadabiz.net and she is an experienced blogger whose main interest lie in finances and new technologies. She might often be found online, sharing her insights into technology trends which shape the way both businesses and individuals function.