More Credit Card Debt Than Savings? Here’s what to do!

Most of us go to school so we can get a job, which will enable us to make a living. The majority of people strive really hard to make ends meet, chances are that most people have more debts than savings. This means that they spend rather than save, on the assumption that they don’t have enough.

In this post, we’ll provide you with some valuable tips on how to cope when you have more credit cards than savings. We hope this will help you improve your financial situation.

Pay Off Debt

It may be overwhelming to have a lot of debts, especially if you don’t even know how or where to start settling them. Here’s how you can start your journey to financial freedom.

• Make a list of all debts: The first thing to do is to come up with a list of all your debts, from the one with the highest to the one with the lowest interest rate. The goal is to work on paying off the one with the highest interest rate first. You can work on the rest after.

• Organize the list by balance: Another approach is to come up with a list of all your debts, from the smallest to the highest. In this case, you can pay from the smallest balance up to the largest outstanding balance.

• Cut your budget: It’s best to cut your budget in order to pay off your debts more quickly. Maybe you can cut down on unnecessary items such as unimportant grocery items, cable television, going out regularly, or unnecessary subscriptions.

• Stop using credit cards: This step is the most important. Make sure to stop using your credit cards completely until your debt is paid. This is easier said than done. But you need to discipline yourself.

• Paying all other loans on time: You know that if you pay all your bills on time, you won’t incur extra charges that might compromise your cash flow.

Have an Emergency Fund

Once you manage to pay off all your debts, you can work on building an emergency fund. Open up a new bank account and start saving. Here are a few things you need to remember:

• Have an initial emergency fund – You can begin by having a smaller emergency fund. Most banks will require you to put in a minimum balance for your savings account. Make that your initial deposit.

• Slowly build your emergency fund – Once you have opened a new savings account for your emergency fund, it’s time to start growing it. Assess your monthly income and your monthly expenses. Determine how much you can reasonably set aside for your monthly savings. Allocate this particular amount to your emergency fund. Be consistent.

• Achieve six months of living expenses – Experts recommend an emergency fund worth at least six months of your living expenses. This includes your rent or mortgage, monthly bills, and any miscellaneous expenses. This should be your financial target for the year.

Final Words

Getting rid of all your debts is one thing; putting together an emergency fund is another. Incorporating the two can make a big difference in your overall finances. Ultimately, all it takes is discipline, focus, and determination. If you still feel like you need assistance with debt relief, please give us a call – 1 855-873-6222