Spending less money every month is like getting extra income. If you want to pay down debt and increase that bad credit score, you need to spend less. If you have a low credit score, it may still be possible to get bad credit loans, or even to get a better job. But there are always things to trim out of your budget. Start with the three things you chose to eliminate from your monthly spending.
Stop Using Your Credit Cards and Consolidate Debt With Bad Credit Loans
If you have bad credit, the odds are good that it is because you have run up your credit cards until they were maxed out. Credit cards make it convenient to buy what you want, when you want. However, if you can’t pay them off just as quickly, the balances will just get bigger and bigger. Bad credit loans are available if you have a low credit score. You can use them to consolidate the debt. But you don’t want to run up the credit card balances again.
The easiest way to stop using your credit cards for impulse purchases is to leave them at home when you go out. Also, don’t store the numbers in your computer. It’s much too easy to buy something online when you don’t have to punch in 16 numbers, a date, and a three-digit security code. If you are having a lot of trouble with these disciplinary practices, you can always immerse the card in a container of water and put the container in your freezer!
Don’t cancel the cards. Part of your credit score is calculated from how long you have had accounts at individual financial institutions. Opening new credit accounts will also lower your credit score because it shows more available credit, especially if you use this credit. Resist the temptation to open accounts for rewards such as airline miles. Until you get your debt paid down, it’s better to just buy the airline ticket (if your budget permits). Otherwise, you’re accumulating debt faster than free airline tickets. Also, avoid the temptation of opening a store card for the discount. Those discounts are usually just 10% and don’t amount to enough to justify sabotaging your debt repayment plan. The interest rates on these cards tend to be very high and are just going to add to your bad credit problem with all of the extra debt.
Instead of carrying your credit cards with you, try putting just the amount of money you plan on spending into your wallet. Or, use a debit card. You can also use a prepaid debit card designated for certain purchases, such as dinners out.
Divide Up Your Paycheck Until Nothing is Left
Use your paycheck up. Start with all of the bills that are due before your next paycheck and pay them. Next designated amounts to be used for things like food and other necessities. Set up separate accounts for other things: an emergency fund, a Christmas fund, a vacation fund. Your bank may already have these programs in place and you simply have to enroll in automatic transfers.The purpose of this action is to not be tempted to spend money that is not already designated for something.
Create a Budget
No one likes this idea. It seems like all work and no fun. But if you are going to improve your bad credit score, you need to be able to pay bills on time and pay down debt. You can’t do this if you spend all of your money on other things. Start with a list of how much money you must put aside to pay bills and loans. Then add to that list what you need to spend on food, school, clothing, gasoline, car repairs and maintenance, and pet expenses. Include any other necessary expenses at this time. If the numbers add up to less than you are bringing in, you have to reduce the amount you are spending. Look at the list of things you spend money on every day that are not necessary expenses. You can also increase your income but you have a lot less control over this than decreasing your spending. If you do increase your income, consider using the increase for savings or debt reduction rather than just increasing your spending.
Short Term Goals
In addition to your plan to pay down debt, set short term goals. These could be goals to only go out for lunch once a week instead of every day, or put a certain percentage of your check into savings. Having a short term goal gives you a light at the end of the tunnel. You can see the changes in your budget when you free up four days of take-out lunches and eat dinner leftovers instead. Or, you can see the balance in a savings account increase.
Hang in There and Watch a Bad Credit Score Become a Good Credit Score – Possibly With Bad Credit Loans
It is possible to pay down debt and raise that credit score. TGUC Financial can help you with credit card refinancing and debt consolidation to make your debt repayment process move faster. Contact us today.
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