Debts are the cause of insomnia and headaches of many people. When you have pending payments it is difficult to save, but it is not impossible. In this note we show you how to manage your personal budget to end debts and start saving. Read carefully!
Do not borrow or use your cards
Learning how to save is not difficult. We must start from not borrowing more. So we advise you not to increase your debt by acquiring new loans or using your credit cards. If you plan to apply for a loan that is a “ debt purchase ” offered by different financial institutions and that allows you to collect all your debts into one.
Be aware of ALL your income
Open a new book in Excel or take pencil and paper and put in detail all the income you have per month. Then make a list of all your essential expenses (payment of services, food, etc.), add this second amount and subtract your expenses from your income. That way you’ll know how much money you really have available.
From the remaining balance you can separate an amount to pay off your debt for the month and if you have money left over you can use part or all of it to a savings account.
Prioritize the payment of debts with greater interest
If you have extra money, such as bonuses for example, you can take advantage of this unexpected cash to pay off a debt. We recommend you do this with the debt that generates more interest. The faster you get rid of the more expensive debt, the faster you will begin to have liquidity and substantial savings.
As you can see, it is not very difficult to start getting rid of the debts you have. It is important that you know your finances well and that you design a plan according to them to be able to have liquidity again. Learn more savings tips in our post 5 tips to save money every month.