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Once you are fully aware of your debt situation, get a clear picture of your finances by creating a budget. This will inform you exactly what your revenues and expenses are and will help you create more savings to reduce debt. List all your sources of income and add them up. Move on to list your necessities. These include essential needs that are due regularly like rent, utilities, car payments, food, communication, and debt repayments. Keep in mind that just because these are essential or fixed expenses does not mean that they cannot be greatly reduced to find savings. List your discretionary expenses. Discretionary expenses are costs that you can change or avoid altogether such as buying new clothing or eating dinner out. The best way to get an idea of these expenses is to look at your bank or credit card statements for a month, and add up all the expenses that are not in your fixed expenses category. If you want better accuracy, take an average over several months and use this figure. Subtract your total expenses from your revenue. This is how much you have left over, or alternatively, how much extra you can afford to pay down to your credit cards. . Try to figure out how to decrease your expenses each month so that you can use more funds to pay down your credit cards. Target primarily variable expenses listed in your budget to find ways to save money. Make meals at home instead of eating out. Make coffee at home instead of buying expensive coffee drinks. Delay expenses that can wait for later, like new clothes. Borrow books, music, and movies from the public library instead of buying them. Do not forget to look into your fixed expenses category as well. Can you move into more affordable housing? Find a roommate? Walk more to spend less on gas? Use a less extravagant plan for your cell phone (perhaps only 1GB of data a month instead of 3GB)? Once you have lowered spending using the above tips, you should be able to free additional money each month. Apply some of that additional income to your credit cards and save some for an emergency. For example, upon creation of your budget you may observe you make $1500 per month, and have $1400 a month in expenses. After implementing the savings tips (for example, you drop down to a cheaper phone plan, stop eating out, and start walking to do basic errands), you manage to find $300 in savings. You now have $400 in additional cash. Perhaps $300 can go to your credit card debt and $100 can go into emergency savings. Don't forget to look at your income too. Are there ways to boost your income? Perhaps you can work more hours, look for a better job, or get a part-time job for ten extra hours a week. Make a list of your balances, interest, and fees every month. Check for unanticipated fees and to make sure your payments have been received and credited to your account.
Create a monthly budget. Reduce your expenses Increase your credit card payments. Reassess your debt monthly.