If you’re struggling to get out of debt or trying to avoid it altogether, one of the first things you’ll need to do is create a budget. This will show you exactly how much money your earning and spending. However, the challenge comes when you realize that you need to make changes to your spending habits to get out of debt. It can be easy to fall into bad spending habits if you’re relying on credit cards. To combat poor spending decisions, you can try the cash-only budget.
Tuesday Tip- Using a Cash-Only Budget
When you’re using credit cards for most of your regular expenses, it is easy to lose sight of your budget and possibly over-extend yourself. This can be dangerous if you’re trying to get out of debt. With a cash-only budget, you simply have a predetermined amount of money available to spend. Once it’s gone, you’re done spending. This gives you a tangible look at your budget and forces you to stick to it. It’s easy to use your credit card, because you’re not seeing that money leave your pocket. The cash-only budget is a visual reminder which encourages thoughtful spending and accountability.
How to Create a Cash-Only Budget
- Create your budget using this household budgeting worksheet (PDF or Excel).
- Look for areas where you can cut back on your spending.
- Determine which expenses can be paid with cash on a weekly or monthly basis.
- Withdraw enough cash to pay for your budgeted amounts.
- If you want to be more organized, try an envelope system. This way, the allotted money for each of your budget categories will be separated. This will help you ensure that the cash is used for its intended purpose.
With some proper budget tracking, motivation, and organization, you can dig yourself out of debt and start making better financial decisions.
If you need further help creating a budget or finding a debt management solution, call American Consumer Credit Counseling at 800-769-3571 today.