- Make a list of all your bills.
- Separate the list into two columns. The first column is for your fixed costs; such as the mortgage payments, heat, hydro, telephone, etc. The second column will be your credit card and any other loans, excluding the mortgage.
- Next you list the net monthly income and start to deduct all your fixed costs. The cash left over is your discretionary money. This balance will be what you have to work with to pay down your debts and save for your future.
- The list with the credit cards and the other debts will be paid with the discretionary money left over each month. If it is possible, you may want to consolidate your debts into one lower interest cost loan. Interest on credit cards are usually the highest cost to use other people’s money. Assuming you do not consolidate your debts then take the highest interest credit card and start paying as much as you can after making the minimum payments on all other debts. Once that card is paid off then you move to the next highest interest card and do the same process.
- Once you have all your debts paid off, start using your credit cards only if you can pay them off in full each month. If not use cash or debit to control your spending.
- With the money you are now saving in interest payments you can now budget the extra cash flow. You may want to start a savings plan for your future, set aside a little each month for your holiday shopping, and the rest in an emergency fund.
- Start your holiday shopping early in the year and take advantage of sales and paying cash.
When the holidays roll around next time you will be well prepared financially and even the bonus of not stressing about what to shop for or where the money will come from.