Hello, I'm your host, Mr. Chuck, perhaps you identified some of your bad spending habits or where you're wasting money. Maybe last week, you create yourself a budget for one pay period. So you know how much money is going out of your checking account. If you haven't done that, I don't know why you're keep listening to this podcast. In order to reduce debt increase Well, you need to watch out what you're spending keep track of your money, don't let the money keep track of you. This week, I'm going to give you my secret plan on how to reduce your credit card debt. But before I get started, a little about this podcast, the back and 20 seconds. Welcome together, we're going to explore our personal finances and figure out how to improve them reduce debt increase. wealth.com is a podcast to educate to improve personal finances, whether it's eliminating debt or making smart investments. Okay, now it's time to get started. You're wondering how you can pay off your credit card debt, and I'm going to give it to you in some simple and easy steps. And I'm gonna explain each step and why you should do it as I go along. Step one, quit creating new debt. How are you going to pay down all your credit card debt if you keep running it up? It's a simple philosophy. convert your spending to cash or from your debit card in your checking account. got to watch out for those ATM fees though only withdraw money from your own banks ATM, because they generally won't charge you a fee. If your bank's charging your fee to withdraw from an ATM, don't do it. Pretty simple concept. Do everything you can to quit using credit cards. You got to do everything you can to build up the balance in your checking account so that you quit paying all those fees the bank's been charging you step number two, pay the minimum balance on all your credit cards and all your loans Quit making extra payments. Wow, how am I going to pay them off if I only pay the minimum balance. More important before you start paying down your credit cards, you need to build up an emergency fund. It's a pretty simple concept. If you don't have a savings account, you need to open one up and put money in there. Most banks will have a $50 minimum balance requirement so you need to put at least $50 into that savings account to get one started. Once you have one started, and you got your budget and you know that you're going to get 12 $100 from your paycheck and now that 12 $100 you need $1,000 to pay your bills including transportation and groceries food. That gives you 200 extra dollars so that day you receive that paycheck. You know how much you need in that checking account with the extra amount. Floor say $300 and that $300 is already in there. You transfer at $200 into your savings account so you do not spend it. Now you have $250 and your savings account you have a start on your emergency fund. Once you build your emergency fund, up to the point Where you're comfortable, you have enough money to cover most every emergency you're going to be facing. And I'm just gonna throw out a number, it's an arbitrary number. And I'm just gonna start with 15 $100. So once you get 15 $100, you don't ever let your savings account go below that number. You keep transferring money, and to that savings account slash emergency fund, until you have $3,000 in there. Once you have $3,000 in there, and you're comfortable that nothing bad's gonna happen. So now instead of having 15 $100, for your emergency fund, you have $3,000 free emergency fund. But we're comfortable now that nothing bad is gonna happen. And then next, say 30 to 60 days, take 15 $100 out of the savings account, and apply it to your credit card. Which credit card do you apply it to it? First, I use a combination of the snowball method versus avalanche method. snowball method, pay off the lowest balance credit card first. That way you would feel like you're making a achievement and you have set one of your goals you paid off a credit card. Once you pay off the lowest balance credit card first and it has a zero balance, quit using it continued not to use it, do not cancel it, do not close the credit card. Because if you closed a credit card, that's going to reduce your credit and it's going to hurt your credit score. Then the next time you apply money to your credit card debt, you want to apply it to the highest interest rate card first. That way you start paying down those high interest rates. And it will take a little bit longer. But you'll end up over time, paying less and interest. That's all you got to do. Then you just build up your savings account again, he get maybe a bonus, maybe a Christmas bonus, put it in your savings account. Once you get three, four or $5,000. Take it out, maybe increase your emergency fund. Now we're talking maybe six months, nine months down the road, increase it up to $2,000. So every few months, you want to add to your emergency fund $100 here a couple 100 now and then, and you get it up to where your emergency funds. So your savings account will never go below$2,000. You got 5000 you take out 3000 you apply it to your credit cards, the highest interest rate first if it pays that one off, then the next highest one and so on and so forth. And you keep doing that until you got your credit cards paid off your personal loans paid off your payday loans paid off, which should be first by the way. Auto Loans paid off line of credit paid off. And finally your first mortgage. If you have two mortgages, pay off whichever one has the highest rate of interest, pay it down. And then finally the last remaining mortgage and do the same thing over and over. You will find out that over time your savings account will start building faster because you're paying less debt. He got to stick with the minimum payments as the only way he can get this to work. The other thing with n your budget, you need to look for items that one you no longer are using or to no longer really need. The more you can cut back on your budget, though. more you can do without certain items. And I'm not saying don't pay your rent and then be homeless. I'm not saying not pay your utilities and not have any heat or electric in your home. You got to be reasonable. I'm saying that gym membership that you're not using quit paying for it. Maybe some subscriptions on your computer that you no longer use them for got you and have cancel them. Maybe you're streaming three or four different services, and you have cable TV, do away with cable TV and cut back from streaming service to maybe one or two. Don't go overboard on your spending, watch where your money is gone. Be aware of where your money is going. Keep track of your money, keep track of your budget, keep fine tuning your budget, so that over a period of six months to a year, you can look at your budget and you're within 10 or$20 of what you're actually going to be paying out. So that you can transfer more money and to your savings account, so that you can build it up faster, so you can pay down your debt quicker. By now you should be well aware, quit creating new debt, paying the minimum balance on your credit, all your credit all your loans. Get your budget under control. And now in this section, I'm gonna talk about how to set up a simple budget. I'm going to do this again, because the budget is the B word. And people don't like doing it. So the easier I can make it on you, the more likely is you may create a budget. Step one, either use pencil and paper, maybe use a spreadsheet. Maybe you have a computer spreadsheet, whatever. Get it out, let's get started. First thing you do is write down what is your net take home pay, how much is being deposited into your checking account from your employer. And how often is that being done. So go back to your last pay that you receive. Write that date down, write down them out the deposit and to your checking account. What bills are due from that day forward? Say it's the beginning of the month, you got paid on the first day of the month, your rents due on the fifth of the month. Maybe your gas bill is due on the 10th of the month, maybe your electric bill is due on the 20th of the month. Go down that piece of paper or that spreadsheet, make some spaces, put in the different dates. Put down the description, gas bill, electric bill and the dollar amount that you pay the last time you paid it. If you know what the current bill is do use that dollar amount. And between there fill in things that you spend money on, such as transportation, gas for the car, maybe had an oil change done to the car, going to the grocery store and buying food, going out to restaurants, entertainment, going to a movie, whatever it is you're doing in that time period, go through there and record it. Once you get all that done, do the math. The first balance you start with is the how much was in my checking account. immediately before my deposit. I'm gonna say$250 my paycheck was 12 $100 that gives me 14 $150, subtract, subtract, subtract, subtract, subtract, all the way down, projecting forward items you know you're gonna pay, and the dollar amount you're gonna pay. If you're not sure how much is do going forward, look back to the previous month and use that. If you don't keep a check roaster, go into your bank account and look at the transactions. and scroll back a month, find those different bills and how much you pay if you're not aware of what's due, and the immediate future. And that gives you an idea, a starting point. And you'll be surprised of all the items you're paying for that maybe you forgot about, it's automatically been deducted from your checking account. At this point, since you're struggling with credit cards, if you're paying some of these bills, with a credit card, you got to stop doing it, you got to cancel that payment from the credit card, and you got to start paying the bills through your checking account. Why? Because if you have multiple bills spread over multiple places, is hard to keep track of put all your bills into one place. If you're paying a monthly bill on a credit card, how is that reducing your credit? How does that stop creating new credit, when every month your electric bill is charged on your credit card, you charge other things, you pay$100, you don't quite get everything paid off for the month, the balance goes forward, it gets a little bit bigger, and it keeps doing it over and over and over and over time you're 5000 $10,000 behind on that particular credit card. I hope you understand this, because it's not that difficult. Once you get all your payments moved over to your checking account, got to make sure you have enough money in the checking account. So the bank don't nalia with overdraft fees, ATM fees, and all those items we talked about a couple of weeks ago. If you have bad spending habits, you should be working on stopping those habits. If you want to go one step farther, when you create your budget, find a application that you can put on your home computer and on your smartphone. You're the one that's setting up these dollar amounts within the budget categories. You're the one setting it all up. Keep it simple at first and gradually keep increasing it. I recommend using one on your smartphone. That way when you go to the grocery store, you can open it up and look how much do I have remaining on my food budget this month. You can look it up, Oh, I got $400 I don't have to worry too much you spent 150 175 you're good towards the end of the month, you may have to cut back on your spending a little bit if you did too much. earlier in the month. If you went out and bought a bunch of steaks, and you had your neighbor's over, and you had a nice little party and you over kind of spent you might have to cut back later in the month. That's just an example. I'm not saying it's good or bad. But that's just an example of what you need to be doing. You need to be aware of how much you're spending. As far as utilities, you should have it down to the penny. And when you make your last utility payment for the month, your budget balance should say zero. If it's a negative number, you need to increase it. If it's a positive number, maybe good bring it down a little bit. If you leave a positive number in all your categories within your budget, that's a good thing. That means you did not overspend on your budget for that time period at all Reach out. And you'll get better and better and better. You can get out all this credit card debt without filing bankruptcy without doing a loan consolidation without doing a lot of things. Because when you do those things, one is going to hurt your credit score, loan consolidation, how's that reducing your debt amount, it's not, you're just rearranging it, it may be a lower debt. But a lot of these loan consolidations will require you to cancel your credit cards, which over time, at that moment, it's gonna hurt your credit score, making it harder for you to borrow more money. So if you're due to buy a new car, or buy a used car, you need to borrow money for it, say in the next six months, you may be should put off doing your loan consolidation, because it could hurt your credit score, where you now you can't afford the credit to purchase the car that you want. Just a note. Keeping track of your spending, keeping track of your finances is a at least a weekly chore. It should be doing it day to day if you're spending money every day, ECB keeping track of your budget every day. If you only spend the money two or three times a week, and your bills are being paid automatically through the bank, you got to make sure you have enough money in a checking account to pay all those bills and don't overspend. That's how you get out of your debt, especially the high interest, credit card debt. And up to this point, I hadn't included any articles in this episode, I do have an article in my show notes I'm going to talk about here a little bit. And it's about budgeting. budgeting is important to this process. If you really want to reduce your debt. Or if you really want to increase your savings in your investments, then you need to have some type of a budget. This gentleman David Wheeler, money under thirty.com. No more budgets. budgeting is stupid is boring. And most of us never stick with it. Let's change that learn an easy way to not budget and just minutes a day. He's really got an article here telling you how to do a simple and easy budget. And what these referring to not budgeting is it's so easy that you forget that you have a budget that you're actually doing it. I recommend you read his article and do everything it says he also has happy numbers in his articles. He's not calling them happy numbers. But he has his happy numbers in there. So we're all on the same page here. I'll be back in 30 seconds with my final thoughts on this episode. You can share this episode is with your friends open for any suggestions for improvement, or for information that you would like to hear about in the future. You can go to my Facebook page and leave me a message I'm more than glad to respond. And to find my Facebook page go to reduce debt increase wealth.com and click on the Facebook icon. This plan can be done by anybody no matter what your income level would be. You got to stick to it. You got to remain confident and he got to have a budget to help you get through your debt reduction plan. Whether you're trying to do it for yourself or do it for your family, it's important. Just a summary. You got to quit creating new debt. You got to make the minimum payments and all your credit cards and all other loans that you may have. And you got to set up an emergency fund a savings account and start building that up. So the next time something pops up and you have to pay you don't use a credit card. budget is a key factor. No matter how you look at it, you got to know your happy numbers. You got to know the numbers that's coming in and going out. If you don't know that you'll never kind of achieve your financial freedom. You got to stay on top of your money and don't let the money get on top of you.