It doesn't matter how many times you transfer credit, or what introductory APR you can find. If you are spending more money on a regular basis than you are earning, your debt will continue to worsen until bankruptcy is the only option remaining. Taking real action before the point of no return can steer you clear of severe financial turmoil.
The first action is always to understand where you are financially and specifically whether you are bleeding money, or just mismanaging your earnings. That means taking stock of your earnings and expenditures in a simple monthly budget. The first thing you'll need is a template.
How to Make a Monthly Budget
Creating your budget outline will be easy, whether you have Microsoft Excel, Apple's Numbers software, or neither. If you have neither, then you can use Google Docs, which has spreadsheet functionality.
Simply use a template provided by the software developer, or use a non-proprietary spreadsheet, which someone else has created. BudgetsAreSexy has a great web page with so many budget templates it'll make your head spin. Check them out and download the one you like.
Using a good budgeting template should be a straightforward process of filling in the boxes according to the relevant label. If you are confused, you might want to try another template. Fill out as many boxes as you can.
Once you have moved through all the items on the list, check to see whether the spreadsheet has forgotten to ask you for a bill or source of income you regularly receive. If it missed something, then either add it to your income, or – if it is a bill – add it to your expenses.
Food and other regular expenses will need to be estimated if you are like me and trash your receipts. But for a more precise budget, you can always save your receipts for the month and then tally them up.
When you are finished inputting your expenses and income, the spreadsheet should automatically calculate whether you are operating at a deficit, or whether you are building financial value.
Keep in mind you do not want to include spending that you would consider optional, like birthday gifts, vacations, etc. The point of this exercise is to figure out how much extra cash you can spend on luxuries and treats. If your budget is at a deficit without even factoring in these extra, one-time costs, then you are racking up additional debt and heading toward bankruptcy.
If you have a positive balance, then the surplus is the amount you can spend on whatever you want without increasing your debt.