cash budgeting help

[radiatorsprings]

I am wanting to switch over from using credit cards for everything to using cash. I have a very limited income right now as I only work part time. My position was eliminated toward the end of last year so I had to move to a position with less hours and I have been struggling ever since. Before this, I was fine using my Chase Disney credit card for everything and paying it off every 2 weeks. However with my income cut now I am getting behind on my credit cards and I realized that I need to make a budget.

The issue I am having is switching over to cash and at the same time paying off my credit cards. When I get paid I put my whole check towards my credit card bills. So far I have not paid any interest (I have only had credit cards for two years) but I realize now I will have to start paying interest in order to start using cash for everything.

I have three credit cards. One is 13.24% Apr and has $400 charged to it. Another is 12.99% and has about $250. The last is my newest card and it has 0% promotion until January 2013; it has $900 charged. I only make about $750 a month right now.

Can someone tell me how I should start paying these off while using a cash budgeting system for my monthly expenses? Should I start paying more towards the highest Apr or the highest balance first?

I cant believe I got myself into this mess. Luckily I live with family right now so I only pay $220 a month for rent. I am trying to find another job right now but so far, after two interviews, I'm still having no luck.

 

[ghosty1000]

What other monthly expenses do you have in addition to the rent and three credit card bills? Do you buy your own groceries and/or contribute toward the utility bills? How much do you spend for gas for your car? Maybe other readers may be able to help you with a budget if they know all of your expenses.

 

[Southernmiss]

I am wanting to switch over from using credit cards for everything to using cash. I have a very limited income right now as I only work part time. My position was eliminated toward the end of last year so I had to move to a position with less hours and I have been struggling ever since. Before this, I was fine using my Chase Disney credit card for everything and paying it off every 2 weeks. However with my income cut now I am getting behind on my credit cards and I realized that I need to make a budget.

The issue I am having is switching over to cash and at the same time paying off my credit cards. When I get paid I put my whole check towards my credit card bills. So far I have not paid any interest (I have only had credit cards for two years) but I realize now I will have to start paying interest in order to start using cash for everything.

I have three credit cards. One is 13.24% Apr and has $400 charged to it. Another is 12.99% and has about $250. The last is my newest card and it has 0% promotion until January 2013; it has $900 charged. I only make about $750 a month right now.

Can someone tell me how I should start paying these off while using a cash budgeting system for my monthly expenses? Should I start paying more towards the highest Apr or the highest balance first?

I cant believe I got myself into this mess. Luckily I live with family right now so I only pay $220 a month for rent. I am trying to find another job right now but so far, after two interviews, I'm still having no luck.

Good luck with the job interviews--pixie dust that you find something else really soon. Can you work 2 part time jobs for now?

Back to the budget...

Dave Ramsey would be a good start for you look for his website--Dave Ramsey (one word) dot com.

You need to list everything that you must pay on a spreadsheet or piece of paper. Rent, food, etc. down to every expense.

After the "must pay" to live items are put down then look at how much you have left for your credit cards. Dave recommends pay down the lowest balance first so that you feel a sense of accomplishment to get you motivated for the rest. Other budget people say pay down the highest interest rate card first--really you know yourself best. Do you need the momentum encouragement or would you feel better with the higher interest rate paid off?

You may have to cut out eating out--make sandwiches, eat cereal, rice and beans for a while until you get another job and make headway on your credit cards.

After doing this, Dave would recommend saving some money in an emergency fund--$1000 to start and then shoot for at least 3 to 6 months of expenses saved in savings. I would stay with your family as long as you can until you can get a handle on some savings and then have payments for deposits etc. in the bank waiting for your next move.

The process is not easy, but so worth it. It sounds as if you are young, if so, that's even more encouragement to get started and on a plan now so that your future is bright.

Good luck with it all! You can do this!

 

[radiatorsprings]

I have already written down my monthly expenses, I was mainly just asking for help planning the credit card payments. Sorry I should have said that.

In case the information is still needed, here is the list.
Rent $220
Utilities $40
Groceries $120
Dog food and supplies $60
Cell phone $10
Car insurance $65
Gas $100

Btw I am gluten-free, soy-free, low-fat vegan so I am not able to go out to eat which is why I don't have a category for that. Also I mostly clothes shop at the Goodwill when they have their 50% off sale so I don't know of any more things I can do to cut costs.

 

[jmartinez1895]

I would make minimum payments on the lowest interest cards and what ever I have left over sent to the highest intest card. Once that one is payed off, send that money to the next card and work your way down. It may take a couple of years, but you will get it payed off. The main thing is that you do not use the cards unless you have no other choice. I wish you the best of luck and if you do have to use a card don't let it discourage you.

 

[danceintherain]

So after you pay your necessities at the end of the month, you have $135 left?

First of all, what will the interest rate of the 0% switch to at the end of the year.
Ultimately, if I was in your position, I would sit down and figure out how much money total I would be paying on each one in the long run. Meaning if I pay off card A, how much extra will I be paying on card B & C etc? Also, what are the minimum payments and what are the penalties for not making them? This can contribute to the total cost over time.

EDIT: This may help: http://www.whatsthecost.com/snowball.aspx?country=us

 

[radiatorsprings]

So after you pay your necessities at the end of the month, you have $135 left?

First of all, what will the interest rate of the 0% switch to at the end of the year.
Ultimately, if I was in your position, I would sit down and figure out how much money total I would be paying on each one in the long run. Meaning if I pay off card A, how much extra will I be paying on card B & C etc? Also, what are the minimum payments and what are the penalties for not making them? This can contribute to the total cost over time.

EDIT: This may help: http://www.whatsthecost.com/snowball.aspx?country=us

The 0% will change to 16.99% in January. Thanks for the link!

 

[danceintherain]

It MIGHT work out better to pay the $400 one first, then switch to the $900 one with the $250. It's hard to tell without crunching the numbers myself. Basically, it would be a combination of the % vs. balance methodsd

 

[cornflake]

You might be better off switching the balances to the 0 interest ('til January) card. At least you won't be paying interest until then and the difference is only like 3% if you're still paying it off and still hold the balance come January.

In addition, once you move the balances off the other cards and don't use them, come January, if you still hold a balance, you could likely negotiate with one of the other cards to move the balance back to theirs if they gave you a year or 6 months of 0% interest.

I've known people who keep swapping around like that on various things, to their advantage. You'd be surprised what you can get. A friend of mine used to never pay for phone service back when you paid for long distance on a land line regularly. Just swapped companies every time one would call to offer a good enough incentive - usually $100 + some credits on the bill plus months of free whatever. When the offer was up, the next time a company called, it'd be 'well, I just switched to this company last year and they gave me x, y and z so I feel loyal.' Which would garner an immediate better offer leading to another switch.

Works with credit cards too mostly.