I was playing around with a new online accounts management tool--which you'll find out about next week in my new addition to our Modern Money Managers blog series--and after adding all my information into the software, I quickly came to the realization that my lack of a proper budget is not helping my credit card debt. Thankfully my debt (at least my credit card) isn't completely out of control, but it made me realize that my mental-money-tracking "budget" has failed.
Granted, it's been an expensive couple of months, and my savings account has taken a bit of a hit. First, I had to pay the deductible on my car when it was stolen. That's $500 I'll never see again. Then I had to buy a new mattress (another $600) for the bed my mother gave me.
What I realized is that not only do I have to create a real budget and stick to it, but that my budget has to be geared toward paying off debt. To do this, I'm going to have to crunch the numbers with some online calculators (here, here, or here). I may also get a jump on my credit card debt with a little money from my emergency savings account; the interest on my credit card is significantly higher than the interest I'm earning in the savings account.
All in all, it needs to be a tight few months, but that has to happen when unexpected expenses come up. I can't just go back to spending as if nothing happened. That's just one way debt can get out of control.
- Jennie
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