Debt freedom requires some sacrifices and to be able to get out of it faster, you may want to maximize your debt payments. That could mean making a few severe cutbacks on your budget to compensate for your limited resources.
A frugal budget means you are living on bare necessities only. This means all of your entertainment activities will have to be cut off (or at least only one or two of the cheapest will remain). It also means you will keep yourself from spending on new clothes, new shoes and from dining out. Since you will be living this way, it is best to only apply this type of budget for a short period.
This is why a frugal budget is best partnered with one kind of debt consolidation – balance transfers. As a debt solution, this involves getting a new card where you can transfer your high interest balances to. You have to pay 3% of the debt amount as a balance transfer fee to make this debt solution possible.
These balance transfer cards usually come with an introductory promo period that provides the cardholder a low or zero interest rate. The debtor enjoys 6 – 12 months of this interest arrangement wherein every payment that they make will be towards the principal debt. It allows them to maximize their income so that they debts will be lowered significantly.
This is where a frugal budget can be of great help. By living on a frugal budget while going through this period, the debtor can maximize their debt payments. Despite the strict regulations on your spending, you should be able to survive this because at the back of your mind, you know that it will only be for a short time.
Some people cannot implement this type of budget because the restriction is too much. Most of them may start using it but they falter in the midst of it. You can say that it is similar to a crash diet. Very few really come out successful and sometimes, they end up worse than when they started. This same concept is applicable to a frugal budget.
You want to make sure that if you apply this in your life, you know when it is going to end. Sometimes, knowing how long we have to make the sacrifice helps us complete that painful period. This is the main premise why a frugal budget is best partnered with a balance transfer debt solution.
After the promo period of the balance transfer card, high interest rates usually take effect. Make sure that you are ready for this. You can actually opt to live on a frugal budget even after the promo is over or you can start to loosen the restrictions. In any case, you should keep the budgeting habit with you. That will help keep you from accumulating any more debt that could threaten your financial security once more.