How can I control debt?

by PICPA Staff | May 11, 2018

The Pennsylvania Institute of Certified Public Accountants (PICPA) offers six ways to get your debt under control.

  1. Track Your Spending
    Know where your money is going. Divide your expenses into categories and track how much you spend in each one. At the end of the month estimate how much money you can allocate to pay off debt.
  2. Come Up with a Plan
    Calculate how much you owe to whom. Most CPAs recommend paying off the credit cards with the highest interest rates first. Once a credit card is paid off, you can apply the money that you were paying on it to another credit card balance.
  3. Pay More than the Monthly Minimum
    Low minimum payments are a trap used to collect interest for years. Accelerating repayment can save you hundreds or thousands of dollars in interest.
  4. Make Sacrifices
    Trim your entertainment budget. Bring your lunch to work. These are all ways of saving money so you can allocate your funds towards paying off your debt.
  5. Replace Your Credit Card with a Debit Card
    A debit card is like a credit card, but it is really the equivalent of a check. When you pay with a debit card, your checking account is automatically debited. That forces you to think before spending. A note of caution: Overdrafts from debit cards can be costly. Be sure you have money in your checking account to cover the expense.
  6. Start Saving
    Once you have paid off your debt start to build a financial safety net by saving three to six months’ worth of living expenses. Once you’ve established an emergency fund, you can begin to save toward your financial goals. Payroll deduction plans that automatically direct money from your paycheck to a savings or money market account are a great way to get started. What you don’t see, you don’t spend.

Answer By: The Pennsylvania Institute of Certified Public Accountants (PICPA) provided the answer to this question.

***Answer originally published June 5, 2015.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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