Can't seem to get on top of it...
I've been doing YNAB since March this year and I love the concept of it all but I can't seem to get the Credit Card/Float thing sorted! I have always been determined to pay my credit card in full even tho its a massive struggle to do this because the interest rates on Credit Cards here in NZ are horrendous!!I can't bear to think i've got to fork out an extra $60+ NZ dollars a month for interest when I haven't got any spare money already and can't even start putting money into True Expenses!!
Would love any suggestions🙂
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When you say pay it in full, do you mean every month or just in general? If its every month then you will need to stop to get off the float.
To pay off your credit card, first step is to stop using it.
Then you need to make a budget that allows you to not use your credit card. Since you didnt put any details about your life, I'm going to make assumptions.
Let's say you make 1000$/month. 1st, budget all your necessary bills.
Rent: 500
Utilities: 150
Phone/cable/internet: 150
CC min pay: 50
Leftover: 150$
Now budget groceries and other things needed to live/get income.
Food: 150$
Gas:....
Well crap. Now you know stuff will go on your CC. So at this point look at your situation, is there a way to lower your expenses? Do you really need cable? No? Cut it out. Can you move to a cheaper home? Can you sell your car and rely on public transportation? Do you really need your 8$ Starbucks coffee every day?
If you are already living on the bare minimum, the next step would be to increase your income. Can you get a part time job? Can you sell anything? Can you pick up more hours? Can you babysit/housesit/walk dogs?
Slowly but surely you will be able to get there. After you have your ideal budget covered, you can start either
a) saving towards true expenses /emergency fund
B) start budgeting more towards CC. (I reccomend trying to budget for the interest rate first so that your minimum payment will go completely towards principle)
C) increase your expenses through lifestyle creep. (I joke. Please dont do this, it wont get you ahead.)
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You get off the credit card float by:
1) Not overspending your categories while continuing to use the credit card
2) Budgeting some money to the CC payment category every month until such time as you get the CC payment category aligned with the CC balance.
You actually have to keep using the credit card in order to get off the float without incurring interest. You can't just stop using it because you won't have the cash to make the payment to avoid the interest.
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Thank you both for your replies....helps alot 😃
