Zero budget strategy
A zero budget is a budget that includes every euro cent earned – every cent is counted in a budget plan category, leaving no penny to spend on unplanned spending. Having a zero-budget strategy does not lead to situations where the rest of the money is spent, for example, on food, clothes, cosmetics or other unimportant things, after making a loan, utilities, or other mandatory payments. The less money you spend, the more you have it, and the more money you have, the faster you can repay your loan. Zero budget is based on the idea that you have to pretend that money for specific items of expenditure does not exist, so you have to spend only the money left over.
Envelope Budgeting Strategy
The envelope budget strategy is a way to reduce your spending by spending only money that is not in an envelope. This strategy is quite simple – on the day you receive your salary, remove it from your ATM and divide it by monthly spending items such as “credit”, “utilities”, “rent”, “food”, “fuel”, etc. Collect cash in the above positions in separate envelopes, writing them for what purpose the money is for. If money in an envelope expires prematurely, take it from another envelope or apply it without it. This strategy teaches you to live within certain limits, which can also be useful when you have no credit. If you would stick to this strategy, you will most likely never have a credit commitment because you will have learned to live within your means.
There are several snowball strategy versions. One of the most popular versions is the version where the credits are arranged in the order of the smallest to the largest, the minimum credit payments are made for all loans, and the remainder of the money is channeled to repay the smaller loan until it is fully repaid. Another version is similar to the previous version, only credits are ranked on an interest rate basis, and the first loan is paid at the highest interest rate. In another version, the total amount of credit is divided by the amount of the minimum credit payment to see which loan can be repaid the fastest. After that, the credits are repaid, starting with the one that requires the shortest time to pay. Which of these versions is the best? One that suits your financial situation and can pull you out of debt.