Getting On Top of Debt
Getting control of debt can feel quite overwhelming. In this contributed post, having the right steps and with a clear plan in place, you'll be able to regain your financial stability and start over.
There are debt consolidation loans out there that can help in some situations, but they're only a part of a strategy that you can put together.
The first thing you need to do is understand where your money is going, then set your priorities and take consistent steps towards reducing what you owe. Getting on top of debt may not be easy, but it can be done as long as you don’t keep your head under the sand.
Get to know your numbers. Before you can make a financial plan for paying off debt, you need a complete picture of your current financial situation. Listing all your debts, including credit cards, personal loans, medical bills and any other balances is the first step to take. Writing down the interest rate, the monthly payment and the due date for each one helps you to see from a better standpoint, how much you have to pay and when. You might find that simply organizing the information makes things feel a lot less chaotic and helps you to see the debts that should be tackled first.
Although I don’t necessarily believe you need to have a budget, if you really want to know how to do it, there are a few ways to build one. A budget doesn't have to be complicated. You can start with your monthly income, subtract your essential expenses, and then see what's left for debt repayments. The goal is to ensure that you're consistently paying down your balances rather than adding to them, so you don't get into more debt, while trying to pay off current ones. If you notice that you're spending too much on non essentials, try making some small cuts here and there. These minor adjustments can free up some money that will help you to get out of your debt faster. Or you can expand your income and use the extra amount you’re bringing in to pay down the debts.
Figure out which ones to pay first. There are two very popular strategies when it comes to paying down debt. The first is the snowball method and the second is the avalanche method. With the snowball method, you'll pay off the smallest balance first, giving you quick wins and motivation. And with the avalanche method, you focus on the highest interest rate first. This saves you the most money over time, and both strategies do work. Pick the one you're most likely to stick with and go from there. Personally, I like the snowball for those of us with inconsistent incomes.
Talk to your creditors. Many people don't realize that creditors are often willing to work with you. If you're struggling, reach out and ask them whether or not they can lower your interest rate, adjust your payment schedule, or freeze so that you can go into a hardship plan. A quick conversation can reduce your financial pressure more than you expect.
Getting on top of debt takes a lot of patience, but it also takes consistency and a lack of fear on your part. With a clear plan and some effort, you can reduce your balances and lower your stress all at the same time.
Everything you just read is a very awesome and practical way to pay down debts. However, I know an even faster and easier method. Next week, I’m inviting you to a FREE workshop where I will teach you how to pay down debts even faster and easier. Just sign up below to get all of the details!