If you’re unable to pay your regular bills, than credit card debt can’t be paid off either. So it grows. The debt snowballs and before you know it you’re wondering if you can ever get out. Let’s take a look at some proven steps for getting out of debt and staying there.
Debt is a common challenge for many people around the country. Between basic living costs, loans for homes, college, and cars, and the extras and emergencies that sneak up, it can be difficult to make ends meet. Credit cards are often used to help cover the extras.
Tips for Getting Out of Debt and Staying Out for Good
- Know the Facts – Surprisingly many people don’t know how much debt they have, and they don’t know what their monthly bills add up to either. Gather the information. Create a spreadsheet that itemizes your debt. What do you owe and who do you owe it to? Also create a separate sheet that documents your monthly bills.
- Stop Using Credit – The next step is to stop using those credit cards. Seriously. Stop using them. Don’t cancel them because that can have a detrimental effect on your credit. Rather, put them in water and freeze them. Lock them in a box. Do what you need to do to stop using them.
- Create a Budget – The only way to get control over your finances is to begin to monitor your spending and create a budget. Document where your money goes and how much you have to spend on each expense.
- Create a Plan – Looking at your list of debt, choose one card or loan to focus on. You might choose the loan or debt with the highest interest rate. You might also choose to focus on the card with the smallest amount of debt first, to build a bit of confidence. Once this card is paid off you’ll move onto the next card or loan and the next until they’re all paid off.
- Emergency Savings – One of the reasons we fall into debt is because of those unexpected financial emergencies. Create a plan to set aside anywhere from $500 to $5000 depending on your income. This way you won’t need to thaw those credit cards when an unexpected expense arises.
- Get Help – If you feel like you’re completely overwhelmed or your debt is so high that there’s just no way you can get out of it, consider getting help from a credit counselor. They may be able to help you consolidate those loans and offer strategies for repayment.
- Confidence and Pride – Seek to change your money mindset. Instead of receiving pride from monetary purchases, consider how great you’ll feel when you’re able to reach your financial goals. Living debt free is something to be proud of and unlike material purchases, the pride of accomplishment lasts forever.
Creating a plan to get out of debt and following through may not be easy. However, it’s well worth the time, energy, and sacrifice. Once you work on getting out of debt, do everything you can to stay there. Debt is stressful and can have a lasting effect on your health and relationships. Pay it off and enjoy financial freedom.