Tips To Free Yourself From Debt
August 4, 2020
Most Americans are currently living with debt as credit has become the norm and a necessity to stay ahead of the bills. Credit cards debt, mortgages, school loans, car payments, and often times emergency expenses like medical and mechanic bills add up quickly. It doesn't take long to find yourself owing far more money that you can pay.
With the help of financial consultants, you can map out ways to manage debt and ways to stop it from increasing. If you are ready to take this step so that in 5 or even 7 years you are living with more financial security, there are steps you can take today.
Where To Start?
Make a list to create a chart where you list the creditor's name, total balance currently owed, interest rate, and minimum monthly payment. As you make this list, evaluate how and why you came into this predicament. It is helpful to go line by line and think about each creditor. Ask yourself the hard questions such as is your debt the accumulation of consistently spending more on daily purchases than you're making? Did you get hit with medical bills? Did it all start with that first student loan? If your issues are a result of lifestyle choices, you'll have to make some tough but quite necessary decisions to alleviate the escalation.
Use a debt calculator to enter all that you listed on your chart into the calculator. The calculator will figure how long it will take you to pay off all amounts due by paying the minimum payment each month. A bottom line dollar amount of how much money it takes each month to stay current with all your payments
Stop Accumulating Debt
In the simplest of terms, you must spend less than you take in every month. So, how do you spend less?
Create a realistic, tight budget and cut spending on non-essentials for 30 days. As you create this budge, include the minimum payment for all debts plus all essential expenses such as insurance, utilities, and basic food. Account for every dollar. At the end of 30 days, reevaluate and assess where you can make additional changes.
Tips for Success
Increased income is often what people think will magically get them out of debt. Increased income can come in the form of a second job or multiple streams of income such as freelancing, babysitting, or completing online surveys. But there are more tips than just increasing your income.
Optimize your tax return and put the refund directly toward bills.
Refinance if your home mortgage is not at the lowest possible rate and if you're planning to stay in your home for several years.
Request a lower credit card rate if you have made several months of on-time payments. Your credit card company may support your efforts to get out of debt if you call and request a lower rate.
Transfer debt if you are able to obtain a credit card with lower interest rates. Switching from 25% interest to 18% interest or even better to 0% can get you out of debt faster.
Tackle the debt head on by choosing one amount to pay off completely first. When it's done, the money that you were sending to that card, you now put toward the next item on your list. Do not allow that money to seep back into your monthly budget. Use it to continue paying down your overall picture.