If you take more than you make, you may have find yourself with more debt than you know what to do with.
Don't feel bad. It happens easily and can sneak up on you. There are so many things to pay for: car repairs, food (especially growing costs if you have a family), mortgage, utilities, taxes, classes, memberships, entertainment, gas, insurance, more insurance, medical expenses...and it seems to snowball doesn't it?
And it happens to the best of us. It tends to snowball right onto credit cards and payment plans you've worked out along the way here and there.
Here's some help you can implement today. We've provided you with some practical financial ammo to help you get on top of paying for it all. Most of all, this is a way to sleep easier and get free of debt.
1. Get real about your situation.
If you've been ignoring debt, now's the time to face it. Writing it all down and adding it up would give you a number you may not be ready to stomach but, it's the first step towards attacking your situation.
- Write down everything you owe as of this very moment. Even your bills that aren't debt necessarily but, you owe on a monthly basis like a utility.
- Take solace that we're showing how to break this big number down into realistic nuggets that help you easily knock out your debt for good.
2. What debt costs you the most?
There are a couple of ways to determine where to start. Picking out the card or debt with the highest interest rate is the best way to go about things because it is costing you the most money in the long run.
But for some people though, they need a sense of accomplish to grease the wheels of getting out of debt. So you might want to look at what debt might be the easiest to take out first
- Once you've decided which debt you're going to attack first, figure out how much extra you can pay in addition to your monthly payments.
- Then keep making minimum payments on the rest of your cards.
- Now that you've wiped out one debt, take that money and apply it towards the next debt you want to get free from.
- Keep repeating this until you're free of debt. Don't lose heart. It starts out slow but every time you pay off one debt and put it towards another it starts paying off faster and faster.
3. Save first.
It's great that you have a plan in place to start paying off debt. But here's where most people's plan falls apart:
They have nothing saved. It's tempting to think saving money should be something you do after you've eliminated your debt. Not saving though can cause you to be right back in the same situation you are now. See if this sounds familiar:
You have a plan in place for paying off debt. You have a solid tight budget for making sure you get there. And then the car doesn't start. It gets towed to the shop and it's going to cost about $1000 dollars to be repaired. Because you don't have savings to cover it, everything you are doing to stick to your budget and knock out your debt completely unravels.
- Make more than you take. You have to make enough to pay all your bills and put money towards an emergency fund.
- Look at every cost you have and see what you can live without. Cable is always a good place to start.
- Get a second job. Deliver pizzas if you have to. Or use your experience to provide consulting to companies that could benefit from your expertise.
4. Pay with cold hard cash.
Paying with cash eliminates some anxiety by taking the guessing game out of what's in your account. Paying with cash makes it easier to balance your checkbook. And if you have your cash budgeted out, you know you have the money to pay for what you're buying.
Plus, it can be a confidence-builder by paying for things in cash. Cash sends a stronger message to your subconscious about your ability to manage your money and build sustainable wealth.
You can do it!
The most important thing you can do when you are attacking your debt is to not give up no matter how big or how many times you slip up. Keep going; you'll be glad you did.