How to Beat Your DebtBy Caitlin in Debt
It seems that the one thing that is universal in our world is that everyone is in debt. Companies, nations, and most of the people you meet are all struggling with credit issues. Unlike many companies and countries, though, it can be much more difficult for you to keep your head above the crest of an ever rising tide of bills, credit card payments, mortgage payments and consumer loans, but it doesn’t have to be that way. Despite the way you may feel, it is very possible for the majority of people to dig their way out of debt, escape the bonds of credit use and never have to worry about creditors’ calls again.
It’s possible, depending on your exact situation, it may not be easy, but it can be done. Like the old saying goes, nothing worthwhile ever comes easy and living debt free is more than worthwhile. You’ll find it is liberating. Just follow these simple steps.
Know Where You’re At
It’s hard to get where you want to go, if you don’t know where you’re at. That is why the first thing you need to do is start keeping track of how and where you spend your money. Those expenses coffees you treat yourself to every morning on the way to work may seem like a small expense, but figure out what they cost you over the course of a month and you might be surprised. Start by keeping track of all the things you buy in one day, this is a great way to ease into created a budget for yourself.
Want, Need, Have to Have
Once you know where all your money is going, divide all your expenses up into those three categories and then be brutally honest with yourself. You definitely have to eat, but do you have to have lunch out every day? Packing a lunch everyday may not be as much fun as going out to lunch with your coworkers, but neither is being afraid to answer your phone because you’re afraid it is a creditor calling.
Eliminate your wants and take a second look at your needs to see if you can find cheaper alternatives. Remember this is just temporary and will be more than made up for when you are finally debt free.
Avoid More Debt
The easiest way to eliminate debt is to not have it to begin with. Avoid “buy now pay later” offers and keep your credit card at home when possible. If you look back, most of the time, it is paying interest and administrative fees that caused you to be in debt to start with. Save up for things you want, that why you won’t have to charge them to your credit card.
Eliminate the Negative
Next look at all of the little charges that add up in your budget, try to minimize your banking fees by only using your banks ATMs. Get a copy of the list of fees associated with your account and see if you can save by paying bills online or if you can save by changing the type of account that you have.
Contact your creditors, don’t hide from them. Be honest with them and explain why you are having trouble making your payments. The majority of the time they will be willing to work with you and modify your payment plan as long as you make an honest effort to pay.
Once you have worked out your new budget and your debt doesn’t seem so daunting anymore, start with your highest interest debt and start paying as much as you towards it every single month. Interest is the killer and the faster you knock down that principal the more you will save and the faster you will be debt free.
Talk with a trusted financial advisor; it may be your bank’s representative, a professional financial planner or a credit counselling agency. They have the expertise to help you work out a plan that will best provide for your current and future needs while helping you eliminates your credit problems.
It can seem like a daunting task to get out of debt, but it can be done and in the process, you will develop healthy spending habits that will serve you a lifetime. Best of all is the feeling of accomplishment you will feel as you see your debt get smaller and smaller and the freedom you will enjoy living a life free of financial strain.