It’s easy to get yourself into financial problems, but getting out of debt is not easy. You need a long term plan and the determination and patience to see it through. So how can you get out of debt? Follow the steps I’ve outlined below.
- Write down all of your debts. use your credit report as well as your statements to see what you owe. Write down who you owe, what kind of debt it is and the amount.
- Create a budget. In order to tackle your debt, you need to set money aside to pay it down. But first, you’ll need to see where your money is going to see how much you can contribute towards your debt.
- Be patient. While it may have taken 1 year to accumulate this debt, it can take you many more years to completely wipe it out. Don’t be discouraged. This plan you’re creating just proves that there is light at the end of the tunnel.
- Decide what to pay first. You’ll want to tackle your worst debts first. Try paying off those with the highest interest rate first. If you have some smaller debts, get rid of those as soon as you can too. This can have a psychological benefit and, if listed on your credit report, will have its status changed to paid which will raise your credit score.
- Savings. While the goal is to pay off your debt, you should not ignore your savings account. In fact, the lack of having any savings is likely the reason you’re in debt. Unless you keep your savings account funded you’ll just continue to rely on credit.
- Sell your stuff. We all have a lot of extra junk we don’t need. Now is the time to get rid of it. Have a yard sale. You can sell gold, sell diamonds and other jewelry. Put up your old electronics on eBay. You will declutter your home and make some money in the process.