To get yourself out of debt, you have to do the work. It may not be easy resisting the urge to stop for your favorite drive-thru coffee in the morning or purchasing whatever catches your eye while browsing online. But make every penny count and remember that the more you pay towards your debts, the faster you’ll be out of the red and taking back control of your (financial) life.
Follow these steps to successfully get out of debt:
- STOP Borrowing Money – Plain and simple, the best way to get out of debt is to STOP borrowing money that you don’t have to spend! That means no more credit cards or loans. If needed, live on a cash-only basis to help you learn the importance of only spending what you actually have.
- Track Your Spending – This may sound like a no-brainer, but one of the best ways to get out of debt is to carefully track where your money is actually being spent. Making budget cuts (see #3) can be difficult if you don’t have a full-picture of what you pay and how you spend money.
- Set Up a Budget – Once you’ve tracked your spending, making a budget will be easy (but sticking to it will be the hard part). Use your regular spending as a guide and look for places to cut spending (i.e., going out to eat, entertainment, travel, etc.). The key to debt-free living is to put your budget and monetary goals in writing and stick to them.
- Debt Snowfall Method – Now that your spending is tracked and you’ve created your budget, it’s time to implement a payoff strategy to help you kiss your debt goodbye. The “Debt Snowball Method” includes making minimum payments from your monthly debt fund to all but one of your outstanding debts. That way you can allocate your leftover funds to pay extra on a specific debt. This “snowball effect” will help you pay off your debts quickly.
- Pay Extra – Every chance you have to make higher payments on your debt will bring you even closer to being debt-free. A good rule of thumb when creating your initial debt payment fund is 20% of your total income. Take advantage of any chance you get to pay extra on your debt (i.e., random bonus at work, cash inside your birthday card, yard sale or eBay profits, etc.).
- Consider Debt Management Plans – Instead of putting yourself at risk to fall right back into debt by balance transfers and debt consolidation, think of a way to better manage and pay off your debt concisely. Consider linking arms with a financial expert and getting credit counseling to help you develop a debt management plan to effectively manage and pay off your debt faster.
- Renegotiate Debt – Sometimes it doesn’t hurt to ask for a little forgiveness. When it comes to credit card debt, many consumers are unaware that you can renegotiate interest rates and fees (as long as your payment history is in good shape). Most credit card companies want to keep your business, so they may be willing to work with you to get you a lower monthly payment or debt settlement.
Consumer Credit Repair Based in Charlotte, NC
No matter how long you’ve been in debt or what caused your debt to build up, Improve Credit can help. While some may argue that they can improve their credit on their own, our trained financial experts are here to guide you and save you 50-75% of your total debt and help you restore your credit. Our personal credit repair services are tailored to your individual needs and will help you turn your finances around with the help of certified credit experts. In addition to our consumer credit repair services, we also offer business credit repair, credit monitoring, credit counseling and even identity theft help.