20 Jul How to Get Out of Debt
Getting out of debt is certainly easier said than done. When the bills roll in, sometimes it feels impossible to make more than a minimum payment. But with a little hard work, discipline and budgeting, getting out of debt can be easier than you may think.
- Gather all bills. Look at the due dates of bills and schedule around your pay periods. Don’t try to tackle all bills on one paycheck. This can create unnecessary stress. It will be easier to split them between pay periods.
- Create a monthly budget to help determine how much extra you can pay on your high interest bills. If you need help with a budget, start out by keeping all receipts on all purchases for one month. At the end of the month, take a look at where you are spending your money. Food is usually a big culprit. Try packing your lunch 4 days a week instead of eating at a restaurant or buy your favorite drink or water in bulk so that you don’t have to spend unnecessary cash.
- Paying high interest credit cards will come before low interest student loans. You will be making the minimum payment on the loans or low interest credit cards, while making higher payments on the high interest credit cards. Once the high interest cards have been paid down, then tackle the next bill on your list. This step alone can save you hundreds in interest payments.
- Start saving. This may seem counterintuitive to paying down bills, but this will help in case of a rainy day. Instead of using a credit card to get yourself out of a sticky situation (ex. a flat tire), you will already have the funds to pay for whatever life throws your way. Keeping a savings account will also help keep you out of debt in the future. Thinking ahead and being realistic is key. Everyone has a time when a rainy day fund is useful.
- Don’t fall for any “get out of debt quickly” schemes. These schemes prey on people by promising them a debt free life, but end up taking any money or property they have left. If they are asking for something additional or giving you an additional loan, say no! Borrowing more money to pay off what you currently owe is never a good idea and will sink you even further into debt.
Getting out of debt is really all about being mindful of the money you have coming in versus the money you have going out. Being debt free will be worth the budgeting and effort that you put in.