Getting out of debt is something most people struggle with. People get into debt for various reasons. Sometimes it’s absolutely necessary to take out a loan to deal with situations that pop up suddenly like accidents and losing your job. While at other times, people just invite debts upon themselves by poor life choices like overspending, vacationing on loan and more.
Whatever the reason, it doesn’t matter what is done is done. What you should be focusing on is getting out of the debt hole. If you have no clue where to start, help is here.
Find out how much you owe
Everything has a starting point. The first step is finding out who and how much you owe in order to organize your finances. Make a list of all the debts you owe, including the 200 dollars your friend loaned you, but for some reasons, you ‘forgot’ to pay back and tally them up.
Create a debt payoff plan
Once you have the exact figures, map out your pay off debt reduction plan. Determine which debts to pay off first. But it’s always advisable to start paying off the huge debts that are, the loan with the highest interest rate. Redirect all your extra cash in paying that loan first and you’ll be shocked at how much money you will be saving at the end of every year.
After paying off that loan, focus again on the next debt with a higher interest rate, and the next until the very last one.
You can as well choose to settle the small debts first and then move in on the loans with the highest interest rates. This method makes you feel like you are making tangible progress and motivates you to stay on track.
Stick to the plan
Once you’ve settled on the plan that you see fit, STICK to it. It’s very easy to give in to temptation, but if you want to get out of debt, you need to sacrifice. You can start with;
- Changing the behaviors that got you in that tricky situation.
- Creating a budget & sticking to it.
- Tracking every cent you spend.
- Looking for ways to earn more money.