5 Easy Steps to Getting Out of Debt
Posted on Wednesday, February 15th, 2012 at 4:51 pm
No one wants to find themselves in financial debt. Unfortunately, many people find themselves in debt each day. Personally, I find myself feeling overwhelmed when I find myself in any sort of debt. Oftentimes when I am overwhelmed by something, like a large amount of debt or a seemingly impossible to-do list, I go into denial. Of course, denial doesn’t actually solve any problems, which is why I am going to walk you through 5 easy steps to getting out of debt. This step-by-step process has helped me overcome my debt and regain control of my finances.
Getting out of debt is a lot like completing a marathon. When you’re just beginning, the road ahead can be daunting. That is why the key to successfully getting out of debt is breaking the big issue (in this case, your debt) down into smaller steps that can be accomplished day by day.
- First you will need to take a close look at your overall debt. How much debt do you actually have? How much are you paying in order to carry this debt (i.e. interest rates)?
- Next, you will need to take a close look at your spending habits. How much are the “extras” costing you? Where can you cut back on? Stop spending money where it isn’t necessary. Instead, put the savings toward paying down your debt.
- Now that you have taken a good look at your debt and spending habits, you can begin to implement a proactive plan. Start by setting goals. Decide how much debt do you want to pay down each month. Now, create a very specific monthly budget and spending plan. Make sure your monthly budget is lower than it was previously.
- If lowering your budget and cutting back on your spending habits isn’t enough to reach your monthly goal, consider taking it a step farther. Consider picking up extra work, a second job, or selling extra assets. Although this step might not be ideal, it will get you out of debt faster.
- Create long-term saving goals. Learning how to manage your finances is an invaluable life skill that will help you save money, even after you’ve paid off your current debt. Visit our “How to Save” section for tons of ways to save!
Although you won’t notice as much initial progress, the first two steps are crucial to getting on the road to debt freedom. As you progress through these steps, you will start to see your progress. Think about it like a diet: if you don’t persevere, you won’t reach your goal. So, stay strong and persevere. Before you know it, you’ll be debt free!