Get Out of Debt
Getting into debt seems easy enough; a family emergency, a lost job, a few months of spending more than you earn – but it’s getting out of debt that’s the hard part. That takes a plan that’s put into action and hard work along the way. It’s not an easy task, but it’s a task that you’ll be happy you embarked upon.
Unfortunately, most consumers don’t know where to start when it comes to getting out of debt. Without the first steps to become debt free, it’s difficult to see any progress against the debt.
So, how do you really get out of debt?
To get out of debt, you’re first going to have to tally up the total and calculate not only how much you owe – but who the payments are owed to. Include everything from personal loans and money owed to friends and family, to money and accounts owed to creditors, like car loans and past due accounts. Use account statements and phone calls to determine current account balances to find the total, and write it down on paper.
To get out of debt, you’re going to have to find money in your budget to put towards the debt. A lot of consumers in debt will skip payments from month to month, trying to make ends meet in their current lifestyle, and therefore avoid fully repaying the debt that has been accumulated. To make a budget, create two columns, one column with your monthly income (from all sources) and one column with your monthly expenses.
Chances are, the expenses are going to exceed the income. This is where the hard work has to happen. You have to work to get the expenses under the income, and this is where the sacrifice occurs. Making small changes like getting rid of cable television, or reducing the money that’s spent on entertainment every month isn’t going to be fun – but it’s going to help get you on track to being debt free.
Yes, start saving. Begin small with five percent of your income and stash it away into a savings account. That money is going to help you stop turning to credit when an unexpected expense comes along. Instead of reaching for the credit card when you’ve got an account that needs to be paid immediately, or a cost in the budget that you haven’t planned for, you can reach towards the savings account. Make sure the savings account contributions are factored into your budget.
There are two general plans when it comes to repaying debts. With both plans, you create a list of the money that is owed, and who it’s owed to.The first method includes repaying the debts in order of smallest to largest. This provides you with some instant gratification, allowing you to repay certain debts quickly. Minimum payments are made to all of the accounts, with the extra portion of the debt repayment budget being allocated to the smallest debt amount, increasing up the list throughout the debt repayment process.
In the second repayment plan, accounts with the highest interest rates are repaid first. Similar to the first plan, where minimum payments are made to the accounts – you put the bulk of the debt repayment budget being paid towards the debt with the highest interest.
However, it’s important to remember that there are times when a debt repayment plan isn’t enough. Maybe there is too much debt, or consumers just aren’t sure where to start. At those times, it’s important to seek help for the debt repayment.
Getting out of debt isn’t easy, Consolifi can help you effectively get your debt under control. Sometimes, you need to make major changes in the budget and get professional help, if you aren’t able to come up with a feasible plan yourself. Using our debt consolidation loans or using debt settlement services can help to lower those monthly payments and get creditors paid sooner.
Consolifi can effectively help to reduce the amount that has to be paid to creditors to settle the account – and there are things you can do repay accounts faster. Taking on extra hours, finding a job that pays more or making lifestyle changes to reduce your expenses helps to find the extra money in the budget to repay debt faster. Sacrifices like getting rid of multiple vehicles in the household, or downsizing the home can help to find immediate money that can be instrumental in getting rid of the debt and starting a new financial life.
Getting out of debt is difficult, and requires you to completely change the way that you think about money. It means beginning to live within your means. Credit is not a tool that should be used to extend your budget.