So if you’re like many people now, you’ve accumulated different types of debt… credit cards, loans, finance agreements for your car etc, then you’ll appreciate how it can feel when this starts to get on top of you and you realise you’ve been paying it off for what seems like years. You maybe don’t feel massively worried or stressed by your debt situation just yet, maybe you do, but you’re probably wanting to move forward in your life and you may feel your debt is holding you back.
If you’re looking to get a grip of your situation and start to formulate a plan to deal with your debt, then that’s commendable. So many people bury their head in the sand and pretend it’s not really a problem, but it’s something everybody should get control of as it needs to be properly managed. I would generally consider myself to be in control of my finances and not someone who buries their head when the bills and statements start piling up, but I’ve had my moments in my youth. Lots of lessons were learned and lots of time & money expended paying it back! Hence why I’m now in a position to help others (perhaps you or your family) how to finally get control over your finances.
How To Eliminate Debt Now
I’ve outlined a plan of action below to focus your attention on the most important points. This isn’t an exhaustive list and is designed to improve your immediate short to mid-term situation. (I’m in the process of creating a page for a more long term approach, so keep an eye out for that).
- Get a grip of the situation by finding out how much you owe. This means opening all those credit card statements, logging on to your banking or loan apps and checking your bills. Total up how much you owe and what is most urgent. Get a grip of all your outgoings and incomings. This isn’t rocket science, but it’s critical you do it.
- Arrange your debts to pay the most expensive interest first. So if you’ve got a loan at say 6% interest for example and a credit card at 15%, interest, you need to move the credit card to the top of the pile as a priority, as you’re paying more each month in interest on that credit card than the loan. This needs to be paid off first as you could end up adding more to your debt by paying more on other debts. Getting them in priority order is.. well… a huge priority. (Obviously if you have any final demands, get these paid first and foremost, then move on to the most expensive ones).
- Put all of your resources into paying off the most expensive debt first. You should still be making the minimum payments on all of your other debts, but the majority of your available money should go to clearing that most expensive one first, then once paid off, move the majority of money to paying the next most expensive and so on. This will also mitigate any further damage to your credit rating by not missing payments.
- Cut up your credit cards and don’t take on any more debts. You’ve got enough on your plate to deal with at the moment, so focus on your current situation and don’t make it any worse! If this means you have to make some sacrifices in your daily life then you have to accept you won’t get out of debt unless you stop the excesses.
- Don’t worry about savings, use any savings you have to pay off your debt. If you’ve got savings, you should really use this to put towards paying off your debt. Stop any standing orders, or regular bank transfers that go to savings accounts, and redirect them to paying your outstanding dues. This has the double effect of reducing the overall time it takes to pay everything off and also reduces your overall interest payments too. Plus, if your money is only earning say 4% interest in a savings account and your credit card interest is 15%, you’re already making a loss as you’re still losing 11% in credit card interest and not gaining anything by keeping your money in a savings account. Your debt can take much longer to pay off if you try to save at the same time.
- Increase your income – You could ask your boss for a raise, take on an extra job or part time position in the evenings or weekends or you could even start your own online business. (I actively promote the latter 2 options on this site, but getting a raise is also a quick way too increase your income and if you can do it, you should!).Check out these other income generating ideas.
- Get better deals on things you already pay for. Research things like utilities, phone providers, broadband providers, cable tv, insurance etc. and see if there are better deals out there. You can even speak to your current supplier about getting a better deal to help reduce your monthly outgoings. This is actually much easier, even painless when compared to point 8 below. So take an afternoon to call around and see what bargains there are to be had. Make it a challenge to save money on as many things as you spend on.
- Modify your lifestyle and spending habits. This is probably the single hardest thing to do. All humans have habits and they can be hard to change. But if you’re willing to put the effort in, this will pay dividends in the long run. If you can give up spending on unecessary luxuries or cut down on a small daily spend, you’ll be amazed how much that can add up over the course of a year.
- Do a household budget. Remember to make sure your outgoings are less than your incomings! Once you get used to doing a weekly/monthly budget you’ll see everything laid out in black & white so you can see where your money is going and what your expenses are. It’ll give you a plan to stick to so you shouldn’t deviate.
Debt Help Free Advice
If you’re really in dire financial straits, you can get free advice and someone to walk through what to do with you. Lots of debt charities are available to help if things are really getting on top of you and you can’t see a way out. Please don’t panic or stress any further, it will only make you feel worse. Take action and seek help now to get the assistance you need. Lots of people devote their working lives to helping people find a way out of situations like this and you don’t have to feel like there’s no road out and that you’re on your own. You’re not!
Do an online search for debt charities in your area or national groups that may be able to help and… call them! Call them now! You’ll feel so much better you did. Half of the problem is keeping it bottled up inside. Talk to a person who deals with this kind of thing for a living and you’ll start to feel so much better just knowing there is help available for you. “A problem shared is a problem halved” as the old saying goes.
In this day and age there is no reason anyone (in the 1st world at least) should be suffering mentally or physically due to outstanding debts. GO AND SPEAK TO SOMEONE NOW! They’ll be able to help you put a plan in place and even help with speaking to your creditors about arranging an alternative repayment plan if necessary. Seriously stop stressing any more and pick up the phone or even chat online if you prefer. You’ll be glad you did.