Get Rid of Your Debt
Debt is very stressful to deal with but no matter what’s going wrong, you can get out of that by taking some important steps.
Find out how much it is that you owe: Get clear on your debt. Come to terms with it. Add up all the numbers, and look at it. This may be heart-wrenching to do, but it is the first step to take control of your finances for the future.
Get all your financial statements together, whether they be credit cards, mortgage, student loans, car loans, lines of credit. Use Microsoft Excel to make a spreadsheet of each place there is a debt and the amount that you owe. Use your credit report to find any outstanding debts. It isn’t necessarily the case that the largest debt needs to be paid off first, but look at which has the highest interest rate because that will cause more debt can add up.
While you tackle the highest interest rate debts, continue making payments on the lower interest rate debts because you should continue knocking off the higher ones while you tackle the minimums.
Now you need to find out the payment you have to get that higher interest rate debt paid off fast. Put together a timeline of perhaps a couple months down the line, or even a year, to pay off the high interest debt and find out the best amount to pay above the minimum payment to achieve that benchmark, because otherwise, what will happen is the interest charges will keep mounting. To do this, you can access a credit card payoff calculator online and just put in info for: amount owed, interest rates, minimum payment, and find out how long it will take you to pay off all debt if you just make minimum payments.
Now that you have all the important numbers in check, you have some very powerful knowledge. So now you need to find out how to lessen the impact these have while you are paying them off gradually. This depends however, on how many debts you have. You can contact each creditor and ask them how you can reduce your interest rate. Perhaps you can refinance a car loan. If your repayment history is solid, the creditor can give you a better rate. Try to get a line of credit or any other lower interest loan, and use it to pay off higher interest debt.
It is very important to protect your credit. If you cannot make a payment on time, be clear about it to the creditor. That way you will prevent further damage on your credit score. By informing the credit card company, and giving an appropriate explanation, they may agree to divide the payment in half for the month so you won’t get charged any fees. A polite conversation can help you come to terms with a more practicable plan. Keep payment dates listed on your calendar so you don’t forget. Don’t wait until the last minute to make the call, and make sure to keep check of your credit report.
Put together an emergency fund for those unpredictable rainy days. This way you won’t add more to your debt if something happens to your car, for instance. Without an emergency fund in place, you can land in even more debt. It is a very difficult downward spiral to get out off.
You can try to find some part time seasonal work, alongside your day job, or try selling off any high priced items for your emergency fund.