If you have fallen into debt, life is stressful. You may be able to dream about the day you are free of debt again, but it will take time and effort, and certainly self-discipline. The process of getting out of debt probably starts with analyzing how it happened in the first place. You need the motivation to get out of trouble. There is little point in putting things off because debt does not disappear by magic and some of the steps you will need to take will be painful. You must change your ways because it will have been your behavior that got you into trouble in the first place.
You must sit down and make a list of your debts, what interest you are paying on each and what you are required to pay each month to keep in line with your creditors’ requirements. Make sure you include everything before you start to make your plans to get out of trouble.
The best way to keep creditors at bay is to set up automatic payments to each of them and accept the financial commitment that you will be making each month. That money is not available to you for spending elsewhere. By automating everything you will not have any late penalty payments to meet in the future so you should avoid any damage to your credit score.
Your Plan of Action
It is unlikely that simply paying these amounts will reduce your debts significantly. If for example, you make the minimum payment to a credit card company, the company then applies a fairly high rate of interest to the remaining balance. If you have a balance in the thousands of dollars it will take many years to clear completely and that is without any additional spending on the card.
You must find a way to pay more and decide which of your debts to prioritize. You must have a budget that lists your income and expenditure on a monthly basis. If there are some obvious savings you can make on some of your expenditure, things like utilities, insurance or telephone, then do your research and change suppliers where you can obviously save money by borrowing fund at realisticloans.com. If you can create a surplus, you can use that to pay out more to your creditors or to build up an emergency fund that can help you in the future rather than having to resort to an expensive credit card.
You may need to cut out some everyday spending; perhaps take a packed lunch and forget the coffee shop? You may even consider downsizing, everything from your auto to your home. There are plenty of ways to enjoy life without spending money and it is important that you find them.
If there are ways to increase your income, that is very welcome too in your efforts to get rid of all of your debt.
There is no absolute correct answer as to what to address first. Psychologically you may want to reduce the number of creditors you have and therefore you will target the lowest amount to clear that first. Alternatively, your approach may be to pay off the most expensive debts first. Often, they are credit cards and ironically if you take out a personal loan at a lower interest rate to pay off a balance in full, you are transferring the debt but paying less out in the long term. The latter makes financial sense but the former helps with motivation and encouragement which you need to continue with the process of becoming debt free.
None of your hard work will be of any use if you do not change some of your habits. If you have paid off a credit card balance with a personal loan, you cannot start to build up a balance once again. By all means, keep the credit card for convenience but always pay off any spending at the end of the month.
No one is suggesting that you will find all this easy but as you make progress, you will start to see the possibility of being debt-free and with it, stress-free. It is worth the effort.