Getting Out of Debt
Getting out of debt can seem daunting, scary and impossible. It doesn't have to be. We have a solid plan to help you begin.
You need to stop accumulating more debt. This can be difficult, especially if you are barely getting by or can't afford the debt you have. However, you have to stop. You can't get out of debt, if you keep getting deeper into debt.
First look at the kind of debt you have Good Debt v. Bad Debt:
Good debt: student loans, mortgage, business debt
Bad debt: credit cards, payday loans, debt that is financing wants v. needs
Steps To Get Out Of Debt
Get out of Debt Step 1: Cut Your Cards
It has been and probably always will be the hard reality of getting out of debt. Cut them up, you are already in debt, now to stop accumulating more debt, you need to stop using your cards.
Get out of Debt Step 2: Face Your Debts
This may be more difficult than cutting up the cards. You have to write down all of your debt. Put them into two categories Good Debt v. Bad Debt. Then, wait for it and take a breath. Look at the amounts. Add them up. It may seem shocking, but don't lose hope. You got into debt and you can get out.
Get out of Debt Step 3: Negotiate Your Bad Debts
You can use your leveraging power with credit cards to get better rates. Shop around and then call your credit card company and ask for a better rate. Also, if you are having a difficult time making your payments, here is the best advice: call your credit card companies and tell them and ask to be setup on a payment plan. It may be difficult to ask for help, but many are willing to help you make payments you can afford.
Step 4: Review or Setup Your Budget and Then Stick To The Budget
Use budgeting software or tools such as Mint.com, make a spreadsheet, or use an old-fashioned pencil and paper, they all work. Write down your income and your expenses. Then adjust your expenses, cut back on certain things, shop around for better services you are already paying on. Be realistic about your goals and expenses.
This is just the beginning we have a Getting Out of Debt: Step 2 to come.
Disclaimer: The content on this site is provided for information and discussion purposes only. It is not intended to be professional financial advice and should not be the sole basis for your investment, financial or tax planning decisions. Under no circumstances does this information represent a recommendation to buy or sell securities, or any other products, or services. All content and information is subject to change at anytime.