You're overwhelmed with even just the thought of how much debt you have. Truly overwhelmed. We get it. You know you are in debt, but you have absolutely no idea where to begin managing your debt, let alone getting out of debt.
Here are the steps you need to know to start taking control of your finances and taking the first (which is often the hardest step) of getting of debt. At Be Secure Financially, we won't offer you a quick fix, or a gimmick, or an unrealistic "we paid off $80,000 in debt in 6 months" article click-bait. Be Secure Financially will just offer the real honest truth and realistic steps for your unique situation on how to plan and begin your personal finance debt-free journey. You can do this.
1. Know Your Debt & Sign Up For Free At Credit Sesame
We know it is really scary, but you need to know how much debt you actually have. This is the first true step. So, you should read the Be Secure Financially article "What Is Credit Sesame? Why You Should Sign Up For Free." Then sign up for credit sesame to see exactly how much you owe, your current credit score, and your credit report.
Okay,now take a deep breath, we know your debt seems like a lot. Whether it is just a few hundred dollars, a few thousand dollars, $15,000, $40,000, $80,000 or $100,000 plus, you can get out of debt. You may feel like you want to cry, and perhaps you should. Just let the tears flow. Then grab some tissues, take another breath and know you can get out of debt, no matter how deep in debt you are. It is not a lost cause, you can take control of your personal finances.
2. Write Down Your Debt & Setup A Debt-Free Plan
Write the number down, yes, the whole number. Write out or use your notes on your phone and write down the following:
Each credit card name
Minimum Monthly Payment
3. Create Your New Debt-Free Budget
Read "What Is A Budget and Do You Need One". Then download our Free budget excel worksheet. It is easy-to-use and customizable. You simply place in your income and your monthly expenses. Don't forget any expenses, this is what will help keep you on track. Based on your income v. expenses. You may need to cut back on your spending. Read Wants v. Needs. Decide what your needs are (housing, food, etc.) v. wants (cable, eating out, etc.). Then make adjustments. Create an "Emergency Fund", start with $250, then $500, then $1000 and keep building your fund. This will provide you with a small comfort zone so you don't have to acquire more debt.
4. Call Your Credit Card Company
You need to call your credit card/loan companies and tell them you are having difficulty making your minimum payments. Do not just ignore them. Call them. Many credit card companies are willing to help you or put you on a realistic payment plan. They want to receive a payment, so sometimes they are willing to accept less than your minimum amount due, especially if you stay in contact with them and make your payments that you agree to. Try not to fall more than 30 days behind, because this really affects your credit score. However, call them even if you have fallen behind on payments, even very behind on payments.
5. Choose Your Debt Payoff Method
Read the Be Secure Financially article "Debt Snowball v. Debt Avalanche" and choose the payoff method that is right for you. Make your required minimum monthly payments, then choose the card based on either balance (snowball) or high-interest rate (avalanche) and start paying that card down with additional payments.
Paying off your debt will take time. You may have to try and make additional adjustments, or for a period of time cut back on your spending; however with the right realistic steps and plan, you can payoff your debt, no matter how big or small. You will feel better once you start paying off your debt. Then one of the most important things is do not take on more debt, or fall into a debt relapse. You can live within your means, payoff debt and still enjoy your life.
If you have any additional questions, please feel free to Ask Izzy and contact Be Secure Financially directly. Remember, you can take control of your finances, no matter how much debt you have, you can do this!