Debt is a scary thing for a lot of people. Many are kept up at night due to the debt obligations hanging over their heads. Fortunately, there are ways to get your finances back on track, even if you’ve veered way off course. Here are some of the options for people who have serious debt.
Get Your Spending Under Control
People with serious debt issues all need to start in the same place. You can’t expect to get out of debt without making some changes to your life. The first step is to make a budget. This will give you a full, unfiltered look at your cash flows. Here’s how you can build an effective budget:
- Get all your financial statements together. This will include your bank accounts, any investment or retirement accounts, and all outstanding balances.
- Calculate your total income. You’ll want to put all your various forms of income into this category. Make sure you use after-tax income, since this is going to be a much better representation of how much you’re actually bringing in each month.
- Add up all expenses. This is typically the least enjoyable part of putting together a budget. But it’s also the most important. Your budget isn’t going to actually tell you anything if you fail to include certain costs. Make sure you put all bills, memberships, subscriptions, food, and entertainment expenses into this category.
- Find areas where you can spend less. Memberships are one of the first places to look if you need to free up some money. Try working out at home instead of at the gym. Or at least opt for a less expensive option. You should also try to prepare as much of your food as possible at home.
Try to Pay Off the Debt
Now that you’ve created a solid budget for yourself, you might be able to claw your way back from the depths of your debt. However, people who can find ways to turn around their spending habits aren’t necessarily out of the woods yet. The fastest way to pay down what you owe is by going after the highest interest rate debt first. Taking this approach will minimize what you’ll end up owing in interest payments.
On the other hand, some people need a psychological boost when squaring up with a massive debt load. For these individuals, it might make more sense to tackle smaller balances first and try to transfer larger sums to a lower interest rate account. This is called snowballing, as it can give people momentum to keep going with their payoff plan.
Work with a Debt Negotiation Company
People who are unable to pay down their debts after budgeting their money are going to need to take a different approach. Working with a debt relief company can help people in this situation finally regain control of their lives. Freedom Debt Relief is one of the top organizations in this industry. They’re known for helping people get their finances under control by getting consumers better terms with their creditors. Freedom Debt Relief reviews from Best Company (overall score of 9.4) really say it all. Clients have had overwhelmingly positive experiences. So, can even pay down their loans entirely in as little as 24-48 months.
Borrow Money from Family
It’s not easy. But sometimes, borrowing money from a friend or family member can be your best solution to getting out of debt. People close to you typically aren’t going to charge high interest like credit card companies or other lenders. Just make sure you actually pay these people back if you end up borrowing from them. Failing to pay back people in your life can put a major strain on your relationships.
Make More Money Somehow
Besides spending less, people can also make more money if they need to pay down a large amount of debt. Consider taking on a part-time job or freelancing within your industry. These can both get you a lot of extra cash coming in each month. Additionally, you can sell or downgrade certain items that aren’t necessary to your life. If you’re driving a luxury car, switch to something less expensive. Get rid of anything you don’t need, and you’ll immediately generate some money to pay down your debt.
No one wants to be in debt. And people who find themselves in a sticky debt mess typically don’t want to address the issue. It’s hard—especially if you don’t see an obvious way to pay for things. Considering your options will let you make better decisions and get your finances back under control.
- Does Borrowing to Pay Debt Make Sense?
- 4 Compelling Reasons to Get Out of Debt as Soon as Possible
- Master Your Money Type to Create a Life of Wealth and Freedom (Part 2)
- How Small Business Bankruptcy Attorneys Minimize Potential Losses
- Managing Your Start-Up Finances
a WordPress rating system
a WordPress rating system