Being in debt can be an extremely large source of stress for anyone. It can also keep you from reaching the many goals you have set forth for yourself, such as buying your first home, taking a long vacation or saving for retirement. There are many people who have been trying to get out of debt for a while but don’t know where to start or what to do. Following the seven steps listed below is a good start to paying your debt off for good and living the life you want.
#1 Think About How Your Debt Began
Thinking about how and why you got into debt in the first place is where you want to start. You want to identify the habits or circumstances that got you into debt in the beginning so that you can change them later on. Start by writing down at least three issues that caused the debt to build up. Maybe you were overspending because you had a good job, but now your hours are cut and you can’t afford the payments you are responsible for. Knowing why you are in debt is the beginning step to getting yourself out of it.
#2 Reconsider Your Spending
Your spending habits may easily contribute to your debt without you even realizing it. It’s easy to spend a little bit here and there on your credit card, but those little bits can add up fast! The first step is to create a personalized budget for yourself and stick to it. You may wish to start writing down everything you are spending your money on, from clothes to food to a cup of daily coffee, to pinpoint where the cash goes. From there you can create a budget that cuts out the frivolous spending you are doing and leaves money for necessities and savings.
#3 Consider Your Debt
You may have turned a blind eye to how much debt you really have up until this point. But it is now time to face your reality if you want to get out from under it. First, make a comprehensive list of every debt you have. Write down how much you owe, the minimum payment, and any interest rates you are paying on. You may want to look at your credit report to make sure you are aware of everything that you owe.