Debt can be one of the scariest words you hear. It can be extremely emotional and challenging for you and your family. Whether it is credit card debt or student loan debt, 39% of Americans carry debt month to month. Instead of carrying around anxiety, depression, stress, regret, and resentment for your debts, you can start right now by handling them.
Here is how you can start tackling your debt today and let go of hopelessness.
Understand what you owe
Now is the time to stop ignoring the bills and open that letter or email you have been pushing aside. It is time to get to know your debt in detail. This is no time for denial.
What you need to know is your current balance on your debts, interest rates, and minimum payments. This will help you find productive ways to minimize your debts.
Now that you’ve accepted the first step, it is time to make a plan and get organized. In the long run, it will help reduce your stress and hopefully help you feel more motivated each time a bill arrives at your fingertips.
To get organized, try these pearls of wisdom:
Update your information: be sure each of your bills has your correct email address and street address. You want to receive all the pertinent information related to your accounts.
Get Alerts: avoid late payment fees by signing up for alerts offered by these companies.
Implement a new system: come up with a new way to pay your bills, whether you use an app, a calendar, or a spreadsheet, find a way to never miss a bill payment again.
Spot the errors: check the history and balance of each of your bills to ensure there are no errors or mistakes.
Now it’s time to get cozy with your bills and debts. While paying your bills might seem like an endless cycle, you can help yourself by examining the fine details.
Take a look at bills you can downgrade on (perhaps your cell phone plan or cable bill). Try to find ways to save so you can put more towards your debts.
It’s always good to investigate your electricity bill as well. Perhaps you can save by unplugging unused items or checking to see if they offer a plan where you can pay a similar amount each month (instead of being surprised by the bill).
Cut bill amounts
For the hardest part, you need to see where you can cut some bills out completely. A better name for this is budgeting. Your best bet is to review your bank account statements each month and see what you are spending.
You might find a trend you can cut out. Perhaps you can cut down on your fancy coffee drinks, fast food purchases, lottery tickets or other things that are not necessary for the time being. With a budget, you can also set aside some money for your wants each month so you do not feel as though you are going without something special.
This is also a great time to check out sales, coupons, or deals on items you may need to purchase. The more money you can save on things you must buy, the better your budget will be.
Increase cash flow
Increasing your income seems like a good way to fight the battle that is debt. You might be finding it hard to get that promotion or upgrade to a better-paying job. What you can do is find ways to increase your income separate from your full-time job!
Find side gigs: try things like handyman work, dog sitting, tutoring, or babysitting.
Sell your stuff: you can always make extra bucks by selling your stuff. Have a garage sale or list your items on craigslist or eBay.
Another decision to be made is how you will tackle your debt. The ‘snowball’ effect has you paying off the smallest debts first and then using the extra cash towards your next bigger debt. Other people prefer to go straight for the debts with the highest interest rates. Whatever way you choose, make the plan and tackle it head-on.
Do something for you
Cutting spending and trying to pay off debt will get old and monotonous real fast. It will bring forth all those feelings of resentment and depression very quickly. You need to fit in something for you each month and it can absolutely not affect your spending.
Right now, you can create a “free” list. Search your town or city for all the free events and activities you can do. It might be whittled down to a scenic hike or walk around a lake, but make a list just for you.
Almost everyone has debt and almost everyone struggles to pay it off. Your goal is to get to know your debts, interest rates, and balances so you can make the most effective game plan for paying it off. It might feel stressful and hopeless, but you might surprise how much of a dent you can make in your debt if you start right now.