As some of you know, my middle child is having an outpatient procedure today and I will be at the hospital with him most of the day. Thanks to Trisha for this great post!
Millions of Americans are facing a bleak year with a poor economy and rising levels of debt. If you are losing sleep worrying about how you are going to make ends meet or get your debt under control you are not alone. You may find hope in knowing that just as you are not alone in living with debt, there are millions of people who have been in your shoes and successfully paid off their debt. If you would like to turn the tables on debt and regain control of your financial future you need to take the first step toward being debt free…today. The following steps can guide you on your journey to living free of debt.
1. Know what you are up against- Before you can successfully work on getting out of debt you have to sit down and finally face the music regarding how much debt you have. When faced with rising balances many people adopt a “head in the sand” attitude and before they realize it their debt has reached levels they hadn’t even realized. Set aside time to gather all your recent credit card statements, utilities bills and other monthly expenses. You will want to take note of the current balances, the minimum payments due and the date when these payments are due each month. Note the interest rate on each account to better determine which balances need to be tackled first.
2. Contact your creditors- This step may be time consuming and perhaps even frustrating as you are not guaranteed to actually find any success, however contacting your creditors is an important step in your path to debt freedom. You may not be able to get all your lenders to lower your interest rate but hopefully a few might be willing to work with you to make it easier to pay off high interest accounts. Creditors are notorious during a bad economy of tightening their reins however they are more likely to work with you if you contact them requesting help; especially if the alternative is not receiving payment at all.
3. Stop incurring debt- Of course this is a logical step, one that many people simply can’t get past. If you are facing a financial hardship and lack of disposable income has you turning toward your credit cards to finance you day to day expenses, you may not see how you can stop using your cards. The fact remains that by using your credit cards you are only delaying the inevitable. Eventually you will reach the end of the line (your credit line that is) and you will now face paying the same expenses in addition to your debt repayment. Do whatever is necessary to stop using credit; cut up your cards, close your accounts whatever it takes to stop digging yourself deeper in debt.
4. Develop a plan- Once you know where you stand regarding your debt and balances owed you are in a better position to develop a plan that will work for you. There are many options available and your specific situation will determine which one is right for you. If you are able to cut costs in your household budget and find money to apply toward your debt, the snowball method might be right for you. This method allows you to tackle one debt at a time, putting as much money possible toward repaying one debt while maintaining minimum payments on other accounts. Some people chose to hit high interest balances first while others pick lower balances in the hopes of seeing accounts paid off quickly. As your accounts are paid off you will then apply the money you were paying on the previous account to the next balance you want to tackle. Choose the method that works best for you and you will see your accounts paid off one by one. For individuals who see no possible way to squeeze extra money into their debt repayment or if you find you cannot meet the minimum payments each month you may need to seek help in the form of credit counseling, debt consolidation, or even debt settlement. There are pros and cons to each of these method, be sure to do your research to find the method right for your financial situation.
Living a life free of debt may seem unattainable to people who are deep in debt, however it is possible. It will require self discipline, sacrifice and some hard work on your part but the rewards are well worth the efforts.