Debt is burdensome and worrisome. For some, mounting debt leads to stress that takes a toll on health, family, and daily living. But it doesn’t have to be this way. You can free yourself of this heavy burden by following these three steps to quickly get rid of the debt you’ve built up over time.
Find Out How Much You Owe
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You can’t start paying off debt until you know how much you owe. This is much more than your minimum payment each month. To get a handle on the debt, you have to know how much you owe in total. Make a list of all your debts, including the total outstanding balance, the minimum payments, and current interest rates. You can use this list as a guide to help you pay your debts off. To decide what’s going to work best for you, ask yourself these questions: Are you going to pay the highest balance off first? Or are you going to work towards the highest interest rate?
The first step to getting out of debt is to stop digging a debt hole. You have to stop using credit cards for spending. You’ll also need to slow down your spending. You don’t want to get further in debt, so cut up the credit card and stop using it for daily expenses. If you want something and you don’t have the money for it, don’t buy it until you can pay cash. For more tips on financial freedom, be sure to visit the Fisher Investments page.
You’ll also want to set up a budget and stick to it. Often, people get into debt because they aren’t sticking to a monthly budget. It takes time and commitment. Keeping a close eye on your money will help you know where and how you spend. You can also know how much you have to pay on debt each month. See where you can cut expenses, like making coffee at home instead of buying it or eating out less. If you can cut your monthly expenses by even a couple hundred of dollars, that’s more money you can put towards paying off your debt.
Snowballing your debt is a term made popular by Dave Ramsey. It’s a simple method that has worked well for many people. The first thing you need to do is find at least $100 you can use as your “debt snowball.” This is the amount you will increase on the payment of your smallest debt. You will continue to make minimum payments on all other debts. Soon, with the extra $100, your smallest debt will be paid off. You then take the money you were paying on that debt and add it to your next smallest debt. You continue with this “debt snowball” until all your debts are paid off.
There is help out there. You can get out of your debt-situation you’ve been in and start living a financially free life. You owe it to yourself to live free of debt and worry.