Seems like no matter how hard we try it’s very hard to go through life without having to pay off some sort of debt. Making payments on cars, credit cards, mortgage or rent, etc. can sometimes get out of hand and can leave you wondering how you’ll pay it all off. Here are a few points to follow when looking to dig yourself out of a financial hole.
Make a budget
Writing down all of your expenses in detail will give you an overall picture of exactly where your money is going. Make note of all of your bills and when they’re due. Write down all of the extra expenses that take place as well, like eating out, buying a coffee before going to work, or buying those shoes you really like online. With all of these “extras” laid out on paper, you can really see where ALL your money is being spent and where you need to cut back the spending.
List all debts and start paying them down
Now that you have an idea where all of your money is going, it’s time to see if you can start to pay more on those debts you’ve accumulated. Start by paying more than the minimum amount due. Look at the interest rates or fees on your debts and if you can’t pay more than the minimum due on each account, focus on paying as much as you can on the account, or accounts, with the highest fees or interest rates. Paying the minimum amount due can take a long time to pay off most debts and with the interest fees charged on most loans and credit cards, your total debt could continue to rise. Instead, be sure to pay off debts in as little time as possible by paying more and focusing on reducing as much debt as possible on the account with the highest interest rates and fees.
Contact the credit card company to lower rates
Calling your credit card company and asking them to lower your interest rate is another way to help cut down on your debt. If you’ve been a loyal customer and have had good history with them most will grant your request, rather than risk losing your business to someone else. Simply lowering your interest rate could help save you hundreds of dollars.
Save, save, save
Once you’ve paid off most or all of your debts, it’s time to take some of that money you were using to pay them off and put it into a savings account. It’s always a good idea to have some sort of savings account for those unexpected expenses. The more you have saved up, the less stress you’ll feel when an emergency arises and the less debt you will have to re-incur.
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