Getting into debt is all too easy these days, with all the literally thousands of credit cards, store cards and loans available. Of course the more debt you get into, the harder it becomes to get back out of, and the more creditors you have the harder it is. Don’t think that because you are in debt now it will always be that way. There are ways out and although it may not be easy you can become debt free again.
Many of us don’t even realize how much debt we are in, this is the first thing you should do, make a list of all your debts and how much you are paying each month. It is also a good idea to list any available credit you have on your existing cards, you may find that you can pay off one of your debts with one of your existing cards, if one of your cards has a lower interest rate than the one you are going to pay off with it then you will save money by doing this.
Depending on your circumstances it may be possible to get a loan to consolidate your debts, although think carefully before you do this. Make sure that the rate on this loan will mean that you pay off less than you would by paying all your debts separately, if you are able to get a low rate then it may be a wise decision. With one loan you will only have to make one payment each month for a set amount, although you may be paying your debts off for longer than you would be if you didn’t take this option.
You could also switch your credit cards if you are in a position to get a new card, if you are able to get a card that offers an interest free period on balance transfers this could save you money if you use it to pay off one or more existing cards. Once you are sure you have your debt organized so that you have the best interest rates that are available to you it is time to start looking at ways to pay it off.
Make another list, this time of all your outgoings, list everything you can think of from regular bills to those luxuries you treat yourself to. It is a great idea to carry a notepad around with you for a month or so and write everything you spend down. It is amazing how all those small amounts add up, just think about your morning coffee for example it might not seem like a whole lot of money at the time, but over the course of a month it mounts up to a tidy sum.
Now it is time to do some shopping around, check that you are getting the best deals available. Could you save money by changing your phone or energy supplier for example? If you find that you are able to save money then put this towards paying off your debts. Look at things you could live without, do you really watch all those TV channels? Could you save money by getting rid of the ones that you don’t watch? The more money you can save, the more you have to put towards paying off your debt.
When it comes to actually paying off your debts, prioritize. The best way I have found to do this is to make another list, this time start with the amount of money you have available to pay off all your debts. Then look at what you have to pay, make sure that you are paying the minimum payment for everything but put a little extra towards certain debts. Decide which ones to pay the extra to by looking at both the interest rates and how much is left to be paid in total. The ones with the higher interest rates should be paid first, but if you find that paying the extra money towards one debt means that is almost completely paid then pay it. Paying a debt in full has two benefits, it is one less debt that you have to pay which means that you will have the money that would have gone to that to divide between you other debts from now on, and it will improve your credit score which may make it possible to obtain a card with zero percent interest that you can use to pay off a high interest card.
Getting out of debt is by no means easy, and it may mean that you need to cut back for a while. Once you are completely debt free you can enjoy those luxuries that you have denied yourself again, and you will not have to be stressed out by being in debt anymore.