It is not healthy to be in debt when you are trying to move ahead financially. Debt seems to suck the life out of you. It robs you of a full paycheck, it can rob you of a healthy life, and debt makes you seem like you don’t have any other options.
Even if you have a job, debt forces you to work longer hours and to think about having more than one job just to try and make it. If you had future dreams, debt could keep you from making future plans and ruins your ability to save. You are unable to save because all your money goes to pay off debt.
I know you feel like there is no hope in dealing with debt and attempting to move forward in life. There are changes in your circumstance that you can make. Getting out of debt is not an overnight success story. Here are some ideas to help you see a clearer picture of your life and how you can deal with bad debt.
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How Much Do I Owe?
The first reality you must confront is to understand how much debt you are in. Come face-to-face with how much you owe. Even financial giants like David Wehner did not start out as a millionaire. Getting out of debt is not going to be easy especially when you see large debt numbers on a page.
It begins with your vision of where you are headed and what it will take to get you there. This is when you must think about the dreaded word “budget.”
A budget is not to punish you, it is to provide more financial freedom. A budget is a monthly plan for you to look at your expenses and income differently so that you spend less toward saving more on things you want to do.
Do I Really Need This?
Make a list of your monthly expenses. This plan allows you to quickly see where your money goes. Look at your list and ask yourself, is this necessary? The more you can trim your expenses, the more money you can apply to your debt.
There are areas in your list that can be reduced, such as reducing your cable bill. Do you really need the highest category of TV viewing programs? Do you really need to eat lunch and dinner at restaurants three or four times a week?
Is your present-day hobby causing you to spend more than you should? Trim or give up some of the things that make you spend more than you should. Then, for now, you can use that extra money to make your debt picture a lesser evil.
Emergency Fund Plan
Emergencies are a part of life. When you place yourself on a budget, pow—a financial emergency could strike. It could be a major household appliance that needs replacing or repair. Your emergency could be an accident or a long-term illness.
When an emergency happens, how can you stick to your budget plan to pay down debt? Don’t give up on your budget plan. As a matter of fact, plan for emergencies. An emergency fund is money you set aside as part of your budget.
Save at least 5% to 10% of your take-home pay for emergencies. Saving around $1,000 is a good emergency fund amount that will keep you from dropping your budget strategy and keep you from going deeper into debt.
Create a Debt Repayment Plan
Stick with your budget plan, trimming where you can. Don’t try to pay off all your debts in one fell swoop. Pay one debt at a time. You have probably heard this before, but putting more money toward the largest bills first is a pay-off strategy that will help you.
Make the minimum payment on your larger bills because of the high interest rates on them and then pay off the highest to the lowest rated bills. The money you are saving by trimming your extra-curricula expenses can be applied to your smaller bills.
Keep your budget plan going and you will see your bills drop off one by one, allowing you to breathe easier and to work toward debt freedom.
When you have a lot of debt looking you in the face, it does seem overwhelming. With the right mind frame, you can climb out from being under. Remember, you are not alone. Also, there are resources that you can use in the form of a financial counselor. Commit to a budget, trim down your expenses, and create an emergency fund. Start saving for the dreams deferred. You can get out of debt if you don’t give up.