Living with debt is pretty much the American way for most people. But you don’t have to live a life saddled with tens of thousands of dollars if you don’t want to. There are ways to get the madness under control. If you approach debt as one HUGE task that you have to take care of immediately, you’ll likely burn out before you even begin. Like anything else that people succeed at, the people who get rid of their debt do so via a plan and by taking several small steps in the beginning. To help you get your ship steered in the right direction, here are some helpful tips for you to put to use…
It all starts with a Budget
Your budget is your game plan and baseline to a more secure financial future. Getting out of debt, in the beginning at least, is about knowing how much money you bring in and how much you pay out every month. Simply put, no matter what your financial goal is, you are not likely to make much progress until you get used to living according to a budget. Think about running your household finances the way a company would, instead of always flying by the seat of your pants. A basic budget is simply an accurate count of every dollar that comes in and every dollar that goes out.
Tackle a Small Debt First
If you were going to take up running, you wouldn’t lace up your shows and try to run a marathon on your first day. No, you’d likely be happy to just get a mile or two under your belt. Take the same approach to paying off your debt. Choose a smaller debt, and make it your goal to pay it off. Instead of making the minimum payment on this debt, add as much extra to it as you can. To do this, you’ll have to find some expenses to cut from your budget to supply the extra money. That brings us to the next step…
Find Places to cut Expenses
Go over your budget and find ways to trim the fat. Do you buy an expensive cup of coffee or two each week? If so, you should choose to brew coffee at home and save the money that you usually spend on those expensive brews. This can add up to $10 a week or more. Over the course of a month, that can be an extra $40 you pay toward the debt you are focused on paying off. You may even find other expenses that you can cut to make even larger payments.
Take on a Larger Debt to Pay Off
Once you pay off the smaller debt, you will be excited and raring to keep things going. Take all of the money (including those expenses you cut from your budget) and apply the money – plus the amount you normally pay – to the new debt.
Rinse and Repeat
You see the pattern here, right? Repeat this process – some call it the snowball approach to paying off debt – and you will be on the fast track to eliminating excessive levels of consumer debt in no time flat. Each time you repeat, try to find new things that you can cut back on in your budget, and then trudge forward. You’ll soon have some serious momentum behind you. You don’t have to be a financial wizard or have the willpower of an Olympic athlete in training to follow these simple steps to helping you eliminate debt from your life.