Are you drowning in debt and have no idea how to get out fast? First off, you’re not alone. In fact, 340 million Americans have some sort of debt which amounted to a total of $14.6 trillion in 2021.
Whether you have mortgages, credit card debts, student debts, or auto debts, these financial issues can cause extreme stress and anxiety. Luckily, no matter how much you owe, there are ways to start paying off your debt and live a more stable life financially.
Read on to learn 5 practical steps to take when you’re in over your head in debt.
1. Assess The Situation
The first step toward debt management is assessing the situation. Start by writing down all your debts, starting with the smallest one. Then, write down your current income and all expenses you have each month.
Next, calculate how much you’d need to pay to get rid of your smallest debt. This way, paying it off won’t look overwhelming and you’ll be able to pay off one debt at a time without going broke.
2. Make a Debt Pay-Off Plan
Regardless of the type of debt you have, you need a plan to tackle it and pay it off in full. For example, if you have credit card debt, calculate how much you’d need to save in a month in order to pay it off. Then, see what you can stop spending money on.
Set a strict amount of money you’ll save for your debts. Do not use that money for anything else but debt payments. You need to develop strong self-discipline if you want to pay off your debts quickly.
3. Cut Out On Extras
Spending money on little extras can be one of the main reasons you’re still in debt. Consider cutting out on extras that are not exactly necessary but can save you good money in the long run.
For example, eating out, coffee to go, magazine subscriptions, gym memberships, store sales, and even groceries. Put this extra money toward debt payments.
4. Find a New Source of Income
The foundation of solid personal finance management is having multiple sources of income. You don’t have to work 80 hours a week to get by but you can find new ways to make more money in a passive way.
For example, maybe you can start a side hustle, sell your stuff on eBay or Etsy, pick up an extra shift at work, or drive for Uber/Lyft. Figure out what works best for your debt and lifestyle and remember it’s only temporary until your head is above water.
5. Stay Away From New Debt
One of the best ways to get out of debt is to stay away from amassing new debt. No new credit cards, no new loans, and no overspending if you can’t afford to buy something with cash. This can be rough at the beginning but it’s a surefire way to stabilize your spending.
If you need help finding the best way to pay off your debt, schedule a consultation with Credit Salvage to see how you stand and what your next steps are.
Make Drowning In Debt a Thing of the Past With These Simple Tips
Whether you have one big debt or a few smaller ones, debt can cause a lot of stress if you’re not sure how to pay it all off. Luckily, with a good plan and assessing your situation, you can make drowning in debt a thing of the past.
Want more tips and advice on personal finances and making more money? We’ve covered these topics in-depth over on our blog to help you live a financially abundant and stress-free life.