When your debts start to pile up, it can sometimes feel like it's impossible to escape. No matter how big your debt is, though, there are options, and for many people, there are ways of paying off your creditors.
Whether your debt is small or large, the important thing is that you start to develop a plan for paying it off. The longer you leave it, the more the interest accumulates, and the harder it becomes to pay off. However, if you start taking small chunks out of it now, you can start working towards a debt-free future.
Here are five steps you can take to help you manage your debt today, and they're things that everyone can implement.
Figure Out What You Owe
If you're going to get on top of your debt, then you've first got to understand it, and this means knowing exactly how much you owe and who you owe it to.
When you've got debt accumulating with different creditors, it's easy to lose track of exactly how much you owe, but in order to make a plan to pay it all off, you've got to know your starting point. It may not be something you want to find out, but once you know the size of your debt, you can begin to take steps towards paying it down. So push through your initial anxiety; it'll feel much easier when you know exactly what you're dealing with.
Create a Monthly Budget
You've got to take control of your finances in order to start paying off your debt, and a big part of this is knowing exactly what you're spending each month.
You may think you have a good idea of how much you spend each month and what you spend it on, but it's not until you sit down and properly plan out a monthly budget that you realize just where your money goes.
Lots of people find that when they plan out their monthly budget, they find a little extra money to help them pay off their bills.
Make a Monthly Bill Payment Calendar
Your bills come from lots of different sources with lots of different due dates, so keeping track of what needs paying when can be difficult. However, by making a monthly bill payment calendar, you can quickly and easily see when you need to pay each bill.
The most painful thing you can do is rack up more late fees that add to your debt simply because you were late on a payment, so paying bills on time is important.
It's a simple solution, but a monthly bill payment calendar can make a big difference.
Prioritize High-Interest Payments
If possible, you want to try and pay off the debts that have the highest interest rates first. In many cases, this will be credit card debts, which have particularly high interest rates.
Another way to approach it is to pay off the debts with the lowest balance first. If you've got a bill that's almost paid off, then pay it back as quickly as you can, and you have one less debt collecting interest.
Once you've listed all the debts you owe, you can decide which are your highest priority to pay off and start working through the list.
Keep Your Other Accounts in Good Standing
You only have access to so much money, which means you can only pay off so much of your debt at one time. Make sure you're not overextending yourself and putting your accounts that are in good standing into the negative.
This just means you've got another debt that will be collecting interest, so while you've tried to put one fire out, another has started in its place.
Instead, you want to work methodically towards paying off your prioritized payments while keeping your other accounts in good standing.
Get Help When You Need It
Sometimes you need help assessing your options, and there are laws that are designed to protect you. However, you've got to take that first step and seek help. Debt lawsuits are serious, get quality help for success.
When you're trying to do everything on your own, it can be a worry that you're not taking the right actions, but when you've got a professional behind you, you can be confident in what you're doing.
If you feel like you're struggling to meet your minimum payments, being harassed by creditors, or have any other worries, speak to a lawyer and get expert advice.
Nish
Voracious reader, vegetarian foodie, mostly armchair traveler, and frequent online shopper. I love to talk about all these passions (and other things happening in my life) in this blog.
