What are The Impacts of a lot of Debt?
If you are struggling with debt, it may sometimes feel like you have a full-grown elephant sitting on your chest. Debt, while bad for your wallet and financial health, can also have a negative impact on an individual’s physical and mental health. If you are currently struggling with debt, it is important to take immediate action to help rectify this situation. The good news is that there is a light at the end of the tunnel because there are concrete steps that you can follow to get out of debt – and fast!
Taking the Right Steps to Get Out of Debt
If you are looking for ways to get out of debt quickly, then congratulations! You’ve already taken the first step towards financial freedom and developing better habits. Consider following this 5 step plan as a launching pad to get out of debt now:
- Review Your Finances
- Prioritize and Organize Debts
- Trim Expenses
- Increase Income
- Seek Professional Guidance if Needed
First, you will want to get organized and make a complete list of your debts. Review your finances and find out exactly where your money goes each month. On paper or on a spreadsheet, write down how much you owe each month for your living expenses, rent, utilities, credit cards, title loans, and other recurring monthly expenses. Categorize your debts by interest rates, paying careful attention to the debts that carry the highest interest rates. Once you have this information in front of you and you have a clear understanding of how much money you have going out each month, you will want to take a good look at how much money you have coming in on a regular basis. Write down your gross monthly income and compare it to the amount of money you are spending on debt and other expenses.
Secondly, you will need to prioritize and organize your debt obligations. Now that you have determined the debts that have high-interest rates, those will be the ones that you will want to tackle first. Paying heaping amounts of interest each month is akin to flushing money down the drain. There are several different methods for tackling debt. With the debt avalanche method, you will prioritize your debts with the highest interest rates and pay those down first. One advantage to this method is that by paying these debts down fast, you are reducing the amount of interest that you are paying each month. The other method that you might want to consider is the debt snowball method. With the debt snowball method, you pay off the smallest of your debts as quickly as possible. The logic behind this method is that once you have paid off all of your small debts, you will have more money to put towards your larger debts.
The third step is to work on trimming your expenses. If you have less money going out, you will have more money to put towards your debt. Even cutting expenses in small ways can be incredibly helpful! Review your monthly subscriptions, and consider what you use most often and least often. Plan meals that are high in volume and can serve well as leftovers. Try riding with your coworkers or partner to work to save on gas and build up your relationships in the process. Even these small changes can add up to make a big difference over time!
Next, if you are trying to work on eliminating expenses, it is also equally important to find ways to make additional income. Are there extra shifts you can pick up at your current job? Do you have talents you can utilize, such as crafting or sewing? Have you recently done some spring cleaning? Stores like Plato’s Closet or Clothes Mentor will purchase your gently used clothing!
The last and final step is to consider seeking professional guidance. There are many non-profit organizations committed to helping people get out of debt. Not only will they help you develop a plan, but they will also help educate you on best practices for financial health going forward. They can also help you explore some debt consolidation possibilities and help ensure that you are getting the best rates possible. Visit LoanMart to learn more about debt consolidation and refinancing options.
The good news is that if you are looking to get out of debt, you have options to explore!
Maintaining Healthy Financial Habits
If you have made the decision to explore getting out of debt, then you’ve already taken the first step towards a more healthy financial life. Building good financial habits is important because financial stress has a habit of eating away at your physical and mental well-being. Not only is it important to establish good money habits, but maintaining these habits throughout your life is equally important.
You do not need to suffer silently if you are struggling with debt! By following the above tips and tricks and making a plan, you are on your way to reaching your financial goals.