If you have found yourself in debt you know it is a very stressful situation. Most of America is in debt and very few really know how to get out properly. Yeah, getting out of debt is quite difficult, but it is not impossible. Maybe it isn’t your fault that you are in debt, maybe it is. Maybe, you have spent your money casually throughout the years and all of the sudden you can’t pay it back. The first step of getting out of debt is to find the reason why you stay in debt. Whatever your reason is there are tips to getting out.
Tip 1: Create a Monthly Budget Your first tip to get out of debt is to create a realistic monthly budget for everything you spend money on. Make a list with all of your expenses and make sure these are covered by your income. You should make sure that you stay within your budget and only allow yourself to spend money that is left over from paying expenses. This way you stop overspending and leading yourself deeper into debt.
Tip 2: Pay Off the Credit Card with the Highest Interest First You want to pay off the credit card with the highest interest first. Don’t pay it off if the balance is over 50 percent of your credit limit. If you pay above the balance of 50 percent it will cause your credit score to go down and you don’t want that. Make sure you pay all of the balances below 50 percent. Once you have paid those, pay off the card with the highest interest rate. If you have other accounts, close the account of this card. Now keep doing this with additional cards until you reach the card with the lowest interest rate. This should be your new preferred account.
Tip 3: Use Cash Instead of using credit cards all the time teach yourself to use cash. Using cash will eliminate any type of interest because well, there is no interest on cash. Only use your credit card for emergencies. Put your card away where you won’t have it with you all the time. A great idea is to not accept any increases on your limit above something you can pay off in three months.
Tip 4: Limits to Banking Something you should look into doing is having your paychecks be directly deposited into your bank account. To make sure you will not just take it out once its deposited, put a limit on how much you can withdraw each week. Make sure there are no loopholes. This will, hopefully, help you stop spending as much each week.
Tip 5: Cut Unnecessary Expenses Maybe tomorrow you shouldn’t go out to lunch with your coworkers. Yeah, it would be fun, but it is an unnecessary expense. Another unnecessary expense would be going over on your cell phone minutes. That money adds up, so avoid going over. This will help save a little extra money.
Tip 6: Assess Your Living Situation Make sure that the expense of your housing costs does not exceed 33 percent of your household income. Household income could be any of the following: home mortgage payments, property tax, and various insurances. If it does exceed 33 percent you may want to find a lower interest rate or refinance your mortgage.
Tip 7: Do Not Borrow More Money One thing you want to avoid when getting out of debt is borrowing more money. People think that consolidation loans will help them get out of debt when all it does is combine it into one loan. If you really need to borrow money try borrowing it from a relative or friend. Scratch that, don’t borrow from anyone because it may lead to fights, arguments etc. That’s what we get for living in a world run by money.
Tip 8: Contact Creditors Try and contact your creditor to try and work something out. A lot of these people are willing to make deals with you. They get their money and you don’t have a debt collector on your tail.
Tip 9: Become a Penny Pincher You want to look for the best deals, bargains, and sales to help you save the most money possible. A great place to start is at the grocery store. This is quite possibly the place where you spend the most money. At least that’s where I do. Find out where you spend most of your money and then find ways that you could save there.
Tip 10: Find Ways to Make Extra Money There are a lot of ways to make a little extra money on top of your normal income. If you have an attic full of junk, try to have a garage sale and sell it. Or maybe you could even get a part time job. Just look for ways to get some extra cash.
