At one time or another, many of us have
borrowed more than we can handle. If your debt has put you in an
uncomfortable, difficult to manage situation, do not give up hope.
But it is important that you learn to get by with what you earn.
Never make excuses as to why you have encompassed do much debt. It
is not your parents or the credit card companies fault. Use that
negative energy you have towards reducing your debt and paying
You may also want to explore enrolling in a
Debt is nerve-racking and it can help
to talk to someone close about your situation. If you are unable to
communicate with a friend or family member, get in touch with a
financial credit counseling company.
Then begin getting a handle on how significant your issue is. Write
down on paper all of your debts and what the total amount you owe
is. Determining a definite number is a vital initial step.
Developing a Budget
The smartest way to begin eliminating your debt is to put
together a budget. A budget is not a punishment but a way of
understanding exactly where your money is going. Add up your
income and subtract your total expenses. Be truthful to yourself
spending habits and you will wind up with a more
- Put aside more than the monthly required minimum for your
credit card payments.
- Develop an
emergency fund. This should be a savings account
that should have at the minimum three months worth of expenses.
Even putting away $20/week will help. With no emergency fund, unanticipated
costs of loss of income can put your further into debt.
What is the plan?
Utilize your budget and plan a strategy for your
debt-reduction. Put together a list of all of your debts from
the highest interest rate down. Be aggressive and pay down the
balances with the highest interest rates first while continuing
to make timely, minimum payments your other cards. Your budget
will determine the amount that you can dedicate towards your
balances every month.
More tips for getting rid of debt:
- If you have extra money in savings, use it to pay off your
debt. This savings money will typically dwarf the amount of
interest you are paying on your debts. If you have the
money in savings, pay off what you can.
- Use any extra money coming in, i.e. a bonus, lottery winnings,
to pay off debts.
-Get a second job or work overtime.
If you are unable to earn
addition income, you will need to spend less by determining what
Fixed Expense vs. Discretionary Expenses
- Avoid going out to eat.
- Only use cash for purchases.
Don't even bring credit cards out with you.
- Get rid of your premium cable service, cell phone plans and/or
Disadvantages of debt consolidation loans
-You will be better off paying your debts little-by-little as
opposed to taking out another loan. Only consider a loan if you
have the control to not use credit cards.
- If you do consolidate your
credit cards into one, or via a loan, destroy all the credit
cards that now have zero balance. The last thing you will want
to do is consolidate and then charge up the cards you just
- Never borrow from your 401k. You will regret that when you
Use credit cards wisely
It is important that once you are out of debt that you stay out
of debt. Stick to your budget. Also, it is important that you
avoid using credit cards in the same manner as your did before.
In addition, utilize
bill paying practices.
- Don't use your credit cards.
- Cut up all of your cards but one and make sure the one you
save is the one with the lowest interest rate. Only use that
card in the event of an emergency.
- If you continue to use your credit cards, pay in full every
month and avoid interest charges altogether.
- Get a free copy of your credit report to ensure that there
are no errors.
- Whenever you go shopping, make a list of what you need and
don't buy anything beyond that list.
- Never use retail store cards. These types of cards have higher
Dealing with collectors
It is important that you understand your rights when
dealing with debt collectors and
- Debt collectors are not allowed to harass you in any way.
- They may not falsely represent themselves in any way or imply
that you have committed any sort of crime if you do not pay your
No matter what you do, never give up hope. Getting into debt
does not happen overnight and getting out of debt also will not
happen overnight. Getting rid of debt takes time and plenty of
fortitude, but it will pay large dividends eventually and help you save.
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