Your Guide to Getting Out of Debt
There are a couple of ways to get out of debt and back on track. It may seem overwhelming, but you can do this!
It’s time to budget
To start with, make a budget. Total up all your monthly take home pay. Next, subtract all of your expenses. You will want to subtract your housing, car, gas, food, entertainment, clothing, and insurance, just to name a few.
Where is your money going?
If you aren’t sure where your money went, go to your checking account online. Take a 30-day period and categorize all your spending. If it’s groceries, put the dollar amount under the heading “groceries.” Do the same for eating out, snacks and drinks, entertainment, clothes, or any other category you discover.
Add up the columns so you have an idea of what you spend on each one for a month.
Put it all together
Put your expense figures into the budget. Then subtract the total spending from the total income. Hopefully you have a positive number. If not, go through each category and decide where you can cut back until you do have a positive number.
Doing this will allow you to free up extra money to put towards your debt, and will also keep you from going further into debt because you are running out of money each month.
Your debt reduction plan
To set up a debt reduction plan, I recommend this free website. You will put in all of your debts, including the dollar amount owed, the interest rate, and the minimum payment. From there, you put in the extra money you have to apply each month. It will calculate how long it will take you to get out of debt, and even print you a calendar showing how much to pay monthly on each debt.
Is credit counseling right for you?
Another option is to work with a non-profit credit counseling agency. They will negotiate lower payments, a lower interest rate, or both with your creditors. From there, you pay them a small monthly fee along with the total new monthly payments and they make your payments for you.
This can be extremely helpful if you are feeling overwhelmed, are receiving phone calls, or can’t get out from under the debt due to huge interest rates. You can find a legitimate credit counseling agency with the National Foundation for Credit Counseling (NFCC).
The burden of debt can be overwhelming. Making a plan to tackle this debt can help lower your stress level and allow you to see a way out. With some hard work, you can be debt free. We’re all rooting for you!