Debt is something no one likes to talk about. In fact, to some, it’s a dirty word. But rest assured Americans are swimming in it.
It’s not necessarily a bad thing to have some debt on the books. When you make consistent payments on mortgages, auto loans and student loans, you’re revealing you can manage your credit. Still, if you’ve overextended yourself, debt can weigh you down in more ways than one.
The goal is to be debt-free, but the journey to financial freedom can take time. If debt is an issue in your life, it’s best to set realistic goals, launch a plan and get creative.
The first step is to understand the debt you have. Don’t be afraid to look at your bills. Write down every debt you owe, to whom, the interest rate you’re paying and your minimum monthly payment.
Next, implement a system to pay your bills. Online bill pay makes it so easy to manage everything – no stamps needed. Perhaps there are smaller debts you can tackle immediately. Or maybe you can consolidate. Pay special attention to those debts attached to high interest rates. High rates mean you’re wasting dollars paying interest versus attacking the principal payment. And realize that if you are only making the minimum monthly payment, it could take years to wipe out debt. Adding just a few more dollars to the principal payment can save you big in interest.
If you can’t afford to make bigger payments, examine your spending habits to see where you can cut. Can you lose the cable or downgrade to a lower package? Are there subscription services you no longer use? Are you eating out too often, or spending too much on clothes? Make the cuts you can and then apply that savings to paying down your debt.
Once you cut, the next obvious action it to figure out if there are ways you can bring in more income. Can you launch a side hustle? Many people are turning to freelance work, driving for Uber a few hours a week, or maybe you can sell crafts on Etsy. Can you ask for a raise? Is it time to look for a new job? A boost in income can significantly attack your debt, so dig in and find ways to make a little more – even if it is just for a short period.
Lastly, you can scour your house for things to sell. Gone are the days when you need to save up hordes of goods for a Saturday garage sale. Many communities have virtual Facebook garage sales, you can upload pics to Craigslist, and if you have higher end goods, you can visit sites that specialize in selling designer purses, dresses and more.
These tasks should enable you to make a big dent in your debt load, but don’t be shy about negotiating either. Call your lenders and ask them to consider lowering your interest rate. Maybe there are fees they will waive if you missed payments in the past. Once you show progress and that you are trying to make good on all debts, lenders will be more likely to work with you.
More than anything, be patient with yourself. If you’ve acquired a lot of debt through the years, it will take time to pay it off. But as you’ll soon discover, once the debt falls away, you’ll likely feel better and less stressed. Celebrate your progress, and learn from your mistakes.
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