Getting Out of Debt One Day at a Time

The first step to getting out of debt is finding out what you owe. When people start experiencing financial problems many times they will have a stack of unopened bills and if they have gotten as far as opening them, they have put them out of sight. After all, if you can not see something it might go away. Right?

If you truly plan on making a commitment to getting your debt under control, you are going to have to get those bills out of the drawer and open them. You can not change what you refuse to acknowledge, so it is time to find out where you stand, financially. List everything you owe and include the amount, who you owe and at what interest rate.

You need to be able to see your debt in black and white to be able to formulate a plan for getting it under control. You may want to do this on a spreadsheet so that it can be updated regularly and you can see your progress.

Realize that not all debt is the same. Some types of debt have a positive return on investment, such as; a mortgage or student loan. These things will appreciate in value where credit card debt will not, as a matter of fact credit card debt will do just the opposite. Be aware of the credit cards with interest rates that are over 10%. It is hard to justify carrying a balance on a credit card unless it is an emergency.

Once you have separated your bad debt from you good debt it is time to develop a repayment plan. There are many ways that you can choose to pay your debt back. Here are a few tips that will help you make decisions about your debt repayment plan.

  • Pick one credit card (it may be the one with the highest interest rate or the one with the lowest balance) and pay as much as you can each month, while paying the minimum on your other consumer accounts. Once you have paid that card off, select another credit card and repeat the process.
  • If you have credit cards with available credit that have lower interest rates than other credit cards you have, transfer as much of the money as you can to the lower interest rate cards.
  • Call your credit card companies and ask to have your interest rate lowered. This can save you hundreds and maybe even thousands of dollars depending on how much you owe and what your interest rates are.
  • Look for ways you can earn extra money to pay towards your debt. Do you have things you can sell online? Do you have a hobby that can make you extra money? Do you have a part time business you can run out of your home? Even an extra $100 a week will go a long way towards paying your debt down.
  • If you have savings or investments, consider using them to pay your debt. They are probably not earning you what your debt is costing you. Once you get your debt paid off you can start saving again.
  • If it is going to take you more than five years to pay your debt off, you may want to consider bankruptcy. A bankruptcy will stay on credit record for 10 years, but it will give you a chance to start moving forward again. In some cases, it may be impossible to repay everything that you owe.

Debt has a way of keeping you from moving forward in your life. Coming to terms with your debt is a difficult process, but if you deal with your debt one day at a time and have a plan, you will soon begin to see light at the end of the tunnel. Getting started is the hardest part and the longer you wait the more difficult it becomes. It you have debt get started today developing a repayment plan.

, , ,