If you’re hoping to have a better financial year ahead, let me tell you a little secret: getting out of debt could be the game-changer you need. Trust me, I’ve been there.
But here’s the good news: I’ve got some quick tips to manage debt and have success on your journey to financial freedom. Ready?
Knowledge is Power
Knowledge is indeed power, especially when it comes to your debts. Trust me, I’ve learned this the hard way. So here’s what you do: grab a pen and paper or open up a simple spreadsheet (if you’re feeling fancy) and start writing down all your debts. Yep, every single one of them.
Here’s the trick: organize them in order of balance owed. This will give you a clear picture of where you stand and which debts need your attention first.
And hey, if you’re a bit of a spreadsheet nerd like me, you can add some columns with the debt name, amount owed, interest rate, and minimum payment due each month. Voila, you’ve got yourself a nifty little debt tracker!
Plenty of online tools can help you organize this information, such as Every Dollar Budget or YNAB (You Need A Budget).
Keeping tabs on your debts like this is a game-changer. It’s like spotlighting those sneaky balances and saying, “Hey, I see you!” It’s surprisingly satisfying to see those numbers slowly but surely go down.
If you don’t want a monthly subscription and need to start with a basic budgeting sheets, grab my budget binder here.
Make a Timeline for Your Debt
Have you ever wondered how long it will take you to pay off those pesky debts finally? Not all debts are created equal, so figuring out how long it will take you to pay off your debt is essential.
You must keep paying the same amount as you are now but try to squeeze in some extra bucks whenever possible. Every little bit helps!
Most people say you should start tackling the debt with the highest interest rate. But guess what? Some financial gurus recommend starting with the debt that has the smallest balance. Crazy, right? We followed the rule of paying off our smaller debts first, regardless of interest rate.
In the end, it’s all up to you. You know your finances better than anyone else. Take a minute to think and decide what feels right for you.
Can You Afford Your Mortgage?
Are you wondering if you can genuinely afford your mortgage? This is a question that most people wouldn’t even consider, but it needs to be looked at. If you’re facing income cuts or illness affecting your ability to make payments, contact your mortgage company.
They may have a solution in the form of a mortgage modification plan. This plan allows you to potentially qualify for revised loan terms, resulting in reduced interest rates and monthly payments.
In addition, it might be necessary to downsize your living situation temporarily until you regain financial stability. Remember, it’s not permanent – just a way to return to a healthy financial state.
Pay Attention To Those Bills
Don’t overlook your bills – it may seem easy, but many people pay them without opening them. Are you guilty of paying your cell phone bill without actually reviewing it?
Countless individuals have discovered that they were overcharged, not once but multiple times! Don’t you want that money in your pocket instead of adding it to the cell phone company’s bank account?
Make every payday count by putting something into your savings, even if it’s just $20. Take control of your debt and gradually chip away by staying informed and committed.
Don’t lose hope – support is available when you feel stuck, bewildered, or overwhelmed.
Here are my tried and true tips to manage debt: understanding your debt, making a budget, prioritizing your debts, and staying consistent. It’s like a recipe for financial freedom.
Now, I won’t sugarcoat it – it won’t be a cakewalk. You’ll have to roll up your sleeves and get your hands dirty. But trust me, the taste of financial independence is worth every effort you put in.
Grab that pen and paper (or keyboard and spreadsheet), and start planning your escape route from debt today. Remember, every great journey begins with a single step, and your first step is just a decision away.