4 Tips for Getting Out of Debt

The process of getting out of debt may seem hard or tricky. It may even seem impossible when it comes to dealing with credit cards, student loans, car loans, and other debts. Although getting out of debt is not something that can be dealt with overnight, it is something that can be dealt with over time; all it takes is a goal to reach, a plan to execute, and help from a loan officer. Here are some tips that you can look at to ease the process of getting out of debt!

1. Find out how much debt you have and write it all out onto a list.

The first step is to have a set goal to work towards. Your total payoff number is a real, complete goal to work towards.

You can do this by:

  • Gathering your most recent statements for all loans and credit cards
  • Getting your annual credit reports to check them for accuracy and to identify all debts
  • Getting your credit score to find out whether you’re eligible to lower your interest rates or for a debt consolidation loan
  • Checking the National Student Data System to gather all student loan information

2. Plan your strategy.

Once you have gathered all the numbers to calculate the total amount of debt you have, you will need to set a plan to reach towards decreasing that total number.

Here are some things to keep in mind when formulating your plan:

  • What are you going to pay off first? Your plan should include a set area for where your money is going to be allocated on a monthly basis. That may include targeting the debt with the highest interest rate or the debt with the lowest balance.
  • How are you going to pay off your debt? Debt can only be paid off with some sort of cash flow either from working or from selling unwanted items.
  • Do you need any help? Because the process of getting out of debt is tricky, you may need some advice. Being in debt is not an uncommon thing, so your loan officer will know exactly how to make a plan that will help you successfully get out of debt as soon as possible.

3. Adjust your spending habits.

Getting out of debt does not just include minimizing your spendings overall, but it includes adjusting your current spending habits to differentiate your needs from your wants. The best way to get out of debt quicker is to avoid using your credit card and live frugally.

Using your credit card is equivalent to using money that you don’t have, which will end up increasing how much debt you have rather than helping you get out of debt. So the first thing to do before you adjust any spending is to not use your credit cards at all.

Adjusting your spending habits and living frugally may look like this:

  • Cook and pack your own meals. Once you do this, there is no need to eat out or buy your meals. It is as simple as cooking your own breakfast, lunch, and dinner and packing them accordingly to be on-the-go. As a bonus, this is also a healthier option than eating out.
  • Budget your grocery trips and make a grocery list. This will help you set aside a budget for the ingredients you will need to cook your own meals. Having a budget will allow you to pick and choose what you would really need when making your grocery list. Having both a budget and a grocery list will refrain you from making impulsive purchases.
  • Learn to say “no” towards unnecessary spending. This includes putting a pause on expensive hobbies and activities or cutting your monthly subscriptions to Netflix or Spotify. When money is tight, it will take some sacrifice to help you get back on your feet.

4. Monitor your plan.

Once your plan is set, you will need to track your behavior closely to make sure you’re making progress and making the necessary adjustments towards areas in your plan that isn’t effective in helping you reach your goal.

When you monitor your plan, track whether your credit score is improving while keeping in mind that getting rid of debt this is not an overnight process. If you see that your credit score is improving, think about getting a consolidation loan or balance transfers to save the money that’s often spent on interest charges for your remaining debts. If your plan is effective as is and you see that the amount of debt you owe is decreasing, stick with your plan until your debt is paid off.

Don’t let past mistakes keep you from getting out of your debt. Getting out of debt takes time, but it’ll be completely worth it. Since the process is not a quick fix, the best thing to do to get out of debt is to manage it responsibly over time. If you need any assistance, contact the Kovacs Connection Team today!

Courtesy of Cuselleration