How to Get Out of Debt the Smart Way this 2016
For most people, one of the biggest financial hurdles they have to face at one point or another is debt. While racking up debt may seem as easy as swiping your credit cards, paying it off takes time and effort. This is why plenty of consumers think they can’t ever pay off their debts. Most of these people have tried to get out of debt but to no avail. Fortunately, a new year means a new slate or a new beginning if you may call it that. To kick off this year’s getting out of debt project, here are easy and smart tricks that might work for your situation:
Know how much you owe
Just thinking about debt is stressful enough. Imagine if you have to get out of your way and make an effort to know exactly how much you owe. That should raise the stress level several notches higher. But no matter how difficult it may be, this is the vital step you cannot afford to slip. Only by knowing how much you owe will you be able to create a viable debt-paying plan that can work.
Create a budget
Creating a budget still works even if you think it’s already obsolete. You’ll never be able to create a debt-repayment plan unless you know your budget by heart. You need to know which expenses you can curb and how much money you can allot for repaying debt. There’s no other way to get around this so as soon as you know how much you owe, get down to creating a simple and realistic budget you can stick with.
Curb your spending
There’s this 10×10 rule that helps consumers to reasonably curb their spending. Rather than drastically cut back on your spending, you can do it gradually by shaving off £10 off your spending rather than £100 in one go. £10 may seem little but the money adds up over time. Before you knew it, you’ve already curbed £1,000 you can use to pay off debt.
Pay off high interest debts first
If you have a long list of debts to pay off, don’t get overwhelmed. Just list them down with the high interest debt on top going down. When paying off your debt, aim to get rid of the most expensive debt first. This could be your credit cards with high interest rates. Once the first debt is paid off, target the next debt on the list and continue doing the process until all debt is eliminated.
Considering how expensive credit cards are, this is also the best time to spend money the traditional way. Use cash whenever possible and keep credit card charges at 30% or below of credit limit instead. When you use cash for shopping, groceries and other purchases, you’ll be more aware at how much money you’re spending as opposed to credit card charging where you’re just handing out your card for purchases.
Seek professional advice
Finally, it wouldn’t hurt to seek for professional help and advice when it comes to paying off your debt. If you’re feeling overwhelmed because of the amount of debt you owe and you don’t know where to start, it might be best to work with a professional. A good financial counselor can create a reasonable and realistic debt repayment plan for you. Yes, you may need to spend money for expert advice but having someone knowledgeable to kick off your debt repayment project will position you on a good start. A good start, while not a guarantee, will help you achieve your debt-repayment goals this year.