Debt isn’t something we like to talk about. It tends to be a dirty little secret that we keep hidden away. But not confronting it, or seeking out help, leads to confusion and ineffective debt reduction plans.
Accumulating debt also has a significant impact on your financial future. Tackling it head-on is all about having a smart plan.
Here are some constructive ways you can begin to reduce your debt for a brighter future.
Meet The Problem Head On And Be Realistic
Being smart about dealing with your debt is about being realistic. Build a list of your debts and prioritize them. Credit cards and loans that have the biggest interest on them should be top of your list. Put your energy into paying them off first and stick to minimum payments with the rest.
Facing your debt problems head-on is the only way to stop them from increasing. It can feel overwhelming at first, but you’ll thank yourself for it later.
Cutting back on everyday spending will make a big difference to your debt. Look into coupons for everything from food to clothing. And pull the plug on your weekly trips to the local Italian. Even walking to work or getting in on the office carpool can help.
Reining in your excessive spending gives you more money to play with. This way, you can concentrate on reducing your debts. Restaurants will be there waiting to host your celebratory meal once your debt is cleared.
Make An Escape Plan
Having a bulletproof plan will help you understand precisely where you are financially. Work out how much money you have coming in each month and the outgoings it needs to cover.
You can even include a small amount for ‘luxury’ spending, so you don’t miss out on a bit of self-pampering. It’s best to work on a ‘worst-case scenario’ plan. Base your spending on the lowest possible amount of income you might have. That way, you won’t have any nasty surprises creeping up on you.
If this feels overwhelming, get in touch with a financial services company specializing in debt reduction like Timberline Financial. They’ll work out a personalized plan that’ll get you debt-free in the shortest time possible.
Pay On Time
Whenever you miss a payment or go over on a credit card or overdraft limit, you can get charged a higher interest rate. It could even mean you are charged a penalty fee. And these fees can add up. Quickly.
It’s worth setting up standing orders for the most important bills. That way, you can be safe in the knowledge that they’ll always be paid. At least the minimum amount. If it looks like you won’t be able to make a payment, get in touch with your lender straight away. They are more helpful than you might think when you hit hard times.
Make A Budget
Make a budget. And stick to it. Just like having an escape plan, it means that you are in the know about your financial situation. Budgeting will keep you from splashing out because you know the consequences that await.
There are plenty of budgeting tools available online, so don’t be afraid to seek out help. Many of them are free, but they’ll make dealing with money feel like a walk in the park.
Got a lot of debt and not enough income to cover it comfortably? It’s time to get creative. That might mean starting a side hustle or getting a part-time job. If you have the time and means to do this, it’ll help pay off those debts quicker.
You could even consider selling your car if it doesn’t impact family life. Fuel and monthly payments for cars are outrageous. And you could save yourself a hefty sum by getting rid of that expense. The best tip you can have for reducing debt, though, is to cut up those credit cards. Burn them, get rid of them. The temptation to spend on them is too much for a lot of us, and you could end up making a new debt worry for yourself.