Do not be discouraged, if it is possible to get out of your debts. For this there are several ways to do it. They all certainly work very well when done correctly and consistently. Neither is a magic formula that will make you eliminate debt overnight. They all require patience, perseverance, and daily implementation.
How to get out of your debts?
How you can do it, here we give you 8 tips to start sorting out your debts.
Accept that you have debts and stop avoiding them
The first step to start paying your debts is to accept that you have them and that you should get out of them. It seems obvious, but there are many people who evade reality and want to pretend that nothing is wrong, that their economic situation is normal and debts do not exist, when the reality is quite the opposite. The first step is to accept that there is a problem, and then open up to new possibilities and take action towards eliminating debt.
Calculate exactly how much you owe
To have a better vision and overview, it is good to always know the exact amount of money that is owed. Then, more precisely, begin to create a plan and main strategy to pay the debts.
Calculate your fixed expenses
Much of your income is dedicated to paying the fixed expenses necessary to live. Make an account of all the essential expenses that you must make month after month, then eliminate those that are not so important and easily discarded. In this way, you will have more money to pay debts without neglecting your important expenses.
Limit the use of your credit cards
When you have credit cards available, you are always exposed to compulsive and unnecessary spending. The best thing you can do is save them and use them very, very little. In this way you save a large amount of debts and expenses; and you do not keep increasing your debts, remember that what you want is to eliminate them, not increase them.
Make a plan
For whatever goal or objective you have, it is very important to come up with an action plan. In this way, you know what to do, when and how to do it. Trying to pay debts without a plan is much slower and more complicated, since there is no clear vision of the strategy to be carried out. With a plan there is clarity and focus, two essential aspects when paying debts.
Stop accumulating debt
Since you know the amount owed, it is very important to stop accumulating more debt. What is the use of having a plan to pay them if while you implement it you continue to accumulate more debts? Eliminating credit cards and unnecessary expenses helps a lot, but it is still important to always keep this fundamental concept in mind.
Establish an emergency fund
A part of your income is dedicated to starting an emergency fund, which will help you a lot when some kind of unexpected situation arises. Be it an accident, a car crash, an unexpected trip, or anything else that involves a heavy unexpected expense. When we do not have an emergency fund, it is very normal for us to accumulate debts because we do not have money to pay directly. It is essential to have an emergency fund, do not hesitate little by little to accumulate part of your income to dedicate it to this fund.
Apply the snowball effect
Once you no longer use your credit cards and you have your emergency fund, it is time to attack your debt. To do this, you can follow the steps below:
- Order your debts from least to greatest.
- Assign an amount of money per month to pay each of them
- Pay the minimum for each debt except the smallest of all, to this you pay a little more to go from the smallest to the largest debt.
- Whatever money you have available, use it to continue paying the one with the least balance.
- When that debt is gone, keep paying the other debts with the same amount and dedicate more your money to the one with the least balance, and so on until you are out of debt.
