Being in debt can be incredibly stressful. For many Americans, debt is a huge burden that limits them from reaching their financial goals but is often seen as a necessity. However, the constant reminder of how much you owe is something you don’t want to deal with for the rest of your life.
A majority of people struggle with debt because they’re unsure of where or how to start. Most of them have numerous questions about the debt repayment process. What debt should I pay first? What amount should I pay every month? How many months or years will it take?
Here are simple steps to help you pay off your debt.
Reflect On How How You Ended Up In Debt
Reflecting back can be of benefit to you. Planning how you’re going to pay off your debt requires a change in your spending habits that led to debt in the first place. Write down at least 3-5 factors that led to debt and think of how you can avoid them.
The best solutions for debt problems are based on an understanding of how you ended up where you are. According to Plumfund, an online crowdfunding platform for people in financial need like those dealing with crippling student loans, knowing how it all started or what caused debt makes it easier to find the best solution to pay off the debt.
Start By Changing Your Spending Habits
Most people find themselves in debt because of bad or uncontrolled spending habits. While debt can sometimes be unavoidable due to unexpected expenses like medical bills, bad spending habits are the leading cause of debt. Are you living beyond your means? Do you keep spending on your credit card?
To stop bad spending habits, you need to create a realistic budget, embrace a savings culture and start a small emergency fund. Control your spending by tracking all monthly expenses, then place each expense in its own category. This will underline where you’re spending your money. After that, you can cut all unnecessary expenses.
Determine How Much Debt You Owe
Many people in debt don’t even know the exact amount of debt they really have. List down the exact amount of money you owe, the interest rates charged as well as the monthly minimum payment you should pay. Use your credit card report, recent bill statements and canceled checks to know who you owe and how much.
With that, you can determine how much you can pay every month to clear off the debt, and also find ways you can pay extra to clear the debt much faster. Consider rearranging your monthly budget to cater for required expenses or find extra income. There are various ways to pay off your debt; visit the Debt Academy site to learn how.
Create A Plan
Prioritize what debts to pay first, either by the amount owed, interest rate or other method. Most people will pick the highest interest debt and start paying more than the minimum to lessen the burden. Choose a method and decide on an amount to pay each month for every debt.
How long it will take to repay all your debts depends on factors like your repayment plan and the amount you’re paying every month. Debt repayment calculators can be of help when evaluating your debt repayment plan.
The Bottom Line
A debt repayment plan will not work if you don’t implement it fully. Ensure consistency with payments, track your progress regularly, minimize credit card use and learn along the way!
Shawn Barton is a super-connector with ManageBacklinks.io who helps businesses with building their audience online through outreach, partnerships, and networking. Shawn frequently writes about the latest advancements in the SaaS world and digital marketing.