All debts are created equal, and not all debts are bad debts. The problem is that the ones that are bad debt can really hang heavy around your neck and create the long-term financial strain you’ve always tried to avoid. The thing is, sometimes you can have all your ducks in a row, but life gives you something that throws everything out of whack.
The good news about debt is that you can reduce it as long as you can pull your head out of the sand long enough to acknowledge it. If you find yourself in a moment where you are Googling how long does it take to file bankruptcy, now may be the time to pull your head in and own up to what you owe. Nobody likes to have to deal with debt, but once you do deal with it, you will be in a better position than you ever have been before. So with that in mind, let’s take a look at how you can get out of it.
How To Get Out of Debt
- Look closely at your spending habits. You have to have a very honest conversation with yourself by taking three months worth of bank statements and working your way through them. Pick up every single little expense that you have made outside of your bills and total up what you are spending and where. How much did you spend on Uber Eats this month? How much did you spend getting your nails done? Of course, these things are an absolute treat and should be done if you’re looking to look after yourself. But if you find that you’re spending upwards of $600.00 on UberEats, then maybe you can cut back.
- Determine the right approach. Some people choose to snowball all of their debts. With the debt snowball strategy, you make minimum payments on all accounts and loans except for the account with the smallest balance, where you put all the extra money. Once you’ve paid that balance, you turn to the next account that has the smallest balance and push all of your money in there. You can continue this approach until your debt has gone. As you pay off your balances, the amount available snowballs into a much larger sum, which allows you to pay down your accounts more quickly. The strategy’s main benefit is the quick win. Seeing a credit card balance at 0 within a few months can really help you to continue it.
- Don’t just worry about the minimums. Paying more than the minimum on any loan or credit card means the account will hit zero balance faster and you’ll save extra on the interest rates. If your card has a current 20% interest rate and the fee, then you need to look at pushing your payment increases up. If you can afford to make more payments by not spending that money on Uber Eats as we mentioned earlier, you’ll be able to get out of debt.
That doesn’t have to ruin your life, you just have to learn to take control.
