How to Get Rid of Debts Slowly But Surely
Debt is a fact of life for many people in the United States. Sometimes debt is accumulated due to unwise spending decisions. Some debt may be accumulated while pursuing a degree for a career. You might accumulate debt because of unexpected expenses such as medical bills or unexpected repair on the house or car. Debt is easy to accumulate but often hard to get rid of. There are, however, steps you can take to slowly eliminate your debt.
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Instructions
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Buy a notebook to list your debts. Pull out your bills, loan papers and anything else that signifies a debt you owe. Make a list of every single debt. Whether you owe thousands of dollars on a education loan or $100 to your brother-in-law, write them down. Total your debts. This gives you a starting point to know exactly what you owe and to whom.
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Total your expenses. List all your regular expenses from rent or monthly mortgage to utilities. Include groceries, eating out, alcohol and that expensive cup of coffee you pick up every morning on your way to work. Include entertainment expenses. Include money spent on clothes, shoes as well as gas and other travel expenses. Don't forget quarterly and yearly expenses such as insurance payments and taxes. If you regularly give to charity, include those as expenses as well. Total your expenses and figure out how much your expenses come to each month.
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Write down all sources of income. Look at how much you bring in per month and subtract your monthly expenses. What you have left is the money you have available to pay off your debts. This "picture" of your financial situation helps you figure out your next step.
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Cut expenses. Look more closely at what you spend on food. Buying an insulated mug and making coffee at home can save you $3 to $6 a day. Instead of eating out so often, plan your meals, buy supplies and prepare a week's worth of meals at a time that are ready to pop into the microwave when you get home from work. Live on less-expensive foods such as beans and rice as staples. You can consider how much you're paying for Internet or cable access. Maybe you don't need so many channels. Maybe you can cut down on vacation spending.
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Live within your means. The only way to get out of debt is to live within your income and cut expenses while paying off your assorted debts. Commit to not buying this year's cool boots just because you want them, even though you have three pairs of perfectly good boots in your closet already. Plan your purchases. If you cannot pay cash for them, don't buy them. If you know you'll need a larger item such as a dryer or a car, begin saving money for them ahead of time. If figures don't add up, get a second job to help pay off your debts.
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Pay off your debts. Starting with the smallest debt to the largest, pay them off. Talk to creditors and ask for better terms. You can pay off your debt if you commit to living within your income, using the money you save to pay off debts already accrued. Commit to not getting further into debt. To help keep this commitment, build up an emergency fund of, at least, $1,000, so you won't be tempted to use your credit cards for small "emergencies." Little by little, you'll dig yourself out of debt.
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References
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