Eliminate Debt with These 3 Proven Tips
If you are struggling to pay bills, constantly worry about bills, or even buying general items such as groceries on credit, your financial situation and debt is probably getting out of control. Here are some proven ways to help stop your debts and finances from getting the better of you.
Regardless of your situation, the good news is, there are always options to change the situation and regain financial control. With some planning you can get on top of it — and even start putting money away for the future.
Here are three proven tips to help you tackle debt:
Work out a budget
A good budget should be balanced between covering your daily expenses and making repayments on your debt and other financial obligations. It’s important that you don’t over-commit on repayments, or you could end up having to use credit to cover your cost of living, which will put you further in debt.
Your budget should include all of your expenses — utility bills, groceries, entertainment, car maintenance, insurance and debt repayments. It’s important to be realistic, and add a contingency for unexpected costs and an occasional night out. But most importantly, it’s vital to stick to your plan.
Prioritise your debts
Some debts cost you more in interest and fees than others. So list your debts with their interest rate, repayment amount and any other fees, and put them in order, with the ones charging highest non tax-deductible interest at the top. Then focus on paying these debts off first.
Also, look at whether it’s possible to consolidate your debts or move them to a lower rate option. For example, many credit cards offer an interest-free period for balance transfers, and a personal loan is likely to offer a lower interest rate than most credit cards.
Remember, even a small reduction in the interest rate can make a big difference on the total you’ll pay over time, so be sure to consider all your options.
The above-mentioned technique is widely known as debt snowballing although there are numerous other great tactics for getting out of debt – check out this great list of detailed debt reduction strategies, mind one that suites your needs.
If you feel that your level of debt has become unmanageable, it may be time to seek professional help.
A debt management expert can help you take stock of your entire financial situation and choose the best way to get on top of your debts. Best of all, getting help starts with simply making a phone call.
Finding a debt solutions provider can be difficult as there are so many options – some free and others paid. How do you find the best service? You must ask the right questions, check reviews on the service provider and know what outcome you are looking for. Debt elimination is not a quick overnight solution and takes time to organize your debt correctly and create good habits to avoid further debt and accelerate the decrease of current debt.
When considering professional help, consider unbiased, non-commercial channels first…comparing their services to potentially paid services. Once you have done your due diligence, proceed with what works for you.
Free financial services providers include the following:
Community Action Agencies (CAA) – There are thousands of CAA’s throughout the country and they are able to assist visitors with assistance across all area of financial services. They are a non-for-profit and have a strong reputation in the communities they serve.
Financial Counselling – A financial counsellor is able to provide assistance across a range of money related situations, including debt. If you believe that your debt is beyond your current financial knowledge, speaking to a free, professional could help fix your situation.