There are several reasons why people end up with debts – it can be because of they have been laid off of their jobs, credit cards, or other unforeseen factors. However, the most common reasons why people end up in debt are due to the fact that they either spend their money beyond their means, poor money management or both.
Of course, some people are in denial. But turning on a blind eye on the problem is not going to solve anything. So now we are going to stop all that and focus on fixing your debt problems right here and now by following these simple ways on how to get out of debt.
Set up a realistic budget for your expenses
Focus on listing all your monthly expenses such as bills and other necessities and make sure that they are all covered in your monthly income. Deduct that from the monthly salary and anything that remains can be spend on other stuff. Better yet, put that in your savings. You need to stick within the budget guidelines.
Use the stack method
A stack method is paying off first the debt with the highest interest rate. Paying off the highest interest rate first of a debt. Interest is a powerful weapon and banks or other financial institutions can use it against you. Make sure to aim in paying off the entire balance and not the minimum repayment as this can cause you to pay more interest in the end and then end up taking longer to pay off the balance.
However, the stack method is not for everyone. If the balance on the card exceeds half of your credit card limit, then do not use this method.
Use cash instead of credit cards
If you have several credit cards, use only one primary and use it ONLY for emergencies or for major necessities. Do not carry more than one credit card when you go on shopping and only list the items you need to buy. Do not keep it for everyday use and never accept increases on the credit card limit above an amount that can easily be paid off in three months.
Direct deposit for paychecks
Make sure that your paycheck goes in for a direct deposit and limit how much you let yourself to withdraw per week and month.
Cut down on unnecessary costs
For those that likes fine dining or just dining out almost every day, try to cut it down. That also goes for overusing of the cellphone.
Evaluate your living condition
Mortgage payments, property tax and other extra expenses should not be more than 33% of the household income. If you feel like you are in a tight situation, try to shop around for lower insurance rates, refinance the home mortgage and try to search for better or more economical utility plans.
Never do consolidated loans
If you think that will take you off your debt problems, you are just digging more holes in your situation. Consolidated loans are just another way of combining debts and instead of making it work in your favour, it might be a means to an end – end up losing everything because you just tied it all up in one loan. If you have to borrow, approach a friend or family member so you can get a low interest or none at all.
Work out a repayment plan
Contact your creditors and try to work out a better repayment plan where you can be sure you are able to pay. Most creditors are willing to work out with you to get their money without having to seek the services of debt collectors.
Seek the services of a professional agency
If you have no clue as to where to start or if you need guidance with your finances, start looking for a seasoned debt solutions expert such as Debt Cutter. They offer various solutions based on your situation such as debt agreements, thorough debt management planning and fixing bad credit ratings. Check out some helpful resources on how to get out of debt.