Debt problems can be really daunting. However, there are a few things that a person can do to regain control of his debt. We will try to give you some pointers about how to manage your finances better in the future and become more proficient in debt management.
So, where to start? Well, you can start by creating a new Spreadsheet file that you can keep updating as you go on with your plan. You need to start looking at your debts. Perhaps the best thing to do is to write them all down and then list them by the amount you owe to each of the company, or more importantly, list them by the height of the interest rate. Go through your bank statements as well as the bills that you have received from those companies, which will help you which debts you should pay first.
Next, you should look into your budget, or if you don’t have one, start making it right away. This could help you realize how much are you exactly making and how big your expenses are. Also, it will help you realize if you can change that, so you can start making some of the payments to your outstanding debts. You can get rid of that debt much quicker by freeing up some spending. Now it is obvious that you need to look at your expenditure, and get rid of all those expensive things that add up over time. Use that money to pay off that debt much quicker.
Once you’ve determined how much you can afford to pay toward your debt each month, you should talk to the companies involved to see if you can make those arrangements. But try and do it from the budget that you’ve already established. Of course, that would be the best case scenario, but if it’s not possible, you may need to borrow some money.
Some debt is short-term. This could include some extra borrowing for holidays, and the banks will consider giving you a loan which could help you with your short term finances, but you need to realize that this will incur interest. But keep in mind that this is not extra money for spending.
Also, you could try a debt settlement service. People offer put all their credit cards into one. Credit cards with a free balance transfer makes this easy to do, which is good because that way you only pay one company, and not many of them. If the budget lets you, pay more than the bare minimum each month, because that’s the only way you’ll see your debt start getting smaller.
Also, it should be pointed out that, in case you’re tempted to hold onto some savings instead of paying off your debt, think about this: If the interest rate you’re getting on your savings is less than the one you’re paying on what you owe, than you might just be better of repaying your debts first. You can always start saving money later, once you get rid of your debt.