To get out of debt, you’ll need two things: A strategic plan for saving money, and time. Without winning the lottery (a terrible plan for getting out of debt), getting your way out of your financial sinkhole is going to be a slow-but-steady endeavor. Here are a few ways to help you get out — and stay out — of debt.
If you go into debt, it’s an indication that you are living beyond your means. Without planning, it can be hard to know just where you’re overspending. Drafting a monthly budget allows you to see in black-and-white where your money goes. While you usually can’t adjust your fixed costs, such as your car and house payment, you probably have certain areas where you might be able to cut back – such as eating out and entertainment.
2. Use Debit Cards
Unlike credit cards, debit cards are tied directly to your bank account. If you don’t have money in your account, you can’t make a charge on a debit card. Since no credit is extended, you can’t go into debt using your debit card. Just be sure to check any overdraft offers your bank might automatically extend you.
3. Pay Off Balances Monthly
If you absolutely have to put some debt on your credit card, pay it off as quickly as possible. Interest charges can rapidly increase your debt, and before you know it you might be completely unable to pay down your debt.
4. Get Debt Counselling
A debt counsellor will review your budget and assist with reducing your monthly debt repayments. Meaning you will have more money each month. They will also deal with all your creditors on your behalf. Creditors also can’t take action against you when you’re in debt counselling.
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5. Take Action
Remaining debt-free and managing debt wisely is ongoing. Keep a diary to document challenges and accomplishments. If you feel the need to take on debt again, read through and relive those times you went through to achieve freedom from debt, today. Remember the temptation of taking on debt is everywhere. Eliminating it will reduce stress and allow you better choices for your cash.