- Some debt can be strategically appropriate for your situation. The important thing is to manage the necessary debt you have so you can repay it as soon as possible.
- Get organized, and plan ahead by using a spending plan tailored to your needs.
- Cut your spending as much as you can, and avoid further debt.
- If you feel the need, speak with your creditors, a credit counselor, or other trusted financial professional to get help managing your debt. Click here to set a free appointment with a financial counselor.
Some debts are avoidable, and some are necessary to take upon ourselves. Chances are, if you have a car, a home, or have obtained higher education, you have loans to pay back. Whether necessary or unnecessary, debt can easily sneak up on people if they do not monitor their money flow.
It’s one thing to get out of debt and quite another to stay out of debt. Thus, the goal of debt management is to pay everything off and decrease future debt by cutting back needless expenses. Thorough planning is an integral part of the process.
The following seven steps can help you as you work toward debt recovery:
- Organize your debt. Make a list of all the creditors to whom you owe money. Write down how much you owe each one and include the interest rate. This will help you conceptualize the extent of your debt.
- Implement a spending plan. You’ll next need to look at your fixed and variable expenses to see how much you spend each month. This will help put more money toward needs rather than wants.
- Cut your spending. Stop using your credits cards, especially if you have debt in credit card lines (although, you should first make sure there aren’t inactivity fees for your cards). Try going out less and finding budget-friendly date ideas. Make dinner at home. Find free activities to enjoy.
- Talk with your creditors. Explain your situation and let them know you are making efforts to pay off your balance in a reasonable time. Ask if there is a way you can get a lower interest rate. Also see if they can help you set up a payment plan.
- Prioritize which balance to pay off first. Some people work to pay off their largest debt first while paying the minimum amount on all other balances. Others do the opposite. Find what makes most sense for you and what feels most comfortable. Use these helpful financial calculators to help you plan this process.
- Make a calendar to stay on track with your goals and payments. Use our helpful Loan Calculator to assist you.
- Consider credit counseling. If you find yourself repeatedly struggling to pay off your debts, you might try meeting with a professional. Click here to learn more about choosing a reliable credit counselor.
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