Speed up your Climb from Debt
Many debtors in the United States have adopted the mindset that once they are in debt, they will be stuck in that position for the rest of their lives. This need not be the case, and by following some proven pieces of advice, you will place yourself on the well-paved road towards financial freedom.
First, it is important to acknowledge that being in debt does not make you a failure. Often, it is not your fault even in the slightest amount, and an unfortunate sequence of events spiraled out of control before any preventative action could be taken. While it is important to face reality and fully acknowledge the financial predicament that one is in, it is not necessary to blame yourself in order to take responsibility going forward.
Being in debt can feel extremely stifling, and you will naturally be drawn towards solutions that present themselves as quick fixes. Be extremely careful before signing up for any debt consolidation program, as these companies are notorious for preying on the despair of those in debt. As is true in most other areas of life, but especially in debt-relief, the slow and steady walker will finish the race much faster than the reckless runner.
Practically speaking, what can someone do to improve their financial situation?
For starters, it will be extremely helpful to understand precisely what your living expenses are. There is only one effective method of doing this: recording every single purchase that you make in a large spreadsheet. You may be very pleasantly surprised to discover areas where you can cut corners drastically, allowing you to begin paying off some of your onerous debts. Each person has an area where costs can be cut, and this is the most efficient way of finding that space.
It is also important to realize that not all debts are created equal. Some debts may be more urgent than others, and only by closely examining the terms on all of your debts can you formulate an effective plan for paying them off. Organizing all of your bills by their urgency is not a task debtors can afford pass up—even though all debts may look the same, choosing to pay the right debt off first may make all the difference in the long term.
For example, debts with high-interest rates, such as credit cards of retailers, should be given a priority over low-interest debts, such as student loans. Still, you should be careful to always pay the minimum monthly payments wherever possible, even on the low-interest debts. Put simply, the most effective plan is to first cover your monthly minimum payments and then to start using the remainder of your funds to begin paying off the debt with the highest interest rate.
Often, switching banks can provide a tremendous amount of benefit to debtors. The largest banks take advantage of those in debt, by penalizing them heavily with incessant overdraft fees and terrible interest rates. By and large, you will be in a much better position with any of the increasing number of internet banks that are sprouting up. These internet banks often have no minimum balances and generally operate within a feeless framework.
Beyond switching banks, it is also important to avoid high-interest credit cards at all cost. Only use a credit card if you absolutely must, and if this is the case, stick to one card that has the lowest interest rate.
The most important thing to keep in mind is to never give up. Getting into debt takes time, and so does escaping from debt. Start with the minimum monthly payments, and before you know it, you’ll be back in the black.
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