Debt is such a stressful thing to have in your life. When you have debt, especially in large amounts, it seems to completely take over your life. It is all-consuming. You think and stress about it constantly. Any purchase, financial decision, plan for the future, are all clouded by the stress of your debt. It is hard to not always have it on your mind.
Most people with debt want nothing more than to get out of that debt as soon as possible. They want to get that constant stress out of their lives. But many of them don’t know how to do it, or where to start. The feat may seem too difficult to manage. The debt may seem too large. The road may seem too long.
But if you are one of the many, many people who are struggling with debt, and have the desire to get out of debt, don’t get discouraged! Getting out of debt is absolutely possible for anyone. You just have to have the dedication it takes. It also helps to know what steps to take.
To help you out, I have created a “Getting out of Debt Cheat Sheet.” If you follow the steps in this cheat sheet, it can really help your process of getting out of debt less painful, and more successful.
1. Stop borrowing
The first step to getting out of debt is to stop borrowing. You will never get ahead if you continue to borrow. More borrowing means more debt, and less opportunities to get out of debt. This step may seem like common sense, but it’s amazing how many people continue to get into more and more debt while they are trying to get out of debt. A few of the steps below can help you to make the changes you need to stop borrowing.
Make sure to cut up your credit cards. Remember, credit cards are debt! So no more credit cards while you are working to get out of debt. Make this a hard fast rule in your life: NO more borrowing until you are completely out of debt!
2. Set a budget
To be able to start paying down your debt, you will need some extra money. If you have the ability to make more money, that is great. If you have the ability, you might want to get a second job while you are working to get out of debt.
If you can’t actually make more money, then the other best way to find more money is to set a more conservative budget. Set a strict budget and stick to it. Eliminate all unnecessary monthly expenses. Remember your goal to get out of debt, and don’t make any purchases that aren’t as important to you as that goal. Learn to distinguish between needs and wants.
Make sure that your budget finds room for extra money that you can use to get out of debt. If you are having a hard time finding those extra funds, it may be time to change your lifestyle. Reevaluate your list of needs and wants. You may need to go without cable, your gym membership, going out to eat, etc while you are working to get out of debt.
Sometimes it requires temporary changes to be able to free up the money you need to have enough funds to get out of debt. Sometimes, if your spending habits are completely off, it may require permanent lifestyle changes. Either way, it’s better than having to live with this stressful debt. If you are not willing or able to make enough changes to free up enough money in your budget with your current earning abilities, you may want to revisit the idea of getting a second job while you are trying to get out of debt.
3. Make payments
Once you’ve found extra money in your budget (even if it’s just a small amount), use that money to get out of debt. This extra money is not to be used on new purchases. Again, remember your goal! Use the leftover money from your new budget to pay down your debts.
4. Find a system that works for you
You will want to find a getting out debt plan that works for you. You want to be smart with how you are making your debt payments, and what system you are using to help yourself get out of debt. Some people like to pay off the debts with the highest interest rates first. Some people like to work to pay off the debts with the highest balances first. Either way, find a system that makes sense to you, and then stick with it. It is just a good idea to have a method behind the paying-off madness, and a way to stay structured and motivated during the process.