Have you recently found yourself struggling with debt? Owing money to anyone can be stress-inducing, but pretending your debts don’t exist won’t help your finances.
If you’re on the hunt for easy ways to get your finances back on track and set your financial health up for success, incorporate these easy habits into your life.
Reassess Your Budget
If you’re drowning in debt, your current budget likely isn’t helping. It’s time to create a new one. Start from scratch, and give yourself at least an afternoon to whip your new budget into shape. Consider all of your monthly expenses. From rent to food, car insurance to gas, education tuition to entertainment costs. You also have to set enough money aside for those unexpected costs that always seem to hit us when we’re down. Cutting down on unnecessary spending and streamlining your costs to the basics can help you funnel more money towards paying off those debts.
Switch Up Your Habits
It’s a step in the right direction to create a new budget, but it’s an entire leap to follow through on your plans. Old habits die hard, and without a concerted effort to change those financial behaviors that landed you in your debt mess, digging your way out is impossible. Make conscious decision to look at your behaviors and cut down on any of the expenses you just don’t need. It could mean giving up that daily trip to Starbucks, or forgoing those lunches out with your colleagues. Paring down your spending to the absolute essentials will leave you more money left over to put towards paying down your debts. Going without some of those entertainment things now will set you up for financial success later—the payoff is worth it.
Cut Up Those Credit Cards
If you’re struggling with credit card debt, get those cards out of your sight. Racking up more debt through credit spending can leave you in a world of hurt down the road. Stop or cut back on your credit spending as much as you possibly can. Don’t take out any new cards, and avoid taking out loans. Set aside a specific amount of cash per month that you can use on unnecessary items (if any at all). Once that cash has been depleted, your frivolous spending is over. Make sure to use discounts and coupons whenever possible, especially on those novelty items, and keep yourself accountable for any excess spending that could have been avoided.
Make a List of Debts
To get a comprehensive view of all of your debts and the total amount of money owed, make a high-level observation by listing out all of your debt accounts. Include important details while you list, including penalties for missing payments, interest rates, and any other pertinent information. You can organize these accounts in several ways. You may choose to order your debt in order from smallest to largest amount owed. By quickly paying off the small debts (while still paying the minimum on all other accounts) you decrease the total amount of debt accounts. This can be psychologically satisfying, and may help you feel less overwhelmed by the money you owe. Maybe you’re worried about racking up interest rates. If this is the case, order your debts by interest rate, going from highest to lowest. Tackling those accounts that are costing you more in the long run can save you oodles of money.
Sometimes, our debts can get so bad that they’re impossible to manage by ourselves. If you’ve hit a point of despair, it’s time to hire help. A professional financial planner can help you determine the best ways to pay down credit card debt. They may provide budgeting advice, savings tips, and general guidance that can transform your bank account and squash your debts. Have tax debt? Hire a tax professional can help you deal with any IRS issues. There are available programs to help you handle government debt problems; the fresh start initiative helps taxpayers come up with payment plans and installment agreements designed to help settle their tax debt.
If you’re in debt, don’t give up on paying off your bills. Incorporate these habits into your daily life and make a change you can be proud of.
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