When you’re in debt, there often seems no way out. How do you make your money stretch further to not only make the repayments, but get your debts under control? While we read a lot about bankruptcy, there are other debt solutions – but they take time, diligence and dedication.
There are no quick-fix solutions for debt management, true debt-management might take a little longer to achieve, but, if you do it right, you’ll be on top of your debt now and in the future.
1. Get serious – If you’re serious about getting on top of your debt, the first thing to do is to stop adding to it. Cut up your credit cards, store cards and anything else that allows you to spend money you don’t have. Ignore seductive.
2. Do a debt assessment – Do you have a clear idea of what you owe? This is where you get out all your statements – credit cards, store cards, car loan, home loan, and anything where you owe money and add it all up.
3. Always pay more than the minimum repayment –Every little bit extra that you can throw at the debt will reduce the time.
4. Find the extra money by doing a budget – It always comes back to this with money, doesn’t it? Just as you need a clear idea of what you owe, you also need a clear idea of what you’re spending. You’re looking for money to redirect towards your debt. Learn more about family budgeting here
5. If you have debt, you have no savings – Many people make the mistake of carrying credit card debt and trying to build up their savings at the same time. Use your savings to pay off as much debt as you can and continue to redirect that money until the debt is gone. Once your balance is at zero, you can direct the “savings” money as well as any money you used to spend on monthly debt repayments into your savings account.
6. Consider consolidation – Taking out a personal loan to cover your debts can work well. Personal loans often have the added benefit of set repayments that are designed to pay off the card within a certain period of time (unlike minimum repayments on a credit card). If you follow this course of action, it’s vital that you cut up your credit cards.