When you have significant amounts of debts to pay off, it can feel like you will never be able to pay it. What you do have to remember, however, is that in the vast majority of cases, it is not impossible. It may take a long time, and involve you being prepared to make lots of changes, but it is doable.
Work out what you owe
The first step you must take is to work out exactly how much you owe and to whom. Spend some time going through all of your bank accounts, overdrafts, unpaid bills, and so on. This can seem daunting, but if you want to pay off your debts and get your finances back on an equal footing, you need to know how much you owe. It is important not to panic at the overall amount is – it can be sorted. What you cannot afford to do though is to bury your head in the sand and ignore it.
Consider a debt management plan
It is important to consider getting debt advice from money experts when it comes to resolving your debts so that you can figure out the best way to clear your debts. These types of plans can be helpful as they let you know where you are financially so that when it makes keeping track of things easier, you still know what you need to pay. If things are particularly difficult, you may want to think about talking to a personal bankruptcy attorney.
Reduce your spending
Tightening your purse strings a little is a simple way to ensure that you have more money left over each month. The goal is to find new ways to cut costs so that each month you have more cash to pay off your debts. Buy just what you need, and nothing else, from now on. Write a list of what you spend every month and use it to figure out where expenses can be reduced. Perhaps you should cycle, for instance, instead of driving the kids to school. Or, maybe, instead of taking two cars, you and your partner might share a car to work.
Figure out a budget
On the subject of reducing spending – it is a good idea to set out a monthly spending budget so that you know what you have available to spend per month. Calculate your income and the income of your partner and then subtract any outgoings from them, so you know what your monthly budget needs to be. Don’t forget to decide what you need to spend on food and fees for school clubs, uniforms, etc., in addition to putting money aside for rent or mortgage payments, bills, and gas money for your vehicle. You will find that you will find it easier to save money and clear your debts if you have a budget in place and know what you are able to spend.
Depending on the level of your debt, you may still be able to leave yourself some money for entertainment. Find a way to entertain yourself for less, such as sharing a streaming account with a friend, or using a Skillz promo code for games.
Being in debt is no fun, and the process of getting out of it isn’t always an enjoyable experience either, but the satisfaction when you see the amount you owe going down is worth it.
Good tips! I would also add consider ways to try to increase your income.