Now that we are well into the new year, many people are starting to look back at the resolutions they made a few weeks ago. One of the most common resolutions people make is to get out of debt. Unfortunately, when this resolution is made, people often do not have a plan outlining how they are going to do it. Like anything else, without a plan, this resolution is almost impossible to keep. Below are eight ways that can help so that if you have not yet stuck to your resolution, you can focus on doing so for the rest of the year.
Collect Your Data
In order to get out of debt, you first must understand your financial picture and where you stand. Collect your most recent bills for any debt you are currently carrying. This includes not only statements for credit cards and loans, but also any utility bills or other household bills you are behind on. Next, obtain a copy of your credit report from one of the major credit bureaus, such as TransUnion or Equifax. This will help you determine what your credit score is so you can better understand if you qualify for lower interest rates.
Create a List of Debt and Income
Credit reports can tell you a lot about your financial standing, but they also will not include every debt you have. To really determine how much debt you have, and create a goal for paying it off, list out each debt in full. Include the name of the creditor, the balance you are currently carrying on that debt, the minimum monthly payment you owe, and the interest rate.
Using another list, write down all of the income you make. This can come from your weekly or monthly wages, returns on stocks, government benefits, and more. Include each type of income so you understand how much income overall you have to work with when paying down debts.
Once you understand exactly how much debt you owe and how much income you bring in, create a goal for when you will have it entirely paid off. Remember, it is important to be realistic, whether that goal is for one year, two years, or even five. Determine how much you would need to pay each month to pay off all of your debt.
Lower Your Interest Rates
This option may not be available to everyone but, when possible, call your creditors and ask about lowering your interest rates. The interest rate on credit alone can make people feel as though they are trying as hard as they can, but they just do not get anywhere. If your creditor will not lower your rates, consider getting a credit card with a lower rate and using it to pay off some of the high-interest debt you carry. If you carry a lot of debt in student loans, you may be able to consolidate it and create an income-based repayment plan at StudentAid.gov.
Pay More than the Minimum
Credit card companies ask you to only pay a minimum amount because it means more money for them. Much of the minimum payment is made up of the interest on the loan and pays back very little of the principal, making it even harder for you to get out of debt. To combat this endless cycle, payback as much as you can and always try to pay more than the minimum balance that is due. This will lower your principal, which means there is less debt for interest to be applied to, and eventually you will start to see that minimum amount, and your overall debt, drop.
Make More Money
Of course, if you cannot pay a significant portion of your debt, you may want to think about making more money. This does not necessarily mean quitting your current job for a better one, although that would help. It might mean taking on a second job, although that may not be completely necessary, either. Consider taking on a side gig on the weekends or whenever you have time, whether that is designing websites or walking dogs. You could also do something as simple as filling out online surveys from the numerous websites that offer this opportunity.
Spend Less Money
Naturally, if you cannot pay down your debt with the income you have and you cannot make more money, the only option left is to spend less money. Spending less money while you are also making more and paying down your debt will turbo boost this effort and help you pay down your debt in no time. A great way to spend less money is to determine what you are spending daily and eliminate whatever costs you can. Spending one week writing down all of your expenses every day, such as your daily coffee or taxi ride, can be a great way to determine where you can cut costs and spend less money.
Create a Budget
Nothing can keep you on track financially better than creating a budget. Within your budget, outline how much you have to spend on necessities every week or month, depending on what works best for you. It is nearly impossible to spend money on only essentials, so remember to leave a section in your budget for discretionary spending. Once you have your budget, you must stick to it as best as possible and not overspend, or else it will not work.
After you have created a budget and have started paying down your debt, keep going. Continue to track your spending habits and continue paying down your debts so you do not find yourself in trouble and have to start all over again in the future.
Call a Florida Debt Defense Lawyer when You Are in Too Deep
Sometimes people are as frugal as possible and try to pay down as much of their debt as they can, and these efforts are unfortunately still not enough. If you have a great deal of debt and a creditor has already started legal action against you, it is time to call a Fort Lauderdale debt defense attorney. At Loan Lawyers, we can defend you in these lawsuits, ensure your rights are upheld and give you the best chance of success. Call us today at (954) 523-HELP (4357) or contact us online to schedule your free consultation so we can discuss your case.
Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation and find out more about our money-back guarantee on credit card debt buyer lawsuits, and how we may be able to help you.