Debt is a major problem for a lot of people these days. The problem is,
even if they know they want to get out of it, they have a hard time
figuring out how to start. Being in debt has a bigger impact on your financial future than you
might realize. Bad debts can continue to to haunt you and your credit
report for years, especially if you don’t deal with it now.
Some question which might be haunting you day in night out:
How To Get Out Of Debt Quickly?
How To Get Out Of Debt On A Low Income?
How To Get Out Of Debt With No Money?
How To Get Out Of Debt And Save Money?
To get out of debt, you need a plan, and you need to execute that
plan. But that can be easier said than done. It’s easy to become
overwhelmed with all the steps you need to take. And it’s also easy to
lose motivation if you don’t realize how much progress you’ve already
made. These steps are designed to help you get a grip on your finances and
spend less money so that you can focus on paying debts back.
Some basic points you should consider in 2016 for getting out of debt
Acknowledge the problem. The first step is admitting you have a problem. The first week, all you have to do is say to yourself, “I have a problem with debt. I got into this because I spend money I don’t have. But I believe that there’s a way out, and I can do this. I can control my spending, make a plan, and slowly get out of debt.” That’s a major step. Now set aside just 30-60 minutes a week to deal with your finances — make it a set day and time, and don’t let yourself miss this appointment.
Stop digging. If you’re in a hole, the first step is to stop digging, and that’s what you’re going to do this second week. For 30 days, see if you can stop any non-essential spending. If you have a major problem with credit cards, cut them up. If you’re not so bad with credit cards, at least put them away and don’t buy stuff online for one month. What’s essential? Obviously your bills, housing, auto, gas, groceries … that kind of stuff. Non-essential?
Make small cutbacks. This third week, take a look at things you normally buy and see if you can cut out a few of them, or spend less on them. Groceries? See if you can buy house brands instead of name brands. Coffee? Make it yourself at home instead of buying out. Lunch?
Start an emergency fund. This fourth week, set up a savings account, if you don’t have one already, for an emergency fund. Now take the amount you saved in Step 3 (and even in Step 2 if you think you can make them last for awhile) and set up a regular automatic deposit from your checking to this emergency fund savings account for this amount. It’s important that before you start paying off debt, you have at least a small emergency fund.
Take inventory. OK, this is a step that we don’t like to take. But take a deep breath. You need to do this. Remember what you said in Step 1? You can do this.
Make a spending plan. We don’t like to do this step either. But it’s not going to be as painful as we think. This sixth week, set up another simple spreadsheet. In one column, list your monthly bills (rent or mortgage, auto payment, utilities, cable, etc.) — everything that is a regular monthly expense. Then list variable expenses (things that change every month) like groceries, gas, eating out, etc.
Control spending. If you’re into your seventh week of this debt plan, you may find it hard to keep track of your spending and ensure that you’re sticking to your spending plan.
A number of online resources such as LearnVest and Mint will pull the transactions from your financial accounts so you can start categorizing and seeing where to trim the fat.
If, as you’ve been reading the cost-cutting suggestions, you have a sinking feeling you have no fat to cut from your budget, then earning more will be your ticket out of debt. If a raise isn’t on the table for you, let everyone in your network — from friends to family to former coworkers — know that you’re looking for freelance gigs.
Pay bills on time. This may be a problem for a lot of people. It’s important, if you want to get out of debt, to start paying all your bills on time.
you are really struggling with your debts and find that after step one
you do have too much of your income going on paying credit card bills,
loans or other debts that just aren't being cleared, then you should
seek professional advice.
step is knowing where you stand. You can monitor your credit easily
using Credit.com’s Free Credit Report Card
It provides you with your credit scores, and breaks down the various
components of your credit file in an easy to understand way.
Commit to getting out of debt.
This may seem like a throwaway tip, but it is one of the
most important. Getting out of debt is hard. It takes maintaining
discipline over a long period of time. It demands lifestyle changes. It
also sometimes requires bucking peer pressure.
While you shouldn’t build a plan so austere that it would
be impossible to stick to, you will have to make some tough choices. If
you’re used to treating yourself to spa days or shopping sprees or wild
nights out, you’re going to have to give up some of these tangible and
expensive pleasures in order to obtain what right now seems like the
abstract state of being debt-free.
Before you embark on this journey that will last months,
if not years, think about how sweet it will be to be debt-free and be
able to pursue other dreams you have, whether it’s buying a house,
taking big vacations every year.
For motivation, create a visual reminder of what you’re
working toward, such as a photo of the kind of house you’d like to buy,
or the destination you plan on hitting when you can afford it. Put the
image in your wallet, on your computer — wherever you spend money — to
remind yourself of what you’d really like to do with it.
Find out the total of what you
This should be a pretty obvious first move, but don't let the simplicity of it get the best of you. Get a piece of paper, a Google Spreadsheet, or open Notepad on your computer. Go to the website of every financial institution to which you owe money. Then, copy down all balances with their respective APRs (interest rate) exactly as they appear. It's also very beneficial to know what your minimum payments are for every account. After tracking down all of your debts, you'll have a decent idea of how much is owed. Let it sink in, but don't worry, in a few more steps we're going to start getting rid of it.
Try to make 0% balance transfers, get your APR lowered or refinance.
Now that you’re committed to paying down your debt, it
would really help if it weren’t simultaneously increasing bit by bit. If
you’re eligible for 0% balance transfers (you can search for credit
cards on sites like Bankrate, Creditcards.com, CreditKarma, NerdWallet and others), see if it makes sense to transfer your credit card debt.
But beware the fine print. If the 0% offer only lasts six
months, be sure you can pay that debt off within that timeframe. If not,
you could end up paying higher interest than you were before — and it
could even apply to the initial six-month period (look for the term
“accrued interest” to see if this might happen). Also, calculate what
the balance transfer fee is and make sure that even with the fee, you’ll
still save money on the transfer.
Work your debt and discretionary expenses into your budget.
Now, calculate what percentage of your take-home pay your
minimum debt payments are. If your necessary expenses are 50% or less,
aim to put 20% of your take-home income toward your debt. If your
minimum payments are less than 20% (say they tally $300 but 20% of your
take-home is $600), you’ll be able to put more than the minimum toward
your debt each month.
Start your debt-repayment plan.
Now that you have a monthly debt repayment target, go back
to your debt spreadsheet. Pay the minimums on every debt except the
highest-interest rate debt.
This method of repayment will ensure you pay the least
interest. If that top debt has a huge balance and you’re worried your
motivation will flag, then you can try the “snowball” method, in which
you start with the smallest balance and then use the momentum from
paying that off to continue on to the rest.
If you can, set up all the payments on auto-pay so you don’t have to worry about missing any of them one month.
Stick to your weekly allowance.
The only way you’ll be able to pay off your debt is if you
don’t keep adding to it. This means being vigilant about living within
Depending on your income and the cost of living in your
city, this can be difficult unless you keep an eye on it. If you know
you need to make a shift in your spending habits, try using cash. Take
out your weekly allowance in cash each week and only let yourself spend
that amount until it runs out.
You could also make sure you’re staying within your allowance with a budgeting app like LearnVest, Level Money, Mint or You Need a Budget.
Trade in Big Ticket Items
Do you have a shiny new-ish car or two in the driveway? You can significantly reduce your total debt by trading in your car for something cheap. If you can get $18,000 for a trade-in, and you can find a $10,000 car on the lot then you just came into $8,000 to help you pay off debt. If you can trade-in two cars and concede to just having one you could double or triple this amount. Now isn't the time to have toys. You can have toys when you're debt free.
Sell Almost Everything
Now that ALL of your big ticket items have been either sold or traded in for less expensive versions. American houses and apartments are filled with crap we don't need. A good way to figure out what you do need: Carry around a notebook and write down every item that you use over the course of a given week. It's going to be a lot less stuff than you imagine. The rest—the crap that added to the debt problem—has to go. It's unnecessary and dragging down your recovery efforts. Get rid of the stuff. There's always time for stuff when you're debt free.
Work, Work, Work
This one is going to blow your mind: To pay off debt faster you can work more. Overtime, second jobs, babysitting, etc. Check out this article I wrote about how to make more money. Pretty obvious, right? More money, more debt repayment.
Achieving your goals, no matter how big or small should be celebrated. Don't take this to mean that you should go out and spend hundreds of a dollars at the Mall for paying off $100 of your debt. Instead, buy yourself a cup of coffee. For a free alternative you could guilt people into congratulating you by posting your achievements on Facebook.
Few major ways that can help Americans get out of debt in 2016: Debt Consolidation
“Do It Yourself”
Of all the options available to people who need debt help, debt consolidation is one of the most mild, least drastic options.
That’s because, unlike other methods we’ll describe below, you don’t
have to negotiate with your creditors in order to do debt consolidation.
if you choose to get a debt consolidation loan:1. You contact a bank or peer-to-peer lender.
First, you do some research to identify which company you want to work
with. After you get in touch with a lender and verify that their terms
and interest rates are good, you’ll need to allow them to check your
credit score. If it is above 660, you should be able to get a
consolidation loan.2. You work with the lender to set terms for your new loan.
Since the bank or peer-to-peer lender who is offering the debt
consolidation loan will be your new (and only) creditor, you need to
work with them to ensure the interest rate and monthly payments are
going to work for you. As always, read the fine print.
3. Your debts are transferred to the new lender.
Once this happens, you no longer owe your previous creditors anything.
You now owe the new lender the total amount of your balance.
Of course, debt consolidation is not the only way to get out of debt. Another common method is debt management.
These two terms are often mixed up, because many companies advertise both debt management and debt consolidation.In reality, debt consolidation only refers to getting a new loan that pays off your old debts
and gives you one payment.
On the other hand, a debt
management plan (DMP) is a program offered by companies or non-profit
groups that helps you negotiate a new payment plan with your current
. So unlike debt consolidation, you still have the same
debts (with the same balances) but you negotiate for lower interest
rates and, if necessary, lower monthly payments.People usually go to a “credit counseling” non-profit organization
to get help starting a debt management plan. (There are also for-profit
companies that do debt management) If you decide to do debt management,
it’s best to use a certified credit counselor from Vantage Acceptance
If you file for bankruptcy, you may be able to eliminate most or all
of your debts very quickly (in a Chapter 7 Plan) or over five years or
less (in a Chapter 13 Plan). If you are being threatened with debt
collection lawsuits, if your income has been to reduced to the point
where you can’t make your payments, or if you are simply feeling
overwhelmed with your debt, it’s a good idea to talk with a bankruptcy
attorney to find out whether it may provide the relief you need.
Bankruptcy may work for you if:
You have significant debts that can be discharged (eliminated), and your income does not prevent you from doing that.
To make it work:
Talk with a qualified bankruptcy attorney, one whose practice is
largely devoted to bankruptcy and helping consumers in debt. Ask for
referrals from a financial professional you trust, or visit NACBA.org.
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