If your creditors are starting to track you down, there’s no need to do anything drastic like declare bankruptcy yet. You have options, and you should explore every avenue before you do anything too extreme. Here are a few ways to make your debt more manageable.
Monitor Your Budget
When you create your budget, don’t just put it into your excel spreadsheet or online program and then let it collect dust. Sit down weekly (if not biweekly) and go over your finances. Monitor where your money is going and how well you’re doing with sticking to your goals.
If you can, keep your budget on your smartphone or tablet and carry it with you whenever you go out. Take it grocery shopping, clothes shopping, out with friends, etc. Keep it on hand as a reference, and update it every time you make a purchase. That way you won’t be tempted to overspend.
If you don’t have one already, start an emergency fund. Those rainy days are budget-killers, and if you don’t have emergency money, you’ll find yourself using your credit card far too often.
If the big family vacation is coming up, start planning months in advance. Save a little more here and there to make up the difference, and do everything you can to make your travelling as cheap as possible. You can’t afford to spend unnecessarily when you’re doing your best to get out of debt.
Before you get each paycheck, know what you plan to do with it. Mete out what percentages go where, and then when the paycheck comes in, stick to the plan.
Toss the Credit Cards
Credit cards are a staple of modern society, but they don’t have to be a staple of your life. Keeping one on hand for emergencies and to build credit is fine, but you shouldn’t have a whole stack of them that you use on a regular basis.
And besides, now that you have an emergency fund, you shouldn’t be using your credit card except in the rarest circumstances anyway.
If you can’t afford something with your debit card, don’t buy it. That might mean giving up that new big screen TV or that two-week cruise to the Bahamas, but face it—when you’re in debt, luxuries like that shouldn’t be your top priority. Pay with cash, and you’ll be surprised at how manageable your finances suddenly become.
Do the Math
What number will get you back in control? How much money do you need to save or set aside from each paycheck to get back on track? Sit down and calculate your expenditures and income. No one loves the idea of crunching numbers, but without it you’ll be saving and spending aimlessly. Having a solid goal in mind will give you something to shoot for.
Break those numbers down into manageable categories. How much can you reasonably pay off in a month? Six months? A year? Five years? Breaking your debt into bite-sized pieces paid off over a certain amount of time will keep it from being overwhelming.
Meet with a Financial Advisor
Meeting with a professional financial advisor doesn’t have to be a last resort. No matter how far you are into debt, if you feel that you want advice you can trust and someone to be accountable to, professionals are available to help you get your debt under control.
Advisors can help you plan a budget, make long-term goals, and negotiate with creditors. As a last resort, bankruptcy lawyers from financial firms can help you decide if bankruptcy is the right route for you.
Don’t let debt overwhelm your life; step up and stay on top of your finances. Being aware of where your money is going is the first step to taking back control. It’s up to you!
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