It is easy to get in to debt-- overspending on credit cards, job loss, medical issues, or reduced hours at work can easily put you into a financial tailspin. After getting back on your feet and realizing how much debt you owe, it can be disheartening and you may feel like you are in a hole that you can't get out of. But don't despair-- it may not be easy, but with some hard work and diligence you can get out of debt. Use the following tips to help you shrink your debt and get into a better financial situation:
Rely on Your Checking Account
Many people rely on credit cards because they are often easy to get, easy to use, and many people don't realize how much they have spent in a month until the credit card bill arrives. One of the first steps of getting out of debt is saying goodbye to credit cards and relying on your own checking account. Take your credit cards out of your wallet and only carry a debit card that is directly connected to the funds in your checking account-- it is not uncommon for people to spend less when they know that the money will be directly taken out of the money available in their checking account. It is okay to keep a credit card for emergencies, but get used to paying for household bills, groceries, and other necessities through your checking account instead of waiting to see your credit card bill.
Make a Strict Budget
You probably know how much money your net is each month from your job, but if you don't have a strict budget there is a good chance that you are overspending and it will be that much harder to get out of debt and enjoy financial freedom. It is important to know where each one of your dollars is going, and a written budget can help you see the cash flow and keep yourself accountable. This doesn't mean that you have to totally deprive yourself--it is always a good idea to budget a small amount of money to be used for whatever you would like.
Make Small Goals
Looking at your debt as one large sum can make you feel like you will never be able to pay it off. Try making small goals and breaking up your debt in your mind instead. For example, look at how much money you owe on a credit card with the highest interest rate and focus on paying off that debt. After that is paid off, move on to the next chunk of debt. This method can make paying off debt feel more manageable, and you will also have victories to celebrate on your way to getting out of debt.
For assistance, talk to a professional like Cheviot Savings Bank.