Debt is so easy to slip into and so very difficult to get out of. People can find themselves paying more and more of their monthly income to their creditors, leaving less for them and their families to live on. If they want to get out of debt, they need to start by doing some preparation.
Know exactly what is owed –
Many people may have an idea or a rough estimate of how much they owe to their creditors, but to start getting out of debt they need to know the exact amounts and other important factors such as interest rates. Your credit card and loan statements should have the total amount due as well as the amount of your monthly payment and also the interest rate. You should include other debts such as medical bills, mortgage, utilities, student loans, or personal loans from family and friends.
Once you have a list of all the debt amounts, you will need to add it all up. Also, you will need to add up the total of your monthly debt payments to know how much money you have coming in and going out. Now, you’ll have a true picture of what you really owe. You can also use a free budgeting tool called Online Budget Advisor to help you sort out all of this information.
Build up an emergency fund –
One reason why many people get into debt is that they don’t have the funds to pay for emergency situations when they happen, and they do happen to everyone. They use a credit card to handle an emergency car repair or to replace a broken appliance such as a busted hot water tank. It just adds to the amount of debt due because of high-interest rates on credit cards.
For those who want to get rid of debt, an emergency fund is a necessity. It provides a financial buffer to handle the emergencies that can drive debt higher. Having enough to cover one month’s expenses is a good start, but ideally, you should have around 6 months worth of expenses saved up. There are different ways to build that emergency fund such as getting a second job, selling stuff online, or having a yard sale. If you get a bonus or raise at work, put that extra money right into an interest-bearing savings account.
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Adjust your lifestyle so you won’t incur more debt –
To successfully pay off debt, people need to live within their monthly income, including the debt payments. If they use credit cards to buy groceries, pay for clothing, pay for gas, or meet utility bills, there is no way for them to meet their debt repayment goals because they are constantly racking up more and more debt.
Cut back on everyday expenses where possible. That might include cooking meals at home more, taking lunch to work, using less expensive personal care items, or cutting down on entertainment costs. If cutting expenses is not enough, the next step is to increase income. Taking on a second job, getting freelance work, or increasing passive income streams are all options.
Make an appointment for free credit counseling –
This can actually be the easiest step in getting out of debt. It’s hard to admit that you might need help to work through this problem, but once you make that call you’ll realize how easy it really was and that you should’ve called sooner. Talking about it with a credit counselor can feel intimidating for some people. But, it is a necessary step in the process and friendly counselors will soon make you feel at ease.
A credit counselor is not going to judge or make disparaging comments to a person going through counseling. His or her job is to help the client assess their personal financial situation and to make plans on how to move forward in getting out of debt. Making the appointment may be difficult but the sense of relief it will bring is worth the moment of discomfort.
If you’re looking for the most effective way to tackle your debt issues, an experienced credit counselor is the way to go. A professional counselor will have the experience and training you need, along with the best strategies to help you maximize your current income. You’ll also learn ways to change your spending habits as you work toward conquering your accumulated debt.
Of course, there is some information you’ll need to take with you as you meet with a credit counselor for the first time. By preparing yourself beforehand, you’ll not only save time; you’ll get a jump start on the process as the counselor will be able to prepare your list of expenses and income immediately after the first meeting.
Preparing for the credit counseling session –
So, what should you expect as you meet with a credit counselor for the first time? The first and most important question you’ll need to answer is “how much income do you make and how much do you spend”? You must be able to answer this question honestly and exactly; guessing or estimating won’t help. Exact figures will allow your counselor to create a personalized budget that will actually work in your situation.
As you prepare for your first meeting by gathering this information, be careful not to underestimate the amount of money you spend each month. This is a common mistake. To overcome this tendency, look through hard copies of credit card and bank card statements for the last three or four months. Many counselors will recommend you use the average expenses of the last three months to get the most accurate picture possible of your real spending tendencies.
If you have income that varies, due to self-employment or commission-based work, find the average for six to twelve months. Next, sit down while reviewing your debt and expenses and write a list of any questions that come to mind that you’ll want to ask your counselor when you meet. This is a great idea the night before the meeting because it will help ensure you don’t forget any important issues during the actual meeting.
Contact a consumer credit counseling agency today –
By doing some preparation work, you will be ready to get out of debt in no time at all. You will be able to start your credit counseling session with all the information you need to begin moving forward in the right direction. Your financial future will start looking up with every step you take!
If you’re looking for a reliable credit counselor, look no further than the highly trained and certified credit counselors at Advantage Credit Counseling Service. We have over 49 years of experience with credit counseling and we can teach you about working with a credit counselor to fix your debt problem.
At Advantage CCS, you’ll find a range of services, including free credit counseling and an excellent debt management program. Contact us today via the telephone at 1-866-699-2227 or by visiting us online at www.advantageccs.org. You can also Live Chat with a counselor today by clicking here!