The recent recession affected the financial lives of people all over the country. The recession led to much higher rates of unemployment and underemployment. Because of this, many people needed to rely on credit cards to meet all of their financial obligations and pay for emergencies that arose. While this may have been a good short-term solution, many now find that they have an insurmountable amount of personal debt, which comes with high interest rates and unaffordable monthly payments. While it can seem difficult to do so, almost everyone can get out of debt if they follow a few different tips.
Tip #1 –
The first tip that should be followed to get out of debt would be to negotiate with the creditors. Most creditors are willing to work with their customers as it helps to ensure that the debt will eventually get paid. By simply calling a creditor, which can include a bank, credit card company, or any other creditor, you could negotiate your debt and make it affordable a number of different ways. You could receive a more affordable payment by either receiving a reduction in your interest rate, an execution of an affordable repayment plan, or even partial forgiveness of some of the money that you owe.
Tip #2 –
Another tip that should be followed to get out of debt would be to set up a personal budget. While many people go into debt due to financial difficulties that were out of their control, everyone ultimately got into trouble because they routinely spent more than they earned. You should set up a very detailed budget, which includes all of your fixed expenses and realistic provisions for spending money. The budget should also include a reserve to pay down your outstanding debts more quickly, which will ultimately save you money. Once the budget is established and written down, it may be clear where you have historically been over-spending, which may make it easier to find ways to cut back.
Tip #3 –
The third tip to follow to help you get out of debt is to categorize your payments. As a general rule, you should stack your debts in order from the highest interest rate to the lowest. When making payments, you should always make more than the minimum payment on all of your bills each month. Anything extra that you have should be used to pay down the highest interest rate debt first. This is called the “Debt Snowball Method”. This strategy will help you save money on interest expense over time.
It’s always a great idea to call a non-profit credit counseling agency before trying any of the tips mentioned above. The phone call is completely free and confidential. The Agency can help you set up a budget, contact your creditors to see if you can join a Debt Management Program, or offer many other suggestions to help you get out of debt as quickly as possible and save money in the long run. Contact a certified non-profit credit counseling agency today, even if you don’t feel you have a debt problem. They can show you some warning signs that might be there and save you from falling into debt before it happens.