Thousands of people find themselves in debt every year. Debt is one of the primary sources of depression and anxiety in the U.S., so if you feel burdened and hopeless by your debt you’re not alone. There’s no way to avoid your debt, so facing it head-on is the first step. Now that you’re ready to get over your debt once and for all, here are the steps you can take to reach financial freedom.
List Your Debt
The best place to start is to make a list of all of your debts. There are two ways to tackle your debt issue. One way is to pay off all debt based on the total amount. Some will pay based on the smallest amount and some by the largest. This method is popular is because it’s satisfying to see the list shrink over time. However, there is a more cost-effective way of paying off debt. Generally, the best way to eradicate debt is to start with the highest interest rate and work down. In this method, list your debt from highest to lowest interest rate no matter what the dollar amount is. Interest rates make debt rise over time, so even a small debt can quickly become a larger issue. You may want to determine which method is right for you by consulting a professional.
Limit Credit Spending
Limit credit spending to save yourself pain in the future. The worst thing you could do while in debt is to add more debt. If you’re already in credit card debt it may be best to avoid opening another card at all. But if you have one and you need to use it, spend wisely. Designate your credit card to necessities like gas, rent, and pharmaceuticals. Try to only spend your card on things that will cost a consistent dollar amount so it’s easy to keep track of.
Invest in Your Debt When Possible
It’s tempting to spend that extra Christmas bonus as soon as it’s in your hands, but is it worth burning through the money right away? Take every opportunity to put extra cash toward your debt. Every bit of extra cash you get is like free money that helps wipe out your debt. Even tax returns are a great way to give your budget a boost.
Monitor Your Spending Habits
If you don’t already, monitor your spending habits now. When you have debt to pay off, it’s time to skip the luxury items for now and go with the basics. Start by writing a grocery list. Based on your budget, factor in what you will and won’t buy. Check for store brand items and forgo the extravagant brands that cost several dollars more. You should also try meal prepping. Preparing a meal ahead of time is a great way to avoid impulse spending during the day and save time. Another way to improve spending is to give yourself an allowance. Withdraw a reasonable amount of cash every week and learn to work only with the cash you have. You’ll be amazed at how thrifty you get when you need exact change! If you have your eyes ona new pair of shoes or a new gadget, wait it out a few weeks or months and save. In that span of time, you may not even want it anymore!
Hire a Professional
Not everyone can handle debt on their own. In more complicated financial situations, it may be best to hire a professional who can work out a plan for you. It may mean more spending, but hiring a well-qualified expert in the field will save you a lot of confusion and heartache. Tax resolution services brought to you by Community Tax will help you climb out of tax debt and set you on a sterling path to your future.
Dealing with debt is never fun but it can be done. Thousands before you have successfully taken care of their debt so you can too. Create a plan or contact a professional to get the debt relief you need.