How To Get Out of Debt In Four Easy Steps

More tips on how to live debt free.

Paying off debt and gaining control of your household debt and finances are typically long-term goals. However, did you know that there are simple steps that you can take right now to get control and stop your financial wreck from turning into a five-car pile up? If you’re someone who’s struggling with debt, I offer a few suggestions for getting back on track with your finances. Here are four steps that have assisted me in getting a jump-start on my financial plan for building wealth.

How To Get Out of Debt In Four Easy Steps

1. Take all the credit cards out of your wallet and freeze them. Yes, in order to get control of your debt, you must stop charging on your credit cards. If you keep charging, that payment you are making every month goes towards interest and your balance will never go down. Freezing the cards in a cup of water keeps you from making impulse buys with your credit cards. You still have the cards in case you may need them. However, you will have plenty of time to think about the purchase while you are waiting for the cards to de-ice. This will allow you to use credit cards responsibly.

2. Put all your bills in one pile. You have been avoiding the bills coming in because of the fear of what’s inside the envelopes. You may have bills, collection letters, and notices that have been looming. What you may not realize is that scattering these all over your house just causes clutter to pile up, and serves as a constant reminder that you have not paid your obligations. At this point, just gather all the mail that you have scattered from one end of the house to the other and place them in one neat pile. You do not have to go through them now, but at least you know where all the bills are! This way, you have completed the first step to facing them. Once you have them all in one place, schedule a time to open each and face what is on the paper. Make it more bearable by pouring yourself a cup of coffee or tea, or maybe even choose to sit down with a partner who can hold you accountable and help you deal with what is on the paper. For right now though, just put them all in one place.

3. Start paying cash. A couple of weeks ago, I attempted to balance my checkbook. Yes, I said “attempted”. Usually, I have no issues with this. However, on this day, for some reason, I could not get the checkbook to balance. With frustration, I decided to go on a cash only diet for two weeks and allow everything to clear the checking account. This is one of the quickest ways to gain control of your checkbook. If you have attempted to balance your checkbook with no luck, stop all use of the checking account for two weeks. Take out what you need in cash and use only cash. This will also help you spend less because cash carries more pain when spent, compared to credit or debit cards. I have enjoyed using cash so much that I have decided to continue this practice because it does help me to be more cautious with my spending.

4. Take the first step and set up an appointment with a certified personal financial advisor. They can help you create a workable budget and spending plan that will assist you with your financial goals of getting out of debt and getting on the right track toward your financial dreams. Even if you decide not to do debt consolidation through a debt management program, the counselor can still send you the budget that they created for you. This is an easy way to create a workable budget. In addition, this provides you with a level of accountability because you are going over the budget planning with another person who is trained to assist you with this.

 
Contributing Writer: Selena