1.Know What You Owe
Your first goal is to get a record of all the debts you owe. Take a look at your credit score and figure out to whom you owe money and why. In some cases, you might be dealing with bad debts that can be wiped from your records. In other cases, you might be able to contact your creditors in order to pay off a portion of the loan. You can’t do any of this until you know what you owe, though – and even then, these records are more to give you an idea of what it will take to live without debt.
2.Make a Budget
The best way to get debt free is to live within your means. Take stock of all of your expenditures and figure out how much money you really need to live each month. Once you’ve got it all down you can start sticking to that budget. Your leftover money can be rolled in to paying off bills in advance or just put into a savings account. The more in control of spending you are, the less debt you will accumulate.
3.Cut the Credit
You will also need to say goodbye to your credit cards. Even if you can’t pay off the balance, you can stop spending. Don’t spend anything other than the money in your bank account and try to reduce your debt as low as possible. Be aware that paying off and closing a credit card can adversely impact your credit score, so make sure you keep a small balance on your open cards. Once you’ve got a big enough savings account, you can close these cards. For now, though, your goal should be to eliminate their use in your daily life.
4.Pay it Down
Finally, start paying down the debts every time you have a little bit of extra money. Target your smallest debts first and pay them off. Take the money you have saved from paying off that debt and put it towards the next. As you free up more money, you’ll be able to pay off bigger and bigger debts. In time, you’ll be able to tackle major projects like paying off student loans or even a mortgage. Paying down debt should be the ultimate goal of this process.
If you want to combat debt, you need a game play. Know what you owe, live within your means, stop using credit and start paying down debts. With a lot of hard work and some sacrifice, you should be able to get yourself out of debt and into a much more financially secure lifestyle.