Sponsored BenefitIf you are struggling with debt, there are advocates who are waiting to help. Debt consolidation options and services available.
Want some motivation to start paying down your debt instead of putting it off? Imagine yourself once you’re one hundred percent debt-free.
No longer will you have sleepless nights wondering when creditors will call next. Wondering about how you’ll make minimum payments will be an afterthought. And as for what you can do with your money, here are just a few possibilities since it won’t be going towards debt any longer:
- Take an unforgettable vacation and travel the world.
- Build a massive emergency fund for even the stormiest of rainy days.
- Fund your retirement so you can stop working at a younger age.
Now that you have that little nudge you need to want to get rid of your debt, let’s look at the plan to make it happen.
A Simple Plan to Eliminate Your Debt
Follow these steps, and that mountain of debt will eventually become a molehill.
Calculate Your Total Debt
You have to know the exact amount of debt you have. Without it, you won’t know what you’re up against.
For many, this is the hardest part of having debt since they have to face the facts regarding their not so ideal financial past.
Get out your calculator and combine every single type of debt you have until you get that total. This number will include such things as student loans, medical bills, credit cards, personal loans, and more.
If debt collectors are calling already, that could mean trouble is coming. But it could mean they are ready to negotiate with you.
Don’t go at it by yourself. Your next step could mean the difference between getting out of debt or getting further into it from fees and deferred payments.
Let the professionals negotiate on your behalf.
Lower the Amount You Have to Pay
With the fear of knowing how much total debt you have now out of the way, you want to make that number as small as you can.
Get a list of all the creditors you owe money to and call them up. The goal here is to lower your debt before you start tackling it.
Get your credit card company to lower the interest rate. Consolidate your student loans. Find out if you can refinance your mortgage.
All of these moves can make a huge difference in making your debt more manageable and easier to pay off.
Classify Your Debts as Good or Bad
Did you take on debt for something you expected to increase in value? This is a good debt, such as loans to finance your education, your business, or your home.
Did you acquire debt for something that depreciated? Any loans for cars or credit card debt for things like entertainment are what we refer to as bad debts.
Select a Bad Debt to Tackle First
Those bad debts are ones that can cause the most regret. For this reason and others, you’ll want to eliminate them first.
Pick one of your bad debts and make getting rid of it your priority.
Make Those Payments
That one bad debt that sticks out like a sore thumb should get the most attention. Pay as much of it as you can per month until it is paid off. On the rest of your debts, pay the minimum.
This will be your primary strategy until all of your bad debts are eliminated.
Finish off Your Good Debts
With bad debts in your rearview, it’s time to pay the good debts down until they’re gone too.
Once your good debts are paid, enjoy building towards your future, as the past will no longer be a problem.