If you are struggling with debt, it is important to take control of your situation right away.
Otherwise, your debt can spiral out of control and put you in an even tougher financial position.
There are a few steps you can follow to stop making your debt problems worse and start putting yourself on track to one day becoming debt-free.
1. Order your credit report and determine your situation.
Before you can start addressing your debt problems, you need to identify exactly where you stand.
The best way to do this is by ordering a copy of your credit report from one of the credit rating agencies.
This document will list all the debts you have outstanding, the amount of debt you have in total and the interest rate on each debt. Reviewing this document ensures you will not forget about any loans or credit accounts.
2. Follow all your minimum payment deadlines.
Nothing sets your debt repayment plan back more than missing a minimum payment on a loan or credit card.
First, the lender will likely charge an immediate and steep penalty, even if you are just a day or two late on your payment. The lender could also increase the interest rate on your account to a much higher penalty rate.
This also makes your problems worse because the more you need to pay in interest each month, the less you will have left over to pay down your balances.
Finally, missing payments hurts your credit score, which gives you fewer options to tackle your credit issues.
Make a list of all the payment deadlines for each one of your accounts and pay each one on time.
3. Stop accumulating debt.
When you are deep in debt, it is easy to start feeling like things are so bad that it doesn’t matter if you keep spending.
Avoid this mindset because it is going to make it even harder to turn things around later on. You may want to cut up most of your credit cards so you aren’t tempted to spend more than you can.
“A weekly budget is a
great way to start.”
4. Set a weekly budget that saves money.
Make a list of everything you need to pay for each week, like gas, groceries, housing costs and clothes. See what you should spend per week based on the necessities.
Is there any money left over? Ideally, you should be able to save some money each week to put toward your debt.
Even a small amount will make a difference.
5. Look for a lower interest rate.
If you can reduce the interest rate on your credit cards, you will be able to pay them down more quickly because more of your payments will go toward paying down the balances.
One possible way to do this is to call up your credit card companies and request a lower rate. They may be willing to do this, especially if you have been reliable with your bills.
Another possibility is to apply for a low-interest credit card or for one with a zero percent introductory APR.
Rolling over your balances to one of these programs could help you save on interest. If nothing works now, keep making your payments on time and try again in a few months.
While your debt might seem like a never-ending problem, it is something you can figure out sooner than you think.
If you can keep things from spiraling out of control, you will be well prepared to start taking positive steps to paying down your debts.