If you find yourself with overwhelming payments every month, it might be time to start looking at paying off your debt. Some people make the decision, when they are stressed over the idea of how much the payment’s they make every month are altogether, or they have a close call with their job and realize that if they lost their job they would not be able to keep up with all of their bills. It might be that you can’t get a loan for a house or a car without making a change. Or it might be that you just don’t want the credit card companies to get so much money from you every month, just for lending you money. It doesn’t matter why, the important thing is that you have decided that it is time to pay it off. When you finally make this decision you might have a lot of debt or just a little, but no matter where you are there are a few steps that can help you reach your goals.
For many people the first step to paying off debt is one of the hardest. It can be scary and create a feeling of instability and your inner toddler will probably throw a fit. But the first step is to stop using credit. No more credit card, layaways or financing, at least until you are done with this process. If you don’t have the money for it you just don’t get to buy it for now. When you haven’t been waiting to get the things you want or need, but try to keep your goal in mind and focus on the end result. Remind yourself of your why and the reason that pushed you to make the decision to get out of debt.
Once you have set your mind to stop using credit, the next step is to get a good picture of what you are dealing with when it comes to your debt. So collect all of the household statements. That is all of your credit card statements, the information for all of your loans including car, and home loans, all of the statements for anywhere that you owe money. On one piece of paper write all of your balances, the current minimum payments, the interest rates, and the pay off amounts for everything that you owe. If it is less overwhelming put the debts that aren’t from your home and cars on one side and the debt from your home and car on the other side. Organize this information in a way that make sense to you, so that you can really see what is going on with your debt. Some people might put the highest amount owed at the top another might put the lowest amount at the top, but the important thing is to organize it in a way that helps you to see what is going on, so that you can make sense of how much you owe.
The next step is creating a budget. This means looking very closely at all of the money you bring in and all of the money that you spend. Write it all down and do the math. You might do this and realize that you really can maintain your lifestyle. You might figure out that you have been spending way too much money on take out. No matter what you discover it is also time to look really closely and figure out where you can squeeze more money out of your income. This might mean cutting back on certain things or it might mean finding a 2nd job or side hustle. It’s important to figure out where your money will come from, so you can make a doable plan.
Now is the time to come up with a plan of which bills you will pay off first. There are a couple of things to keep in mind. Unless you need a quick win, start with your highest interest debts. Paying off your highest interest debts first allows you to save money on how much you are paying and you will be able to see some progress to help keep you going. If your high interest debt feel overwhelming, try starting with your lowest balance debt first. The most important thing is that you pick a plan that will help keep you going.
After you have started the process it’s important to track your progress. Paying off your debt is not something that’s going to happen overnight. It could take months or even years. So, anything that you can do to keep yourself engaged and in the process is really important. For some people it’s helpful to just keep changing the numbers on the sheet that they created at the beginning of the process. For others, the most motivating tracking sheet, is one that is visual. So creating a visual that you see every day, where you can see your progress as the debt decreases, will make a huge difference in your motivation.
As I mentioned above, unless you win the lottery paying off your debt is a long-term goal and it isn’t going to happen overnight. It requires self-control and that skill can be impacted by exhaustion, and frustration. It’s important to maintain your patience so that you can reach your goal. One thing that can help you with that is taking care of yourself. Make sure that you are sleeping and eating and getting exercise. If you tend to spend money emotionally try your best to be aware of that and have other activities that you can do instead of spend money so that you can meet your goals. It will take some time and some patience but you will eventually get there.
