“How do I get out of debt on my own?” That’s your question when you’re deep in debt and there are lots of debt solutions out there.
There is credit counseling and debt consolidation option. There are also lawyers offering to have your debt reduced for a fee. And in certain financial situation, there is bankruptcy. With these choices, you might think that it’s impossible for you to get rid of your debt on your own.
The truth is that it is possible to become debt free with no outside help. Even those who think there is no room in their budget to pay down their debts are often surprised. It takes willpower and determination, but it is true that you can reduce and eliminate debt on your own.
Steps to Get Out of Debt On Your Own
Are you too deep in debt? If so, to do self-help debt management you will need to develop a plan and stick to it. Here is what you can do:
1. Stop accruing new debt. Don’t charge your credit cards, and refrain from taking out new loans or refinancing old ones.
2. Create a budget. You need to know where your money is going each month, and in which areas you can cut back to save some money to pay off your debts. As a start write down all of your expenses for a month and then make your budget.
3. Cut the unnecessary items out of your budget. Once you know where your money is going each month cut back anywhere else you can. Set this money aside to pay down your debts.
4. Determine which debt needs to be paid off first. If you have secured debts other than a long-term mortgage, you may want to pay them off first. Debts with high interest should also take priority, unless you have lower interest credit cards that charge exorbitant annual or monthly fees.
5. Put the money you have set aside toward your top priority debt. Only pay the minimum payment each month on all of other debts. Put all of your extra funds, if any, toward that debt, and continue to do so until it is paid off. If you get a bonus at work or unexpected money from some other source, consider putting it toward your debt as well.
6. When you get one debt paid off, start putting your extra money toward the next one. Repeat until all of your debts are paid in full.
Do it yourself debt reduction is often easier than you think. By taking a realistic look at our finances, we can often find ways to come up with the money to pay debts off without the help of anyone else. Doing so helps us get out of debt as well as rebuild our less than perfect credit.