Have your spending habits changed over the years? In the days when everybody carried cash in their wallets, careful consideration was given to every planned purchase. The arrival of credit card spending has made it a lot easier to fall into debt. You see something you like and without a second thought, you whip out your Visa.
Before you know it you owe the bank a considerable amount of money, and suddenly you wonder how will I get out of debt?
Look at your spending habits
A good first step toward getting out of debt is to look at your spending habits. Before buying something new, evaluate what you have and consider if it really needs replacing. If you have a weakness for fashion, avoid temptation. If you absolutely have to have something, shop around and compare prices.
As a first line of defense to control your debt, it might be a good idea to cut up the credit card. If this is a bit too drastic for you, put the card out of reach. If you no longer carry it with you, you can’t use it.
Talk to the bank
The bank’s financial advisors are not your enemies; they are there to help you. If your debt is spread over multiple accounts such as student loans, a car loan, and a credit line, you may qualify for a consolidation loan. If nothing else, a consolidation loan will give you a lower interest rate. In addition, the bank can set up a payment plan for you. In your zest to get out of debt, you may be a little too hard on yourself and may not be able to keep up your good intentions. By setting up a realistic payment plan, you will reduce your debt and still have a life.
Selling one or more of your assets may be a way of getting out of debt. If you live in a big house with multiple bedrooms and the kids have flown the nest, consider moving to a smaller residence.
If you have two cars and you can make do with one, sell one set of wheels. Not only will this save on car payments, but it will also cut out insurance, taxes and gas expenses.
Selling an antique, jewelry or a coin collection may bring in some cash.
Pay more than required
How to get out of debt in the case of a credit card account will often depend on the number of your monthly payments. If you only pay the required amount, you will be paying for a very long time, especially if the account carries a high-interest rate. Paying double if not triple your monthly payment is a sure way to get out of debt fast. This will reduce your total principal amount and the amount of interest you will have to pay.
The banks hope that you won’t figure this out. They want you to pay the minimum amount because that’s where they make their money — on the interest you owe!
Find a temporary job
To help you make extra payments, you could work extra hours at your current job or take on extra work. Whether it’s a second job or selling your services where they are needed, extra cash can be put toward extra payments.
Getting into debt is easy, but how to get out of debt may be a struggle. Keep careful track of the payments you make and the remaining balance after. As you watch the amount you owe go down, you’ll be encouraged to keep up the good work.