Everyone’s experience with finances is unique, but most of us struggle
at some point in our life, whether we’re eighteen, thirty, or fifty-five.
For a lot of us, it can take half our lives if not longer to gain control
over our finances and finally come out on top. That’s why, eliminating
debt takes discipline. It takes hard work and perseverance. But, it’s
100% worth every minute of it.
If you are struggling with debt (as most Americans are), here are five
pieces of advice to help you get out of debt.
1. Create a detailed budget.
So many worthwhile things in life started out with a detailed plan, right?
In order to have a thorough financial plan, you need to create a budget.
This will help you better understand where all of your money is going.
You want to sit down and create a written budget every month, before you
pay any bills.
You don’t need a fancy, complicated budget with spreadsheets. All
you need is one or two pieces of paper with your monthly income and all
of your expenses, including: food, insurance, utilities, housing, credit
cards, auto loans, student loans, clothing, etc. Do not spend money just
because you have cash sitting in the bank. Instead, spend what you wrote
down in your budget – don’t go overboard.
2. Start an emergency fund NOW.
It’s nearly impossible to climb out of the seemingly endless cycle
of debt if you don’t have an emergency fund. Without one, every
dental or vet emergency, every trip to the mechanic, and every other unexpected
expense will lead you straight to your credit cards.
Before you start paying off your debt, we challenge you to put $1,000 into
an emergency fund. Can you make that happen in the next 30 days? If that
sounds unrealistic, try it anyway! You’d be surprised how creative
you can get when you’re determined to see a goal to the finish.
3. Pay off debt like this.
Regardless of the interest, list your debts in the order of smallest to
largest. Pay the minimum payment on all of the debts, and squeeze all
the money you can out of your budget to pay off the smallest debt. When
that debt is paid off, repeat the same pattern until you pay off the next
smallest debt. Continue until you’re debt-free!
4. Visualize being debt-free.
Visualize being debt-free and keep this image in your mind. If you lose
sight of your debt-free goal, it’s too easy to fall back into a
financial hole. In order to dig out of debt, you need focused determination
to succeed. Can you imagine how amazing it would feel to have zero debt?
5. If you’re in too deep, file bankruptcy.
If you’re in too much debt and it will take you many years, if not
decades to dig out, seriously consider filing a
Chapter 7 or
Chapter 13 bankruptcy. Federal bankruptcy laws were created to help debtors gain
the financial fresh start they need – there is no shame in filing for
“Psychology of Debt”
To find out if bankruptcy is right for you,
contact our office to schedule a free consultation with a Harrisburg bankruptcy attorney.