Change your Mindset
“Making the decision to get out of debt is the first step, but also the hardest,” says Cory Chapman, personal financial coach and CEO of EFC Wealth Management. “Actually changing your mind and accepting that you have to make life changes is the hardest part. The process of getting out of debt is going to take discipline, but it starts with the mindset that you want to be debt-free.”
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Get a Clear Picture of How Much Debt You Really Have
To get out of debt, you first need to realize how much you have, says Michael Gerstman, ChFC, CLU, CEO of Dallas-based retirement planning firm Gerstman Financial Group.
“List all your debts, the current balance and what the interest rate is on each debt,” he said.
Consider Consolidating Your Debt
Debt consolidation can be a great option for people who have a variety of high-interest debts and want to make only one monthly payment that is used to pay off all of your debt at once. If you go this route, taking out a personal loan can help you achieve your financial goals in a more manageable and affordable way.
Don’t let your debt overwhelm you more than it should – take advantage of smarter ways to pay it off.
Track Your Monthly Spending
Now that you know how much you owe, get a clear picture of where your money is going, whether it’s on your morning coffee, technology, shopping, food or planning your dream wedding.
“Most people don’t know what they’re buying every month,” Chapman said. “Multiple items and small purchases eventually add up. Use an app or program to help you track your spending habits.”
Cancel Any Unused Subscription Services
When you see how much you’re spending each month and exactly what you’re spending, it’s easier to see ways you can cut costs. Start by eliminating the automatic payments you make for subscription services you don’t use or can live without.
“There is no easy way out of debt other than changing your personal consumption habits,” says Robert Reilly, senior wealth advisor at PRW Wealth Management. “If you can’t afford to pay for that item or service this month, you can’t afford it – period. Review all the subscription deals you’re charging for, everything from Planet Fitness to Netflix to Apple Music to Spotify. Are you really using this stuff? ? Can you live without it? Everything can be reconsidered.”
Eat Out Less
Another important way to reduce your spending is by reducing how often you take out or eat out.
“Make a goal to cut [spending on eating out] in half per month by bringing lunch to work and eating dinner at home during the week,” said Trey Peterson, a Ramsey Solutions master financial coach with Haven Financial Group. “This will likely save you $250 or more a month. It’s an upgrade that can help lower your credit card balance.”
Reduce your Cable and/or Phone Bill
Renegotiating your cable or phone plan, moving to a lower level plan or switching providers can save you hundreds.
“A lot of my clients find this to save them $150 to $200 a month, and they never miss the 500 channels they never watch,” Peterson said. “In fact, I often hear this makes them more active while helping them reduce their debt.”
Stop Paying For Things With Credit Cards
When you are struggling with credit card debt, you should do everything you can to stay under control. Whether you need to schedule your payments so you don’t miss a credit card bill date or if you only need to use your card for necessities, there are several ways you can better manage your credit card. Make sure you are always on top of how much you use it and when you have to pay them off, so your debt stays under control.
Develop a Budget
Once you have a clear picture of how much you spend — and have taken steps to reduce this amount — you can see how much money you have left each month to dedicate to paying off debt.
If You Don’t Have Enough Income to Pay Off Debt in a Reasonable Timeline, Find a New Stream of Income
If you don’t have enough left over between your income and expenses to be aggressive about debt repayment, consider supplementing your income by working overtime, starting a new part-time job or starting a side business or side business.
“Think about how much extra time you have and use it,” says Ericka Young, certified financial coach and founder of Tailor Made Budgets. “There are plenty of ways to use your gift and talent to earn a little extra income. Just $500 more per month can be the difference in paying off your debt in months instead of years.”
Selling Unnecessary Household Items
To get more funds to pay off your debt, consider selling household items you no longer use, such as clothing or electronics. There are likely plenty of hidden sources of income lying around your home.
Check Your Progress Every Week
Creating a debt repayment strategy is important, but it won’t be effective if you don’t really stick to it. Be sure to check your payments and see if you have accumulated any new debt that will need tackling.
Find an Accountability Partner
It can help to have someone to check in with who keeps you on track with your debt repayment goals.
“Just like with a diet or exercise routine, having an accountability partner makes all the difference in your odds of success,” says Peterson.
Your accountability partner can be a friend or family member, or a financial professional.
Once you have paid down your Debt, Start Prioritizing Saving
Paying off your debt is an important step in getting your financial life back on track – but it’s not the only one. Set yourself up for long-term success by building your savings and retirement funds.
“When you have streamlined your life, start thinking about saving, and pay yourself first every pay period,” said Reilly. “Start putting money into a retirement plan sponsored by your employer, or start your own if your employer doesn’t have one.”
You should also aim to save at least $1,000 in an emergency fund, some experts say. This will help ensure that you do not go into debt again in case of family, medical or home emergency, or job loss.
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This article originally appeared on GOBankingRates.com: Feeling Overwhelmed By Debt? Here are 14 Ways to Improve Your Financial Future