Yes, it’s 2019, and you are or STILL in deep debt.
There’s irony in being trapped by debt, considering we are living in a year obsessed with financial security and resources towards financial independence is just fingertips away from our mobile phone.
However, I argue that with unstoppable inflation and yes, human nature, we can expect that some people are fated to repeat the mistakes of the past. Only this time, the price you need to pay has frightening interests.
But being debt-free should never be impossible. Challenging? Yes, but never impossible. Most of the time, we don’t know where to begin.
Thus, we’ve compiled six steps you can use if you do not know where to begin when dealing with your debt:
1. Acknowledge Your Debt, Stop Denial
Your debt exists, and it’s horrible. I know that reality check is often disappointing and painful. When it’s debt, it’s scary. Probably the same reason why we don’t want to acknowledge debt is that we don’t want to experience all this negativity as we wake up.
But it doesn’t have to be all negative.
If anything, this signals a brand new hope, a more realistic optimism.
Tell yourself you have a debt. Compile then calculate the total amount. Is the amount something that will stress you out? Stop. These are just numbers, but you are in control. You want to pay this debt, and you will zero this out because you believe in yourself that you can.
Now, deep breaths. Your debt exists, but you are here to resolve this.
2. Cut the Biggest Expenses
Once you know your liabilities, expenses, and budget, you must take steps to cut, which are the biggest expenditures. You can’t get out of your debt if it keeps growing. You can’t make money from debt payments or savings. It’ll have to come from elsewhere.
Organize and categorize your spending to see where you’re spending too much money—on transportation or eating out, for instance. Then make an expenditure reduction plan.
3. Make More than Minimum Payments
Minimum payments are cute and seem non-threatening at first, but you will be surprised how it slowly kills your life-long dream of reducing your debt to zero.
Average American has a credit card balance of about $12,600 with a 25% interest rate. Earning a minimum salary each month would leave you paying off that debt for nearly 15 years! If you want to get out of debt, you must make a higher-than-minimum salary.
4. Maintain Communication with Creditors
Creditors, on the contrary, are people too, and they do have a sense of sympathy. If you’re struggling, get on the phone, and talk to your creditors.
While some of them sound like they will stop at nothing to drain you of every penny, know that they are just doing their jobs. Be honest of your situation and explore your options if you can set up a payment arrangement.
5. Consider Spending Cash
Cut those cards!
Yes, the science behind spending cash because you see money coming out of your wallet puts more warning signs that you are probably paying too much than using those credit cards. This is optional as you might have been used to using plastics and also, the fear of being robbed.
But you will be surprised how spending cash can be quite adequate with your budget and your aim of being debt-free. You will find yourself creating ways to secure your money in places only you can find.
The best solution to getting out of debt on a low income is making a strict budget persistently, and not giving up, no matter how hard it is. After all, which would you be rather, living carelessly for a few years or living in debt for a lifetime?