How to get out of it? Do you have anxiety? Do you cross your fingers so that your boss pays you a surprise bonus? Are your ends of the month coming too fast? Have you thought about debt consolidation but don’t know where to start? It may be time to take the plunge and attack your debt once and for all. When debts prevent us from sleeping, something is wrong.
Here are 5 key elements to get out of debt:
1. Prepare your personal balance sheet
Your balance sheet indicates your situation. Most people in debt let little problems pile up. Your balance sheet should contain details of your assets, income, debts and regular expenses that you have to pay each month.
To help you, use these ACEF forms and templates. The majority of over-indebted people have only a vague idea of their real situation. This exercise will make you aware of your situation.
2. Make an inventory of debts
Who says debt consolidation, says inventory of debts and classification of these according to their values and their interest rates. Since not all debts are identical, they should not always be eliminated at the same time. Mortgage debts are rarely problematic because they are linked to a property that is likely to increase in value over time. The most pressing debts are those with the highest rate. We are talking here about department store credit cards or an annual fee card with rates varying between 15 and 23%. Here’s your pet peeve. And by making only the minimum payment on a balance of $ 10,000, for example, you will need 25 years and pay $ 11,800 in interest to overcome it. Unenviable.
3. Put the cards aside
You must therefore stop using your high-rate credit cards or, for the most determined, put the scissors in it. If you can get a personal or mortgage margin to consolidate your balances, it will be wonderful. Otherwise, contact your card issuers and demand a better rate. If that doesn’t work, you can shop among the other card issuers. Several lenders regularly offer very attractive promotional rates. But beware, only transfer your balance. Don’t ask for more credit and cancel the first card.
4. Change your habits
From that moment, the ball is in your court. You need to seriously change your spending habits and eliminate unnecessary spending. The rewards for your good moves with purchases or restaurants? Finished. Your big reward will come later in the form of savings that you will manage to free up from your budget. Each economy made will add up and turn, we hope, into a hundred dollars each month. Smartphone applications like MINT are effective because you always have access to your account balances and expense items.
5. Ask for a little help
If you really don’t have a bump in the numbers, seek the help of an accountant or planner from your financial institution. You have to talk about your problem and you give the means to solve it. Do not let it invades all your thoughts and hinder your tasks and your projects!
- There are multiple ways to get by
- Take stock of your debts to see the situation clearly
- You will have to get rid of some bad habits
- Help is available, just ask.