Category Archives: Getting out of Debt

A Beginner’s Guide to Getting out of Debt

How to get out of debt? That’s the million-dollar question many of you are probably searching for answers. Getting into debt is as easy as swiping your credit cards without second thoughts. It’s the getting out of the mountain of bad debt you’ve buried yourself into that’s hard to do. Though extremely difficult, getting out of debt is not rocket science. With a solid plan and enough willpower, you’ll be debt-free in no time. Here’s your guide to getting out of debt successfully.


Make a decision

You’d think this part is a given and doesn’t really need to make it in the list. But you’d be wrong. While a throwaway tip, many people forget this. Before you can truly get out of debt, you must make a decision you can fully and completely commit to. Remember that getting out of debt is hard. It entails challenges and complications. At one point, you might even want to abandon the plan. This is where you can go back to that moment when you made the decision to do it.

Face the music

The next step is to face the music and by that we mean that you need to make a list of all your debt including debt that aren’t listed on your credit reports. From credit cards to mortgage and personal loans, now is the time to really know how much you owe. When you make your list, include details about your creditor, interest rate, balance and required monthly payments. While you’re at it, you should also write down three-year payment for each debt.

Create a repayment plan

Now that you know how much you owe, the next step is to create a repayment plan that will effectively lower your interest rates. This means that you’d want to pay debt with high interest rates first. In most cases, you’ll probably need to take care of high interest credit cards first. If necessary, you might want to consider a debt consolidation plan to pay off high interest debts leaving you with just one debt to pay off each month.


Set realistic expectations

The journey to a debt-free lifestyle is rarely smooth and problem-free. You’ll encounter challenges and problems you might think may ruin your plan overall. This is why you need to be realistic with your goals and your expectations. If you especially have a massive amount of debt to pay off, you’d want to take it one realistic step at a time. At first, your efforts wouldn’t seem to put a dent on your debt but just keep it at and soon enough you’ll see the improvements.

Get professional help

If truly necessary, you might want to consider enlisting the help of an expert. A financial advisor who has your best interest in mind can help you get out of debt more effectively. If you’re especially clueless about where to start or what to do, speak with a professional and go from there. Though it may cost you and working with other people isn’t always comfortable, the right professional can do wonders in terms of creating a plausible repayment plan in the end.

Reward yourself

Don’t forget to reward yourself no matter how minor the accomplishment. If you accomplished a repayment goal or have consistently committed with your budget, it’s time to pop some bottle and cheer for a job well done. You need a tap on your back from time to time. Even if you have to do it yourself sometimes, rewarding yourself can help boost your confidence. Treat yourself to a mini vacation or a reasonable shopping spree from time to time.